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Climate policies in a second-best world--A case study on India

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  • Mathy, Sandrine
  • Guivarch, Céline

Abstract

The aim of this article is to analyze the potential for synergies between climate policies and development in a case study on India focusing on the power sector sub-optimalities. To do so, we use Imaclim-R, a dynamic recursive energy-economy model that represents a second best world with market imperfections and short-run adjustments constraints along a long-term growth path. The analysis suggests (i) global carbon pricing induces prohibitive macroeconomic costs for the Indian economy, even in the case of significant financial transfers associated with a global cap-and-trade system and a 'Contraction and Convergence in 2100' allocation scheme and (ii) the most cost efficient climate policies are not uniform carbon pricing only. The implementation of domestic policies suited to the national context, for instance targeting sub-optimalities in the power sector for India, allows reducing significantly the macroeconomic costs induced by international mitigation policies.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 3 (March)
Pages: 1519-1528

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Handle: RePEc:eee:enepol:v:38:y:2010:i:3:p:1519-1528

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: India Second-best world Synergies between climate mitigation and development;

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  1. Filippini, Massimo & Pachauri, Shonali, 2004. "Elasticities of electricity demand in urban Indian households," Energy Policy, Elsevier, vol. 32(3), pages 429-436, February.
  2. Joaquim Oliveira Martins & Frédéric Gonand & Pablo Antolín & Christine de la Maisonneuve & Kwang-Yeol Yoo, 2005. "The Impact of Ageing on Demand, Factor Markets and Growth," OECD Economics Department Working Papers 420, OECD Publishing.
  3. Carol Corrado & Joe Mattey, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-167, Winter.
  4. Jean-Charles Hourcade & Olivier Sassi & Renaud Crassous & Vincent Gitz & Henri Waisman & Céline Guivarch, 2010. "IMACLIM-R: a modelling framework to simulate sustainable development pathways," Post-Print hal-00566290, HAL.
  5. Sandrine Mathy & Céline Guivarch, 2009. "What if energy decoupling of emerging economies were not so spontaneous? An illustrative example on India," Post-Print halshs-00366274, HAL.
  6. Urban, F. & Benders, R.M.J. & Moll, H.C., 2007. "Modelling energy systems for developing countries," Energy Policy, Elsevier, vol. 35(6), pages 3473-3482, June.
  7. Shukla, P. R., 1995. "Greenhouse gas models and abatement costs for developing nations : A critical assessment," Energy Policy, Elsevier, vol. 23(8), pages 677-687, August.
  8. van Ruijven, Bas & Urban, Frauke & Benders, René M.J. & Moll, Henri C. & van der Sluijs, Jeroen P. & de Vries, Bert & van Vuuren, Detlef P., 2008. "Modeling Energy and Development: An Evaluation of Models and Concepts," World Development, Elsevier, vol. 36(12), pages 2801-2821, December.
  9. A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer, vol. 6(3), pages 421-443, August.
  10. Thakur, Tripta & Deshmukh, S.G. & Kaushik, S.C., 2006. "Efficiency evaluation of the state owned electric utilities in India," Energy Policy, Elsevier, vol. 34(17), pages 2788-2804, November.
  11. Céline Guivarch & Stéphane Hallegatte & Renaud Crassous, 2009. "The Resilience of the Indian Economy to Rising Oil Prices as a Validation Test for a Global Energy-Environment-Economy CGE Model," Post-Print hal-00566971, HAL.
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Cited by:
  1. Meriem Hamdi-Cherif & Céline Guivarch & Philippe Quirion, 2011. "Sectoral Targets for Developing Countries: Combining "Common but differentiated Responsibilities with meaningful Participation"," Post-Print halshs-00692486, HAL.
  2. Rao, Narasimha D., 2013. "Distributional impacts of climate change mitigation in Indian electricity: The influence of governance," Energy Policy, Elsevier, vol. 61(C), pages 1344-1356.
  3. Emanuele Massetti, 2011. "Carbon tax scenarios for China and India: exploring politically feasible mitigation goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 11(3), pages 209-227, September.
  4. Céline Guivarch & Sandrine Mathy, 2012. "Energy-GDP decoupling in a second best world—a case study on India," Climatic Change, Springer, vol. 113(2), pages 339-356, July.
  5. Neil Strachan & Will Usher, 2012. "Failure to achieve stringent carbon reduction targets in a second-best policy world," Climatic Change, Springer, vol. 113(2), pages 121-139, July.
  6. Vaibhav Chaturvedi & Priyadarshi Shukla, 2014. "Role of energy efficiency in climate change mitigation policy for India: assessment of co-benefits and opportunities within an integrated assessment modeling framework," Climatic Change, Springer, vol. 123(3), pages 597-609, April.
  7. repec:hal:wpaper:hal-00866437 is not listed on IDEAS

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