Crucial Issues for an Effective Climate Policy in India P.R. Shukla Indian Institute of Management Ahmedabad, India Subash Dhar UNEP Risoe Centre Roskilde, Denmark Presented at International Workshop on, Reconciling Domestic Energy Needs and Global Climate Policy: Challenges and Opportunities for China and India. Palazzo Querini Stampalia,Venice, Italy, March 15, 21
Agenda 1. Drivers 2. Vision & Scenarios 3. Modeling & Base Case Projections 4. Stabilization Challenge 5. Crucial Issues 6. Conclusions
Demographic Drivers Population (Million) Year: 2 Pop: 121 Million 16 12 1183 1449 1.2% 1593.47% Male Female 8 4 358 555 2.22% 849 1.67% 2.15% Growth Rate Age Age 15-6 years 18-62 Yrs Male Female 1 8 6 4 2 195 197 199 21 23 25 Labor Force (Million) 36 915 795.7% 595 1.46% 2.54% Growth Rate 21 2.74% 133 2.3% 195 197 199 21 23 25 Age 15-6 years Age 8 6 4 2 2 2 4 4 6 6 8 8 Population (million) 18-62 Yrs Population (Million) Year: 25 Pop: 1593 Million Male Female Male Female 8 6 4 2 2 4 6 8 Population (Million) 8 6 4 2 2 4 6 8 Population (million)
Human Capital R&D Drivers of Economic Growth High Labor Supply Increasing Education Migration (intra & inter county) Increasing Government/ Private Expenditure International Knowledge Flows R&D Collaborations Technology Infrastructures Learning, transfers, deployment Behavioral Changes High Savings Rate Changing Lifestyles Governance Institutions Laws Policies 4 35 3 25 2 15 1 5 Savings Rate?? 37 35. 33. 32 24.6 22.8 2.6 198 199 2 21 22 23
Base Scenario GDP Base Year 25=1 25 2 15 1 Annual Growth Rate 25-5: 7.3% Annual Growth Rate 25-32: 8% GDP US $/person 12 1 8 6 4 Per Capita Income 5 2 25 22 235 25 Base Case Assumptions: Summary 1. GDP Ann. Growth Rate: 7.2% from 25-5 25 Economy: 24 times larger than 25 2. Population 2: 121 Million 25: 1593 Million 2 21 22 23 24 25 3. 65 ppmv CO2e Concentration Stabilization (or 55 CO2) 4. Radiative Forcing: 4.7 W/m2
Visions & Scenarios
Conventional Climate Centric Paradigm Aim Drivers Interventions Target Allocation of Rights Carbon Market Universal Participation Market Structure/ Rules Global Greenhouse Gas Concentration Stabilization Technologies Remove Market Barriers Cooperative R&D Tech Transfer Stabilization at Minimum GDP Loss Competition/ Trade Energy Resources Energy-Mix Mandates Modify Preferences Forecasting
Sustainable Development&Climate Paradigm Aim Drivers Interventions Targets Innovations Technological Social/Institutional Management National Socio-economic Objectives and Targets Low Carbon Society Co-benefits Sustainability Aligning Markets Win/Win Options Shared Costs/Risks Long-term Vision Avoid Lock-ins Global Climate Change Objectives and Targets Modify Preferences Back-casting
Sustainable Development & Climate Paradigm Scenarios Stabilization Scenarios with Global Targets Baseline Paradigm Conventional Δt 4 to 6 O C Sustainability Δt 3 to 5 O C Stabilization Targets 6. 5. 4.5 2.6 Radiative Forcing 6. 5. 4.5 2.6 Target W/m2 Δt3 O C Δt2 O C Geography Level Global Regional National Local Global Regional National Local
Modeling & Base Case Scenario
Integrated Modeling Framework Integrated Modelling Framework DATABASES Socio-Economic, - Technologies, Energy Energy Resources, Resources, Environmental Constrai nts AIM AIM CGE/GCAM Model End Use Demand Model ANSWER-MARKAL Model AIM SNAPSHOT AIM ExSS Model AIM Strategic AIM (SDB) Database (Strategic (SDB) Database)
National Analysis: MARKAL & End Use Models Base Scenario: Growth of Economy and Population From 25-25: Annual Economic Growth: 7.2% Annual Population Growth:.9% Absolute Growth in 25 over 25 Economy 23 times Population 1.56 times Mtoe 3,5 3, 2,5 2, 1,5 1, Other Renewables Nuclear Hydro Gas Oil Coal Commercial Biomass Non Com Biomass Energy Million Ton CO2 8, 7, 6, 5, 4, 3, 2, Carbon Emissions 5 1, 25 21 215 22 225 23 235 24 245 25 2 25 21 215 22 225 23 235 24 245 25
2 O C Stabilization Challenge
Global & National Analysis: GCAM & AIM/CGE 6 5 4 Base Case Scenario: INDIA Unconventional oil Renewable Nuclear INDIA: Carbon Emissions Mtoe 3 2 Coal 1 Gas Oil 25 22 235 25 265 28 295 Electricity Production (in EJ) and CCS Share (in %) Scenario 25 235 265 295 8 7 GDP Loss for India 45 ppmv (2 deg C) Total Electricity Production (in EJ) Coal w/ccs BAU 45 ppmv 55 ppmv 45 ppmv 2.55 2.55 2.55. 12.43 1.78 BaU 1.51 29.71 43.14 43.86 39.58 36.2 65.43 67.35 61.91 33.38 % 6 5 4 55 ppmv (3 deg C) (% share) Gas w/ccs (% share) Biomass w/ccs 55 ppmv 45 ppmv 55 ppmv 45 ppmv.... 6.2 5.38 1.63 5.72 21.31 5.6 2.75 1.67 29.8 4.3 2.85 11.83 3 2 1 % share) 55 ppmv..71 3.19 5.54 25 22 235 25 265 28 295
Mitigation Options: Conventional 8, Million Ton CO2 6, 4, Fossil Switch Baseline Emissions Other CCS Device Efficiency Nuclear 2, Emissions (for 2 O Target) Renewable 2 21 22 23 24 25 Carbon Price ($) 2 52 87 136 2 Technology Co-operation Areas Energy Efficiency Wind/Solar/Biomass/Small Hydro Nuclear/CCS Conventional Approach: transition with conventional path and carbon price High Carbon Price Climate Focused Technology Push Top-down/Supply-side actions
Mitigation Options: Sustainability 8, Million Ton CO2 6, 4, Fossil Switch CCS Transport Reduced Consumption Recycling Material Substitutions Device Efficiency Renewable Energy 2, Emissions (for 2 O Target) Building 2 21 22 23 24 25 Carbon Price ($) 15 28 55 1 117 Technology Co-operation Areas Transport Infrastructure Technologies 3R, Material Substitutes, Renewable Energy Process Technologies Urban Planning, Behavioral Changes Sustainability Approach: aligning climate and sustainable development actions Low Carbon Price Bottom-up/Demand-side actions Behavioural change Diverse Technology portfolio
Co-benefits of Energy Choices Co-benefits of South-Asia Integrated Energy-Water Market Benefit (Saving) Cumulative from 21 to 23 $ Billion % GDP Energy 6 Exa Joule 321.87 CO 2 Equiv. 5.1 Billion Ton 28.8 SO 2 5 Million Ton 1.3 Total 359.98 Bahrain Qatar!. Iran United Arab Emirates!. Uzbekistan Tajikistan Turkmenistan!. Herat!. Afghanistan Chotila Ѻ Ѻ Oman Legend Important Places Existing Gas Pipelines Ѻ Gas Pipelines under construction Proposed Gas Pipelines Existing LNG terminals Proposed LNG terminals Existing Gas Basin Saudi Arabia Yemen Somalia South-Pars Bandar-e-Abbas Iranshahar!. Delaram Proposed Gas Basin!.!. Kandhar!.!. Khuzdar Quetta Karachi Pakistan!. Nangal Ludhiana BathindaSangrur Ambala Multan Panvel Pune Maldives Sonipat Delhi Faridabad Mahesana Kalol Ujjain Jhabua NadiadAnand Rajkot Bharuch Olpad Surat Valsad Dadra ChiptunGuhagar Ratnagiri F Gadag Kochi Bareilly Nepal Shahjahanpur Auraiya Kanpur Gwalior Jagdishpuri Jhansi Kota Vijaypur Guna Solapur India Nellore F Palmaner Hassan Chennai Mangalore Chittoor Bangalore Coimbatore Tiruchchirappalli Kayankulam Tutikorin Sri Lanka Kokinada Vijaywada Patna Gaya Vishakhapattnam China Bhutan Dispur Bangladesh Kolkata Myanmar (Burma) Laos Thailand Indonesia Malaysia Spill-over Benefits / Co-Benefits More Water for Food Production (MDG1) 16 GW additional Hydropower (MDG1&7) Flood control (MDG1&7) Lower energy prices would enhance competitiveness of regional industries (MDG1)
Implications for Primary Energy Mix Energy Mix in 25 Primary Energy Demand (Mtoe) 1,6 1,2 8 4 Base LCS_CT LCS_SS Total Energy Demand (Mtoe) Base 2825 LCS_CT 2945 LCS_SS 227 Coal Oil Gas Nuclear Hydro Renewable
Additional Renewable Energy (in Sustainability Scenario over Base Case) Increase over Base Case (Mtoe) 7 6 5 4 3 2 1 Hydro Solar Wind Bio-energy 22 23 24 25
Primary Energy & Carbon Price 25 Carbon Price 2 Price (US $/tco2) 15 1 5 2 O C Conventional Mitigation Scenario 2 O C Sustainability Scenario Base Scenario 21 22 23 24 25
Crucial Issues
National Climate Change Action Plan 8 National Missions: 1. Solar Energy (1 MW PV/yr; 1 MW Thermal by 217) 2. Enhanced energy efficiency (1 MW saving by 212) 3. Sustainable habitat 4. Water Sector (2% water use efficiency improvement) 5. Sustaining the Himalayan eco-system 6. A Green India (6 Mil. Hectare afforestation; Forest cover from 23 to 33%) 7. Sustainable agriculture 8. Strategic knowledge for climate change
Infrastructures to Overcome Lock-ins - 1 Coal by Wire Gas Demand for Power Generation 21-23 9 7 Base CR CBW Bcm 5 3 1 21 215 22 225 23
Infrastructures to Overcome Lock-ins - 2 Train Corridors Rajasthan Haryana Haryana Dadri Uttar Pradesh Sustainable modal shift Efficient logistics Infrastructures investments Associated development Gujarat Madhya Pradesh Technologies for Train Corridors J.N.Port Maharashtra
Sustainable Low Carbon Cities Ahmedabad (29) Pop 5.5 Mil AMC (New boundary AMC ) (Old boundary ) GHG Emissions/reductions (mt- C2) 7 6 5 4 3 2 1 1.2 61.1 67% 3.7 4.3 2.4 15.4 2.4 25 235 BaU 235 LCS 6.3 8.6 Mitigation Contributions Transport Efficiency Industry Efficiency Building Efficiency Fuel Switch Energy Service demand Coal + CCS Emissions 7 Mt CO2 6 5 4 3 2 1 25 235 BaU 235 LCS Sectoral CO2 Emissions ( mt CO2) Freight Transport Passenger Transport Industry Commercial Residential Value in 25 = 1 16. 14. 12. 1. 8. 6. 4. 2.. 25 235 BAU 235 LCS Passenger Transport Demand Energy Demand GHG Emissions
Demateralization 7 Demand (Million Ton) 4 Conventional Development 3 2 Sustainable 1 2 2 Society 21 21 4 22 22 23 23 24 24 Conventional Development 15 1 Sustainable 5 2 Society 21 22 23 Conventional Development 4 Sustainable Society 2 21 22 3 3 2 6 2 25 25 Paper 35 25 Cement 8 5 Demand (Trillion Lumen hrs) Demand (Million (Million Ton) Ton) Demand 6 Demand (Million Ton) 1 Steel Steel 24 25 23 24 25 Lighting 2 Conventional Development Sustainable 1 Society 2 21 22 23 24 25
Technologies Energy: Efficiency, Renewable, Nuclear Industrial Process: Cement, Steel, Paper Infrastructure: Transport, Pipelines, Electricity T&D, Hydro (+Canals) Soft Solutions: Communication Conservation/Behavioral: 3R, Material Substitutes Planning: Urban design, Industry locations End-of-pipe Solutions: CCS
Conclusions
Developing Country Scenarios US Secretary of State Hillary Clinton As told to CNN's Fareed Zakaria in an interview http://business.rediff.com/report/29/aug/11/do-not-follow-us-growthmodel-clinton-tells-india.htm http://edition.cnn.com/cnn/programs/fareed.zakaria.gps/ "Although India and China have every right to choose their own path of development, they should not follow the American model in their Endeavour to improve the condition of their citizens,. "Our argument to China and India is: Yes, you have a right to develop and we want you to develop, and in fact, we admire your commitment to eradicating poverty and we want to help you do that. But you can't do it the way we did it, because you will suffer consequences that will undermine your development"
Co-benefits & Technology Choices Technologies delivers multiple dividends In developing countries, significant opportunities exist for gaining co-benefits Technology Assessment should consider all costs and benefits For developing countries, the good news is that their environment and natural resources policies are often so bad that there are reforms which would be both good for the economy and good for the environment. Joseph Stiglitz
Conclusions Integration of Visions, Multiple Objectives and Targets Policies to align markets and deliver Co-benefits Incentives to induce Behavioral Changes Infrastructures to overcome long-term lock-ins Global Technology Cooperation Architecture Developing National Technology Industry Keeping along Long-term Development Vision
Thank You