Indicators of carbon emission intensity from commercial energy use in India

Transcription

1 Ž. Energy Economcs Indcators of carbon emsson ntensty from commercal energy use n Inda Barnal Nag, Jyot Parkh Indra Gandh Insttute of De elopment Research, Gen. A. K. Vadya Marg, Goregaon East, Mumba , Inda Abstract Ths study tres to analyze the commercal energy consumpton evoluton patterns n Inda n terms of prmary energy requrements and fnal energy consumpton and ther mplcatons for overall carbon ntensty of the economy. The relatve contrbuton and mpact of dfferent factors such as actvty levels, structural changes, energy ntensty, fuel mx and fuel qualty on the changes n aggregate carbon ntensty of the economy has been studed, takng nto account coal qualty whch has declned drastcally n the last two decades. The major fndngs of the study are: frstly, from the 1980s onwards, ncome effect has been the major determnant of Inda s per capta emsson ncrease, although pror to that, energy ntensty used to be the most mportant factor. Secondly, there has been a major shft towards electrcty from prmary energy carrers n the major energy consumng sectors, and the hgher end use-effcency of electrcty has been able to compensate for the hgh emsson coeffcent of electrcty consumpton. Thrdly, emsson ntensty of thermal power generaton shows a substantal declne when the data s controlled for the declnng qualty of coal used n power generaton Elsever Scence B.V. All rghts reserved. JEL classfcatons: Q41; O53 Keywords: Decomposton; Dvsa; Intensty; Structural effects; Fuel mx; Fuel qualty 1. Introducton The thrd sesson of the Conference of Partes Ž COP 3. to the UNFCCC ŽUnted Natons Framework Conventon of Clmate Change. held n Kyoto had hghlghted the role of developng countres n helpng to solve the problem of clmate change Tel.: ; fax: Ž. E-mal address: barnal@gdr.ac.n B. Nag $ - see front matter 2000 Elsever Scence B.V. All rghts reserved. Ž. PII: S

2 442 B. Nag, J. Parkh Energy Economcs even though there s consensus on common but dfferentated responsbltes as specfed durng the 1992 Earth Summt at Ro. These concerns rest on the premse that developng countres would become a domnant force n the demand sde of the world coal and ol markets 1 durng the next two decades. In the present analyss, we study emssons due to energy use n Inda at dfferent levels of energy use and actvty. Inda s one of the developng world s largest consumers of energy, prmarly because of ts huge populaton, rapdly rsng ncome, urbanzaton and ndustralzaton. Coal, whch s the most pollutng of all fossl fuels, s the most abundant source of commercal energy n Inda. Inda s the thrd largest producer of coal n the World after Chna and the USA wth total coal reserves of approxmately 200 bllon tonnes. Inda s coal ndustry s growng at 7%, well above the world average of 3% Ž IEA, and most of the coal produced s used for ndgenous use. On the other hand, Inda has been unable to rase ts ol producton substantally n the 1990s. Rsng ol demand of almost 10% per year has led to szeable ol mport blls. In 1995 Inda s nstalled generaton capacty was MW, of whch 73% was thermal and 67% of the electrcty generated n Inda s from coal. Keepng n vew all these factors, the approach paper to the Nnth Plan has emphaszed the satsfacton of energy demand from ndgenous resources so as to reduce the vulnerablty of the economy to uncertantes of external markets as well as outflow of scarce foregn exchange resources ŽMurthy et al., Even though a number of steps have been taken to orent energy sector towards market based economy and penetraton of alternatve sources such as gas and renewable forms resource endowments patterns ŽParkh, 1997; Red and Goldenberg, 1998; Srvastava, 1997., some constrants, such as energy supply securty ssues, nadequate gas dstrbuton nfrastructure, stagnaton of ol producton n the last decade Ž Rao and Parkh, and lack of nvestble funds and weak nsttutons mply that Inda s economy would contnue to be dependent on carbon-ntensve fuels at least n the medum term. In absolute terms, Inda s the world s sxth largest emtter of energy related CO, accordng to estmates of IEA reports Ž , contrbutng to 3.3% of world CO2 emssons. Although measured on per capta bass, Inda s energy related CO2 emssons are very low Žt was approx t of CO2 per person n 1993, fve tmes below the world average of energy related emssons have been growng rapdly, almost doublng between 1980 and In the present study, we try to dentfy the major factors, whch have nfluenced carbon emssons at dfferent levels of energy use n Inda by usng the Dvsa decomposton technque. Whle rsng ncomes and ncrease n populaton contrbute more to demand for prmary energy sources, rapd urbanzaton and ndustralzaton result n a shft from prmary energy forms to transformed energy, namely electrcty and from non-commercal to commercal energy. To ths extent t becomes mportant to analyze the carbon ntensty changes resultng from substtuton of coal, ol and non-commercal fuels by electrcty on the one hand 1 Consumpton of petroleum and coal accounts for 41.2% and 38.5% of world s total CO emssons 2 from consumpton and flarng of fossl fuels.

3 B. Nag, J. Parkh Energy Economcs and from changes n economc actvty, sectoral and sub-sectoral shfts, and changes n energy effcency on the other. Our study seeks to answer the followng questons: 1. What s the relatonshp between economc growth, energy ntensty and carbon ntensty? What has been the role of past natonal economc and energy polces on the trajectory, of these components? 2. How has the commercal energy consumpton pattern evolved n Inda n terms of fnal energy consumpton and prmary energy consumpton? What have been ther mplcatons for overall carbon ntensty of the economy? 3. What s the relatve contrbuton of dfferent factors such as actvty levels, structural changes, energy ntensty and fuel mx on the changes n aggregate carbon ntensty of the economy? 4. What can we nfer from the past patterns of energy demand? How has the substtuton of prmary energy carrers namely coal, petroleum products by electrcty contrbuted to overall carbon ntensty changes n the wake of large generaton and transmsson and dstrbuton losses n Inda? 5. Is there any evdence of envronmental Kuznets curve behavor between economc growth and per capta ncome? There exsts a number of studes nvolvng decomposton of energy consumpton, energy ntensty and emssons, whch have attempted to dstngush the relatve contrbuton of the dfferent factors affectng changes n energy consumpton ŽBoyd et al., 1987, 1988; L et al., 1990; Shreshtha and Tmlsna, 1996, 1997, The studes can be broadly categorzed nto cross-country studes ŽTorvanger, 1991; Shreshtha and Tmlsna, 1996; Ang and Pandyan, and country-specfc studes Ž Boyd et al., 1987, 1988; L et al., 1990; Ln and Chang, 1996; Huang, and most of the studes have preferred to concentrate on a specfc sector of the economy, the most frequently studed sector beng the manufacturng sector ŽL et al., 1990, for Tawan; Torvanger, 1991, for OECD countres.. Shreshtha and Tmlsna Ž 1996, have studed CO 2, SO2 and NOx emssons n the power sector for selected Asan economes. So far, not much detaled study has been done on Inda. Srvastava Ž has studed the past trends n energy consumpton and economc growth n Inda, whch prmarly was a statstcal analyss of the energy scenaro and faled to capture the varous factors whch nfluenced such energy and emsson trends. Shreshtha and Tmlsna Ž studed emsson from power generaton n Inda as part of a cross-country analyss of 12 countres. All the prevous studes have provded useful nformaton regardng energy and emsson ndcators. However, one needs to be aware of the lmtatons of the analyses. The nter-country comparson of ndcators of emsson tends to be based due to a number of reasons. Frstly, cross-country comparsons nvolve strong assumptons snce the data used are not homogeneous n defnton and measurement across countres. Indcators calculated to assess energy effcency vary from country to country and the nterpretatons of smlar ratos dverge consderably Ž. Ž. Bosseboeuf et al., The data used by Shreshtha and Tmlsna 1996 for

4 444 B. Nag, J. Parkh Energy Economcs nstance, has been derved from ADB Ž 1992, 1993., AEEMTRC Ž and IEA Ž 1993., for analyzng the emsson ntensty of power generaton n 12 countres. Inda has been studed along wth other countres usng ths data source. These data assume calorfc value as constant across countres whereas n Inda the calorfc value of power grade coal has declned from 4822 kcal kg n 1974 to 3736 kcal kg n 1994, a decrease of approxmately 22.5%. Our paper shows that conclusons dffer sgnfcantly when ndgenous data source that gves gross calorfc value of each fuel, s used nstead of data that add these fuels n weght regardless of varyng qualty across tme. Secondly, detaled and rcher data from such sources facltate detaled decomposton and study of other mportant factors, whch nfluence emssons consderably. Important ndcators mght be neglected due to data lmtatons and nferences could be msleadng. In ths paper, we carry out three separate analyses for Inda. Frst, we look at growth n per capta emssons through prmary energy requrements for Inda, whch s more ndcatve of effcency of generaton and dstrbuton as t ncludes losses. Next, we study fnal energy consumpton from two broad perspectves: carbon emsson arsng due to fnal consumpton of only commercal prmary energy carrers such as coal and carbon emsson arsng due to fnal energy consumpton ncludng both prmary energy carrers as well as electrcty. The dfference between the results n the two cases reflects the effect of substtuton of prmary energy carrers by electrcty n fnal energy consumpton. Ths knd of substtuton has two mplcatons as far as carbon emssons are concerned. Electrcty has hgh end use effcency but ts generaton and dstrbuton nvolves huge losses 2 especally so snce major generaton n Inda s from prmarly coal based thermal plants. Increase n demand for electrcty for end use consumpton could therefore lead to ncreased carbon emssons. For further nsghts we also analyze the effects of fuel qualty, fuel mx, and energy ntensty on emssons from electrcty generaton separately. Changes n emsson ntensty n the power sector s a major ndcator of change n effcency because emsson n the thermal power sector results from fossl fuel consumpton to generate power, and emssons would be drectly proportonal to the rato between total prmary energy Ž TPE. consumed and total fnal energy generated Ž TFE Methodology We carred out a study of emsson ntensty at three dfferent levels of energy use and actvty, usng the Dvsa decomposton technque. Although varous decomposton technques have been used for smlar analyses, lke Laspeyres ndex method Ž Howarth et al., 1991; Schpper et al and the more recent, factor analyss Ž Landwehr and Jochem, 1997., we have chosen to use Dvsa decomposton technque due to ts varous advantages over other ndces ncludng ts 2 Transmsson and dstrbuton losses account for approxmately 21% of total generaton n Inda. 3 TPE TFE can be nterpreted as the nverse of generatonal and dstrbutonal effcency.

5 B. Nag, J. Parkh Energy Economcs smplcty of mplementaton and sze of resdual ŽAng and Lee, 1994; Greenng et al., The decomposton equatons for per capta emsson and emsson ntensty and the components for each of the analyses are explaned below. Carbon emsson ntensty has been defned as the rato between total carbon emtted by a sector and actvty level of that sector. In dfferent studes, actvty s taken as physcal output or a measure of output such as PKm. n transport or value added. We have chosen value added as the determnant of actvty level 4 for study of emsson due to fnal energy consumpton by sectors and total thermal power generaton as a measure of actvty level for emsson ntensty of power generaton TPER total prmary energy requrements For studyng movements n per capta emssons and ts ndcators, we have done the analyss for the perod between 1970 and 1995 and have consdered emssons from prmary energy consumpton, namely coal, ol and hydro and nuclear power. We decompose per capta emsson nto fuel mx, energy ntensty and per capta GDP. The dentty for the per capta emsson can be wrtten as, Ý F C F t t t GDPt c Ý k... Ž 1a. t t Nt F GDPt Nt Where, Ý t Ft Ft GDPt Ý k t.. Ž 1b. F GDP N Ý t t t C k.f Ž 2. t t t ks carbon emsson coeffcent of energy source 5, whch s constant over tme; Nt populaton n year t; F consumpton of prmary energy carrer Ž t coal, crude ol, natural gas, hydro and nuclear power.; F total energy consumed Ž expressed n ggajoules. t ; and GDPt gross domestc product n year t. 4 The concept of value added as proxy of actvty level for the sector n queston s not error free especally for sectors lke transport where prvate trps do not contrbute to value addton n the sector. However, studes where changes n carbon ntensty are consdered at sector level, t becomes the most sutable ndcator for measurng aggregate output f not the best. 5 Emsson coeffcent s TC GJ for coal and TC GJ for all petroleum products. For natural gas t s TC GJ.

6 446 B. Nag, J. Parkh Energy Economcs Ž. For ease of notaton, we wrte the decomposton Eq. 1b as Ý c k.m.i.pc. Ž 3. t t t t t The above relaton between the varables s the decomposton we use to base our analyss on Dvsa approach. Ths relatonshp can also be wrtten as a decomposton of the growth rates of emsson ntensty of the four component ndces,.e. Ž. g g g g 4 c m I PC where growth rates can be expressed as dy dt dlny Ž 5. Y dt where, Y c, m, I, PC Integratng both sdes of Eq. Ž. 4 expressed as n Eq. Ž. 5 and takng antlog, yelds a constant tme Dvsa ndex decomposton of the change n emsson ntensty. A Dvsa ndex s the exponental of the weghted sum of growth rates where weghts are each component s share n aggregate. Thus, the weghts change over tme and can be wrtten as W where,,t k,t m,t It PCt W Ž 6.,t k m I PC Therefore, Ý,t,t t t ½ 5 ½ 5 t 1 t 1 t dln PC ½H Ý dt 5 t 1 ct t dlnm t dln I exp H ÝW dt exp H ÝW dt c dt dt t 1 exp W dt Ž 7. However, our observatons beng dscrete, tme approxmaton has to be made and snce for short-tme perods, ntegrals can be approxmated by means of the start-pont and end-pont, we use the weghts as: W,t W,Žt 1. W Ž 8.,t 2 so that, m ½,t Ý,t m,žt 1. 5 Dm exp W ln Ž 9.

7 B. Nag, J. Parkh Energy Economcs 22 ( 2000) I ½ t Ý,t I Žt 1. 5 Ž. DI exp W ln 10 ½Ý,t PC Žt 1. 5 PC t DPC exp W ln Ž 11. and, c t Dm.DI.DPC R Ž 12. c t 1 Dm ndex for changng energy mx n the economy; DI ndex for changng energy ntensty n the economy; DPC ndex for per capta ncome n the economy; and R resdual term due to approxmaton. R s very small n the case of Dvsa ndex compared to other technques of decomposton lke the Laspeyres ndex wth ether fxed or rollng base year Ž Greenng et al., Other features of ths technque whch prompted us to choose t for analyss are that the dscrete form ndex approaches the contnuous form ndex when length of the tme perod goes to zero. DI s also flexble snce t employs movng weghts rather than fxed weghts Total fnal energy consumpton, TFEC: nter sectoral analyss Overall emsson ntensty of the sectors s decomposed nto emsson coeffcent, fuel mx, energy ntensty and structural effect. The resdental sector has been excluded from ths analyss as personal ncome of ths sector and value added of other sectors are not comparable. 6 The followng varables have been used for the decomposton: ks carbon emsson coeffcent of fuel n sector s, ths coeffcent does not vary across sectors. In the case of electrcty, total carbon emssons were frst calculated by summng over the products of ndvdual fossl fuels used n power generaton and ther respectve emsson coeffcents. Ths was dvded by the total electrcty used by fnal consumers to get the emsson coeffcent for electrcty. 7 Ths weghted coeffcent s dependent on the fuel qualty and fuel mx n power generaton, generaton effcency, transmsson, and dstrbuton losses. Calculaton of emsson for power sector s dscussed n detal n the followng secton. 6 In Natonal Income Accountng they appear n separate accounts. 7 Emsson s dvded by consumpton nstead of producton because of the transmsson and generaton losses nvolved whch make actual power consumpton less than generaton.

8 448 B. Nag, J. Parkh Energy Economcs E energy used from n sector s. Ths s measured n ggajoules Ž GJ. s. Es the sum of energy use over n sectors, s,.e. total energy use n sector s. VAs the volume of output measured as value added n sector s. VA the sum of value added over all sectors. Cs carbon emsson from use of fuel n sector s. Ž. C k E 13,s,s,s C total emsson from sector s,.e. s Ý C C Ž 14. s s C total emsson of carbon from all fuels and all sectors. s Ý s,s C C Ž 15. c Aggregate emsson ntensty over all sectors defned as total carbon emsson dvded by total value added. For our analyss emsson ntensty c s wrtten as the followng dentty: C E,s Es VAs c Ý k s Ž 16. VA E VA VA,s To facltate notaton let us wrte s s E,s e Ž 17a. s E s E s I Ž 17b. s VA s VA s S Ž 17c. s VA so that, Ý,s s s,s C ke IS Ž 18. The Dvsa ndces of the above components are found usng the methodology descrbed n the prevous secton. The fnal decomposton nto ndces of major components can be wrtten as: c t Ž. Dk De DI DS R 19 c t 1

9 B. Nag, J. Parkh Energy Economcs where R s a resdual term due to approxmaton, and Dk, De, DI, and DS are the Dvsa ndces for effects due to changes n emsson coeffcent, energy mx, energy ntensty and structural shft. Snce fnal energy ntenstes refer to the fnal end uses of energy, they are more sutable for comparng the energy requred for fnal consumpton aganst value added than prmary energy ntenstes. All sectoral actvtes do not respond equally to populaton changes and therefore specfc energy ntensty changes n each sector provde greater nsght than energy per GDP or energy per capta. The analyss has been done twce, once ncludng power n the group of energy sources used by the sectors and agan by excludng t and usng only petroleum products, gas and coal Transformaton and con erson sector The components of the emsson ntensty studed are fuel ntensty effect,.e. effect due to change n fuel ntenstes Že.g. mprovements n generaton effcency of power plants., generaton mx effect and fuel qualty effect Ždue to changng heat value of the fuels.. An earler study by Shreshtha et al. Ž assumed constant calorfc value of coal for all the countres thus neglectng the followng two effects of declnng calorfc value of coal. Frstly, for the same amount of electrcty generated Ž GWH., a bgger quantty of coal may have to be consumed and secondly, snce the carbon content of fuel s drectly lnked wth the fuel s energy content, the carbon per klogram of fuel also reduces. We call these two effects ntensty effect and qualty effect, respectvely. Snce these two effects are n opposte drectons the net effect on carbon emssons would depend on the relatve strengths of these two effects. The decomposton equaton can be wrtten as c k q f g, where, t t t t t c carbon emsson ntensty of thermal power generaton; t kt emsson coeffcent of fuel ; q fuel qualty of Ž n GJ unt weght of fuel.; and t f fuel ntensty, defned as t F t f Ž 20. t Q t where, Ft amount of fuel used for power generaton n year t. Qt power generaton based on fuel type n year t. gt share of power generated from fuel n total generaton n year t.

10 450 B. Nag, J. Parkh Energy Economcs Q t g Ž 21. t Q Ý t The fnal decomposton nto ndces of major components can be wrtten as c t Dq Df Dg R Ž 22. c t 1 where, Dq Dvsa ndex for changng fuel qualty; Df Dvsa ndex for fuel ntensty; and Dg Dvsa ndex for generaton mx. To show the extent to whch data lmtatons or and assumptons n analyses affect results we have done the decomposton exercse for the power sector, once usng constant calorfc value of coal and once usng varyng calorfc value of coal. We have fxed the calorfc value of only coal for the former analyss because coal s used n large quanttes by the power sectors and ts qualty has declned the most for coal compared to the other fuels used. We have used annual tme seres data for consumpton and qualty Žgross calorfc value. of coal, lgnte, hgh-speed desel ol, lght desel ol, furnace ol, LSHS and natural gas by thermal power plants. The perod of analyss s Data sourcesindependent data sources were used for the three analyses. The detals and source data are gven below TPER total prmary energy requrements We use annual tme seres data for consumpton of coal, crude ol, natural gas and hydro and nuclear power by the economy for the perod between 1970 and Data sources for the analyss are Petroleum and Natural Gas Statstcs, Ž MoPNG., Coal drectory of Inda, Ž CCO. 8, Central Electrcty Authorty, Ž CEA. 9 and Natonal Accounts Statstcs Ž CSO TFEC total fnal energy consumpton Four sectors have been studed, namely ndustry, agrculture, commercal and 8 Coal drectory of Inda, Coal Controller s Organsaton, Mnstry of Coal, Government of Inda Ž several ssues.. 9 Publc electrcty supply: All Inda Statstcs: General Revew, Central Electrcty Authorty, Government of Inda Ž several ssues.. 10 Natonal Accounts Statstcs, Central Statstcs Organzaton, Mnstry of Plannng and Programme Implementaton, Government of Inda Ž several ssues..

11 B. Nag, J. Parkh Energy Economcs transport. Data for energy use n agrculture ncludes consumpton of petroleum products and natural gas by plantatons Ž lke tea., but does not nclude petroleum products used by the agrculture sector for transportaton of agrcultural commodtes. Annual tme seres data for consumpton and fuel qualty Ž n kcal kg. for each of these sx fuels, namely coal, hgh speed desel ol, lght desel ol, furnace ol, LSHS and natural gas and electrcty by each of the sectors has been used for the perod Same data for avaton turbne fuel has been addtonally used by the transport sector. Fuel consumpton and fuel qualty data are from energy statstcs Mnstry of Petroleum and Natural Gas, Ž MoPNG. and Central Electrcty Supply Authorty, Government of Inda Ž CEA.. Data for sectoral value added have been acqured from Natonal Accounts Statstcs of Inda Ž CSO Transformaton and con erson sector Study has been done for the perod between 1974 and 1994 usng annual tme seres data for fuel qualty of each of the sx fuels,.e. coal, hgh speed desel ol, lght desel ol, furnace ol, LSHS and natural gas and ther consumpton by power sector. Source of ths data s Central Electrcty Supply Authorty Ž CEA.. 4. Dscusson of results 4.1. Per capta emssons Increase n per capta emsson n tself s not so much of a concern to Inda as the current level of emssons have reached a mere 0.23 Tc per capta. However, t s mportant to dentfy contrbuton of the varous factors, namely mx of energy sources, effcency of energy use and rsng ncome whch boosts greater energy use, and also the change n trend of these factors for sutable polcy analyss. The results as shown n Fg. 1 ndcate that untl 1980, energy ntensty was the major determnng factor behnd per capta emssons and from 1980 onwards ncome effect became the major contrbutor to per capta emssons. In the frst decade of study, growth rate of per capta emssons was lower than n the 1980s when per capta emssons grew by 51.7% from 1980 to 1990 Ž Table 1.. In the perod , t was 29.4%. From 1980 to 1990, ncome effect showed a sharp rse by 44% and approxmately 89% of the growth n per capta emssons were contrbuted by ths factor. From 1990 to 1995, per capta emsson rose by approxmately 22% and all the three effects contrbuted to the rse, although fuel mx effect was almost nl Ž the ndex beng very close to 1.. Approxmately 21% of the per capta emsson rse was nfluenced by ntensty component, that s, durng ths perod economc actvty became more energy ntensve. Fuel mx effect has been almost constant, slghtly movng n favor of reduced emsson. The above analyss clearly shows that although rsng energy ntensty was the major factor behnd per capta emsson durng the 1970s, from the 1980s onwards, ncome became the most mportant factor. Such a trend could be ndcatve of

12 452 B. Nag, J. Parkh Energy Economcs Fg. 1. Dvsa ndex decomposton of per capta emsson. hgher energy effcency n the 1980s and can be attrbuted to the reason that after the frst ol crss n 1973, Inda undertook the polcy of energy ndependence, whch on the demand sde mpled energy effcency. Ths along wth the fact that Inda saw a hgh annual rate of growth n the 1980s led to a shft n the trend. Annual growth rate ncreased to approxmately 6% n the 1980s from a low of approxmately 3% n the 1970s. So although energy ntensty used to contrbute Table 1 Dvsa ndex decomposton of per capta emsson ntensty a Per capta emsson Energy mx effect Ž 4.6. Ž 2.7. Ž 1.2. Energy ntensty effect Ž Ž Ž Income effect Ž Ž Ž a Note. Fgures n parentheses ndcate percentage contrbuton of the varous effects to change n per capta emsson.

13 B. Nag, J. Parkh Energy Economcs nearly 75% of the per capta emsson n the 1970s, the contrbuton declned to only approxmately 13.8% n the 1980s. If the exstence of an envronmental Kuznet s curve Ž EKC. s assumed for Inda, the rapdly rsng per capta emssons followng the trend of rsng per capta ncome ndcates that Inda s stll n the rsng slope of the nverted U-shaped EKC. CO2 beng a global pollutant does not nflct local damage and ts abatement cost beng very hgh, the peak of EKC for CO2 s usually expected to be very hgh, f at all t exsts Ž Cole et al., The presence of Kuznets curve for CO 2 emsson s debatable snce CO2 beng a global pollutant does not gve rse to local dsutlty n the short run Ž Arrow et al., 1995; Moomaw and Unruh, However, n Inda, potental for mproved effcency n energy use, transmsson and dstrbuton of electrcty, completon of the shft towards commercal fuels from tradtonal fuels and full electrfcaton of all vllages ndcate towards the possblty of reachng a peak of the Kuznets curve. The downward movement mght have to be a conscous effort towards removal of market dstortons, structural change towards less pollutng sectors Ž growth of the servce sector. and nternatonal transfer of energy effcent and emsson abatng technologes TFE: cross-sectoral analyss Changes n emsson ntensty of the four sectors have been shown n Fg. 2 as estmated from ther energy use and composton ncludng electrcty. Comparng the dfferent sectors, we fnd that transport sector had the strongest reducton n ntensty of 18%, between 1984 and 1994 followed by the ndustral sector where the reducton was approxmately 8%. Emsson ntensty n the agrcultural sector, however, has rsen sharply by approxmately 2.5 tmes. Ths could be explaned by the fact that hghly subsdzed prce of power n the agrcultural sector, has led to ndscrmnate use of electrcty n ths sector. Emsson pertanng to fossl fuel use n power generaton s consdered as emsson from electrcty. Electrcty beng a transformed energy has a hgh emsson coeffcent due to generaton and transmsson losses; thus, emsson resultng from electrcty consumpton s very hgh for the agrcultural sector. Approxmately 95% of emsson n agrculture comes from electrcty consumpton. In the transport sector, coal use n ralways has been gradually substtuted for electrcty, so emsson due to coal use shows a drop from 26% n 1984 to 1% n Although emsson coeffcent of electrcty s hgher than coal, emsson from power consumpton shows an ncrease of only 1% because end use effcency of electrcty s very hgh. Desel consumpton and hence emsson from t has ncreased, and t s the major contrbutor to emsson from the transport sector. Its share of emsson ncreased to 75.5% n 1989 and 86% n 1994 from 62% n In the commercal sector, the major fuels consumed have been natural gas and electrcty and the share of natural gas n total emsson has been ncreasng over tme. It ncreased by 5% between 1984 and 1989 and by 1.5% between 1989 and Share of emsson from electrcty consumpton has declned from 84% n 1984 to 76% n In the ndustral sector emsson due to coal consumpton

14 454 B. Nag, J. Parkh Energy Economcs Fg. 2. Carbon emsson ntenstes n dfferent sectors. ncreased from 38% n 1984 to 42% n Emsson from power consumpton has decreased by approxmately 4% n ths perod. 11 Results of the Dvsa decomposton on emsson ntensty due to consumpton of major prmary energy carrers and electrcty are presented n Fg. 3, whch shows the evoluton of carbon emsson ntensty, emsson coeffcent, fuel mx, energy ntensty and structural effects. Fg. 4 presents the results of the analyss wthout consderng power consumpton by the sectors. Hence t does not nclude the emsson coeffcent change effect whch results solely from the changng coeffcent of power. Fg. 3 shows that n the perod between 1984 and 1987, all the three factors of energy ntensty, emsson coeffcent and structural effect contrbuted to the rsng emsson ntensty. In the perod between 1984 and 1987, emsson ntensty ncreased by 15%, of whch approxmately 64.5% was contrbuted by the rse n emsson coeffcent. The effect of ths factor, however, declned gradually. From 1991 onwards energy ntensty effect was the most domnatng factor n the rse n emsson ntensty. Results ndcate that the contrbuton of the dfferent factors have vared consderably over the years wthout showng any clear trend. So study of sub-perods mght be msleadng dependng on the choce of end-ponts. When the above analyss s carred out wthout ncludng power consumpton by 11 We consder power bought from utltes. Some of the coal consumed by the ndustres s used for generatng power wthn ndustres.

15 B. Nag, J. Parkh Energy Economcs Ž. Fg. 3. Decomposton of emsson ntensty of fnal energy consumpton ncludng electrcty. the dfferent sectors, results show Ž Fg. 4. that emsson ntensty from drect consumpton of fossl fuels s fallng and declnng energy ntensty s the major causal factor behnd ths change emsson ntensty. Fuel mx effect and structural shft show smlar movements as n the prevous analyss ncludng electrcty, the former contrbutng to reducton n emsson ntensty whle the latter showng movement towards energy ntensve sectors. In the perod from 1984 to 1994, emsson ntensty shows a fall of 28% caused prmarly by energy ntensty effect, whch contrbutes 121% of the declne and by fuel mx effect, whch contrbutes 14% of the declne. Structural shft has an effect of approxmately 35% to an ncrease n emsson ntensty. The two analyses, wth and wthout power sector, captures mplctly the effect of fuel substtuton. The sharply declnng fuel energy ntensty n the second analyss and a rsng energy ntensty n the frst analyss, shows that n Indan economc sectors, drect fossl fuel consumpton has been substtuted by power consumpton. Ths substtuton has been dstnct for the transport sector. However, the fact that the fuel mx effect s less than 1 Ž , ndcates that the reducton n fossl fuel use and mproved effcency of end use of electrcty domnates over the rse n electrcty use.

16 456 B. Nag, J. Parkh Energy Economcs Ž. Fg. 4. Decomposton of emsson ntensty of fnal energy consumpton excludng electrcty Transformaton and con erson sector Coal s the major fuel used n thermal power generaton n Inda. However, the qualty of coal gong to thermal power generaton has been declnng n Inda as shown n Fg. 5. Energy used n power generaton, measured as ggajoules per ggawatt hour Ž GWH. of thermal power generaton shows a sharp declne when the calorfc value of coal used s taken nto account. From 1974 to 1984, the rato of prmary energy nput n GJ to fnal electrcty output n GWH declned by 12.4% and from 1984 to 1994, t further declned by 14%. We have carred out our analyss usng both constant calorfc value Ž5000 kcal kg. and varyng calorfc value of coal to study the mpact of coal qualty declne on measurement of emsson ntensty growth. Results show Ž Fgs. 6 and 7. that the mpact of coal qualty on emsson s substantal and the analyss fals to project the true pcture f ths aspect s gnored. Emsson ntensty wth constant calorfc value of coal Ž Fg. 6. follows the path of fuel ntensty whle fuel qualty effect Žresultng from qualty varatons n other fuels used n power generaton lke varous petroleum products and natural gas. and generaton mx effects have remaned almost constant. Emsson ntensty shows a declne by approxmately 5.5% n the perod of analyss. However, when changng qualty of fuels s ncluded n the analyss, the declne n emsson ntensty turns out to be much hgher, approxmately 25%. The decomposton for sub-perods are shown n Table 2a,b and the major contrbutor to fall n emsson

17 B. Nag, J. Parkh Energy Economcs Fg. 5. Calorfc value of power grade coal n Inda. ntensty n all the sub-perods n Table 2a, s the fuel qualty effect. In the overall perod of analyss, fuel qualty effect contrbuted almost 74% of the declne n emsson and the rest of the declne was contrbuted by ntensty Ž 24%. and Fg. 6. Decomposton of emsson ntensty of power generaton wth constant calorfc value of coal.

18 458 B. Nag, J. Parkh Energy Economcs Fg. 7. Decomposton of emsson ntensty of power generaton wth declnng calorfc value of coal. Ž. Ž. generaton mx effect 2%. In the analyss wthout coal qualty Table 2b, ntensty effect s the major determnant of emsson ntensty. 5. Polcy mplcatons and concluson Need for GHG abatement on the one hand and urgency for mprovement n energy effcency, especally of non-renewable fossl fuel sources on the other, and the uncompromsable objectve of development have dverted attenton of energy polcy of developng countres, more towards energy ntensty changes of economc actvty or GDP. The three dfferent levels of analyses n ths paper help us to face the questons posed at the begnnng of the paper. Study of per capta emsson from prmary energy use shows that although rsng energy ntensty was the most mportant factor n the 1970s, from the 1980s onwards, rsng per capta ncome became the major determnant of per capta emssons. The change n the trend can be attrbuted to the energy polcy of the government emphaszng self-suffcency through ncreased effcency on the demand sde and also the ncreased rate of economc growth n the 1980s. Emssons from end-use of commercal energy by the four major sectors namely ndustry, transport, agrculture and commercal sector were studed through decomposton of emsson ntensty nto fuel mx effect, energy ntensty effect, and structural shft. Dfferences n the analyses, wth and wthout ncluson of power

19 B. Nag, J. Parkh Energy Economcs Table 2 Ž. Ž. a a Dvsa ndces of emsson ntensty from power generaton wth coal qualty effect Emsson ntensty Fuel qualty effect Ž Ž Ž Ž Intensty effect Ž Ž 7.3. Ž Ž Fuel mx effect Ž Ž 8.8. Ž Ž 3.0. Ž b. Dvsa ndex decomposton of emsson ntensty from power generaton Ž wthout coal qualty effect. Emsson ntensty Fuel qualty b effect Ž 1.3. Ž Ž 4.4. Ž Intensty effect Ž Ž Ž Ž Generaton mx Ž 7.1. Ž Ž Ž a Note: Fgures n parentheses ndcate percentage contrbuton of the components to change n emsson ntensty. b Qualty effect mples the effect of changes n calorfc value of fuels used other than coal n power generaton. consumpton ndcated that there has been sgnfcant substtuton of prmary energy carrers by electrcty n energy consumpton by the sectors. Furthermore, the analyss, ncludng electrcty, showed that overall growth n emsson ntensty has been contrbuted manly by rse n energy ntensty, although structural composton of producton seemed to have been n favor of reduced emssons. Although emsson coeffcent of electrcty consumpton s much hgher than prmary fossl fuel consumpton, our analyss showed that the effect of change n energy consumpton mx,.e. substtuton of prmary fuels by electrcty has contrbuted towards reducton n emsson ntensty, the fuel mx effect beng less than unty. The hgher end-use effcency of electrcty consumpton more than compensates for the hgh emsson coeffcent of electrcty consumpton. Thus, fuel shft towards electrcty n Inda s favorable for emsson reducton. The magntude of ths effect can be further enhanced through mprovement n transmsson and dstrbutonal effcency, whch would help n reducng the emsson coeffcent of electrcty use. Study of the major transformaton sector of thermal power generaton shows that the declnng qualty of fuels used n power sector has played a major role n reducng emsson ntensty n ths sector and neglectng fuel qualty effect overestmates emssons and underestmates effcency mprovement. The fact that fuel ntensty has not vared much n spte of a declnng fuel qualty ndcates an

20 460 B. Nag, J. Parkh Energy Economcs mprovement n effcency. Ths mprovement n effcency could be due to the reason that although coal qualty declned drastcally, the reducton n prce of nferor qualty coal was much less than proportonate. Ths brought about forced effcency of coal use n power plants to avod ncreased expenses of acqurng larger quanttes of coal and also ncreased transportaton cost of coal. From the study of emsson at dfferent levels and the trend of the components, t can be expected that emssons wll contnue to be nfluenced by ncreased energy use by mddle and upper ncome groups as more and more consumer products, especally electrcal gadgets, penetrate nto the market. Gven that per capta energy consumpton s very low and only a small percentage of households own consumer durables n Inda, t s expected that demand for energy wll rse and so wll emssons. The analyss ndcates that energy consumpton and hence emsson n Inda are stll n the rsng slope of the EKC and peak mght be reached when the organc level of energy use s reached,.e. when full electrfcaton and motorzaton of the economy s complete Ž Sengupta, and the economy shfts from tradtonal to commercal fuels and from prmary energy forms to transformed energy. Effcency mprovements through technologcal and manageral solutons could help Inda to tunnel through the EKC. So far, most of the mprovement n effcency has come through autonomous technologcal mprovement and not conscous techncal shft towards newer and more effcent technologes. Inda s expected to become more and more mportant as global energy consumer and therefore autonomous technologcal change wll not be enough to attan the desred level of effcency and emsson reducton. It s mportant to recognze the features of the energy market n Inda whch affect effcency mprovements. These nclude several prce and non-prce factors lke mprovement of energy nfrastructure and removal of mperfectons n the energy market. References ADB, 1992, Energy Indcators of Developng Member Countres of ADB, Asan Development Bank, Manla. ADB, 1993, Electrcty Utlty Data Book for the Asa and Pacfc regon, Asan Development Bank, Manla. AEEMTRC, 1994, Asan Energy Revew, Asan-EC Energy Management Tranng and Research Centre, Jakarta, Indonesa. Ang, B.W., Lee, S.Y., Decomposton of ndustral energy consumpton: Some methodologcal and applcaton ssues. Energy Econ. 16 Ž. 2, Ang, B.W., Pandyan, G., Decomposton of energy nduced CO2 emsson n manufacturng. Energy Econ. 19, Arrow, K., Boln, B., Costanza, R. et al., Economc growth, carryng capacty and envronment. Scence 268, Bosseboeuf, D., Chateau, B., Lapllonne, B., Cross-country comparson of energy effcency ndcators: The on-gong European effort towards a common methodology. Energy Polcy 25 Ž 7 9., Boyd, G.A., Hanson, D.A., Sterner, T., Decomposton of changes n energy ntensty: A comparson of Dvsa ndex and other methods. Energy Econ. 10 Ž. 4,

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