8/8/2019 P. R. Shukla

1/23

Indian Institute of Management, Ahmedabad

ECONOMIC AND ENVIRONMENTAL MODELING WORKSHOP

January 19-20, 2004, New Delhi

Economic Environment Modeling: Policy Insights for

IndiaP.R. Shukla

8/8/2019 P. R. Shukla

2/23

Economic Environment Modeling: Policy Insights for India

Few Key Q uestions for Emissions Policies

What are the IPCC SRES equivalent alternate emissions pathways for India?

What will be the future trends of emissions and intensities for India?

H ow are local and GH G emissions control policies linked?

What shall be the mitigation supply curve for India?

H ow shall South-Asia regional cooperation affect energy and emissions?

What shall be the implications of stabilization regime, e.g. 550 ppmv, on Indias

energy system during the century

Should we promote supply-side push of clean technologies (e.g, solar PV) for

GH G mitigation?

8/8/2019 P. R. Shukla

3/23

Economic Environment Modeling: Policy Insights for India

Indian Emission Scenarios: Framework

Fragmented

IA1

e.g. China

IA2

Pre-reform(Mixed Economy Model)

IB1Sustainable Development

IB2Self Reliance Model

Centralization

Decen

tra

liza

tio

n

Market integration

Go

vernance

Integrated

8/8/2019 P. R. Shukla

4/23Economic Environment Modeling: Policy Insights for India

Indian Emission Scenarios

200

300

400

500

600

700

800

900

2000 2010 2020 2030

CarbonEmissions(MT)

IA1

IA2

IB1

IB2IA1T

8/8/2019 P. R. Shukla

5/23Economic Environment Modeling: Policy Insights for India

Energy and Carbon Emissions for India (IA2 Scenario):AIM/ MARKAL Model Analysis

0

200

400

600

800

1995 2005 2015 2025 203

Year

Carbon(M

T)

0

10

20

30

40

50

1995 2005 2015 2025 2035

Year

ExaJoules

Coal

Oil

GasHydro

Nuclear

RenewablesBiomass

Carbon EmissionsEnergy Consumption

8/8/2019 P. R. Shukla

6/23Economic Environment Modeling: Policy Insights for India

Energy, Carbon, Electricity and GDP(H istory and Projections for Reference Scenario)

0

2

4

6

8

10

12

14

16

18

20

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Energy Carbon Electricity GDP

Past Trends

Future Projections

8/8/2019 P. R. Shukla

7/23Economic Environment Modeling: Policy Insights for India

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Electricity

CarbonEnergy

Past Trends Future Projections

GDP intensities of Energy, Electr icity and Carbon(Reference Scenario)

8/8/2019 P. R. Shukla

8/23Economic Environment Modeling: Policy Insights for India

Large Point Sources of SO 2Emissions

Thousand Tons

A

B

C

D

E

F

Sectors L P S

covered

Po w er 9 4Steel 1 1

C em en t 8 5Fertilizer 3 1

Paper 3 3Su gar 2 8

C austic S od a 1 9C rud e refin ery 1 2

Petroch em ica l 1 4

H N O 3 m anu factu ring 5

H 2SO 4 m anufactu ring 6 3A lum inum 3C opp er sm elting 8

Lead sm elting 5Zinc sm elting 3

A lcohol p rodu ction 1 4

C oal m in ing 3 2N atu ra l gas p rod uction 9N . gas transportation 1 2

C rud e oil p roduction 7

M unicipa l solid w aste 1 4O ther industries 7

T o ta l 509

8/8/2019 P. R. Shukla

9/23Economic Environment Modeling: Policy Insights for India

Locations of Large Point Sources

20002030

8/8/2019 P. R. Shukla

10/23

Economic Environment Modeling: Policy Insights for India

SO 2 Emission: AIM/ Emission Model Analysis

2000 2030

< 0.01

0.01-0.0170.017-0.0260.026-0.0350.035-0.044

0.044-0.053

0.053-0.060

> 0.060

Million Tons< 0.01

0.03

0.07

0.15

< 0.20

0.11

Million Tons

< 0.01

0.03

0.07

0.15

< 0.20

0.11

Million Tons

8/8/2019 P. R. Shukla

11/23

Economic Environment Modeling: Policy Insights for India

GH G versus Local Emissions in India

0

200

400

600

800

1995 2005 2015 2025 2035

Year

Carbon(MT)

Year

Million

Tonnes

0

1

2

3

4

5

6

1995 2005 2015 2025 2035

7

Carbon Emissions SO 2 Emissions

8/8/2019 P. R. Shukla

12/23

Economic Environment Modeling: Policy Insights for India

Carbon Mitigat ion Supply Curve: (2005-2035)

0

10

20

30

40

50

60

1 2 3 4 5 6 7

Carbon abatement (billion ton)

Cost($/TonofCarbon)

6 billion t ons of mitigation below $25/ ton ofcarbon

8/8/2019 P. R. Shukla

13/23

Economic Environment Modeling: Policy Insights for India

Carbon Mitigation

(under different Post-Kyoto Scenarios)

Scenario

Kyoto Period

2000-2012

Medium Term

2000-2030

Long Term

2000-2100

750 ppmv 138 (3%) 743 (5%) 11334 (11%)

650 ppmv 301 (7%) 1555 (11%) 23666 (23%)

550 ppmv 449 (10%) 2503 (17%) 33284 (32%)

(in Million Ton)

8/8/2019 P. R. Shukla

14/23

Economic Environment Modeling: Policy Insights for India

Technological Change in India to Stabilize CO 2 at 550ppmv

0

500

1000

1500

2000

2500

1990 2005 2020 2035 2050 2065 2080 2095

Carbon C apture

Energy Efficiency

Wind

Solar

Biomass

Hydro

NuclearGas

Oil

India 550 ppm v emission

Reference Case Emissions

400

800

1200

2000

1600

550 PPMV

8/8/2019 P. R. Shukla

15/23

Economic Environment Modeling: Policy Insights for India

Implications of Mitigat ion: Coal and Gas in IA2 Scenario

Coal Demand

0

4

8

12

16

20

1995 2005 2015 2025 2035

Exajoules

Reference

15%

Gas Demand

0

2

4

6

8

10

12

1995 2005 2015 2025 2035

Exajoules

5% 10%

20% 25%

8/8/2019 P. R. Shukla

16/23

Economic Environment Modeling: Policy Insights for India

Regional Energy Market Development

8/8/2019 P. R. Shukla

17/23

Economic Environment Modeling: Policy Insights for India

Total Primary Energy Supply Saving

Cumulative Saving in StrongCooperation: 60 EJ in 20 years

(2010-2030)

This is equivalent to $180billion cumulative

0

2

4

6

8

10

2010 2020 2030

%S

aving

Medium Cooperation Scenario

Strong Cooperation Scenario

8/8/2019 P. R. Shukla

18/23

8/8/2019 P. R. Shukla

19/23

Economic Environment Modeling: Policy Insights for India

Reduction in Carbon Emissions

0

4

8

12

16

2010 2020 2030

%D

ecrease

Cumulative Savings in ACS:

1.4 Billion tonnes of Carbon.

This is equivalent to $28

Billion saving

Medium Cooperation Scenario

Strong Cooperation Scenario

8/8/2019 P. R. Shukla

20/23

Economic Environment Modeling: Policy Insights for India

Benefits from South-Asia Energy Cooperation (2010-2030)

Benefit (Saving)

$ Billion % of Region's GDP

Energy (Direct Benefits)

Energy 60 Exa Joule 180 0.48

Investment in EnergySupply Technologies

72 0.19

Investment in EnergyDemand Technologies

69 0.18

Environment (Indirect Benefits)

Carbon 1.4 Billion Ton 28 0.08

Sulfur Dioxide (SO2) 50 Million Ton 10 0.03

Total Direct and Indirect Benefits 359 0.98Spillover Benefits

Water 16 GW additional hydro capacity

Flood Control From additional damsCompetitiveness Reduced unit energy/ electricity cost

8/8/2019 P. R. Shukla

21/23

Economic Environment Modeling: Policy Insights for India

Penetration of Advanced Technology: Competition Paradox

0

5

10

15

20

25

30

35

40

1990 2000 2010 2020 2030 2040 2050

Base

Hi-Solar

$25 TaxMed-Solar + $25 Tax

0%

5%

10%

15%

20%

25%

30%

High Solar $25 Tax Med Sol+ $25 Tax

Solar PV Penetration Carbon Mitigation

8/8/2019 P. R. Shukla

22/23

8/8/2019 P. R. Shukla

23/23

Economic Environment Modeling: Policy Insights for India

Development and Climate: Expanding theFrontier