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Costs of Reducing Greenhouse Gas Emissions: A Case Study of India’s Power Generation Sector

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  • Manish Gupta

    (National Institute of Public Finance and Policy)

Abstract

If India were to participate in any international effort towards mitigating CO2 emissions, the power sector which is one of the largest emitters of CO2 in the country would be required to play a major role. In this context the study estimates the marginal abatement costs, which correspond to the costs incurred by the power plants to reduce one unit of CO2 from the current level. The study uses an output distance function approach and its duality with the revenue function to derive these costs for a sample of thermal plants in India. Two sets of exercises have been undertaken. The average shadow prices of CO2 for the sample of thermal plants for the period 1991-92 to 1999-2000 was estimated to be respectively Rs.3380.59 and Rs.2401.99 per ton for the two models. These shadow prices can be used for designing environmental policies and market-based instruments for controlling pollution in the power sector in India.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.147.

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Date of creation: Nov 2006
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Handle: RePEc:fem:femwpa:2006.147

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Keywords: Marginal Abatement Costs; Distance Function; CO2 Emissions; Shadow Prices; Power Generation Sector;

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  1. Gollop, Frank M & Roberts, Mark J, 1985. "Cost-minimizing Regulation of Sulfur Emissions: Regional Gains in Electric Power," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 81-90, February.
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Cited by:
  1. Matsushita, Kyohei & Yamane, Fumihiro, 2012. "Pollution from the electric power sector in Japan and efficient pollution reduction," Energy Economics, Elsevier, vol. 34(4), pages 1124-1130.
  2. Breen, James P. & Donellan, Trevor, 2009. "Estimating the Marginal Costs of Greenhouse Gas Emissions Abatement using Irish Farm-Level Data," 83rd Annual Conference, March 30-April 1, 2009, Dublin, Ireland 50938, Agricultural Economics Society.
  3. Kyohei Matsushita & Kota Asano, 2014. "Reducing CO 2 emissions of Japanese thermal power companies: a directional output distance function approach," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(1), pages 1-19, January.

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