Académique Documents
Professionnel Documents
Culture Documents
Under guidance of
Prof. Trupti Mishra
Prof. Rangan Banerjee
• Introduction
• Energy security and climate change mitigation in Indian context
Contents • Electricity Sector scenario in India
• Command and Control vs Market Based Instruments
• Need for Low carbon scenarios
• Literature review
• Climate policy scenario in India and rest of the world
• Review of past modeling studies
• Review of energy models
• Research gap & research questions
• Rationale for choice of TIMES
• Assessment of policy instruments
• Assessment Methodology
• Modeling Baseline
• Identification of policy options
• Poor in global standards with a very low per capita GDP of 1630 USD (current USD)(WDI, 2014).
• Economic development, energy access and energy security on agendas of policy makers.
“India faces an enormous challenge if it is to meet her energy requirement over the coming 25 years
and support a growth rate of 8 percent. This challenge can be met with a coherent approach, which
develops all available energy resources.” Integrated Energy Policy, (2006)
Extended Kaya identity Total electricity production in India by fuel type (TJ) (IEA, 2015)
2000
1500
500
0
1991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
-500
-1000
Year
expanded rapidly 0
1995
2006
1990
1991
1992
1993
1994
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2007
2008
2009
2010
2011
2012
• Electricity sector is also the largest contributor Year
of GHG emissions in India amounting to about
coal oil gas biofuels waste
38% of total gross emissions as of 2007 (INCCA, nuclear hydro geothermal solar PV solar thermal
200000
1993
1990
1991
1992
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Total carbon emissions from electricity sector (kt) (Author calculated using IPCC methodology from IEA
Introduction Literature Review data) Assessment of Policy Instruments
Command and Market based
control mechanisms
Static efficiency
Dynamic efficiency
Reduced compliance costs.
Requires a force of law for
implementation Flexible in accommodating
changes in economy and
Dependability emissions abatement
Strengths Consistency and Predictability technologies.
Accountability Lesser information requirements
and hence decision making can
be decentralized.
Revenue surplus instrument
• Fischer et al., (1997) used the Indian module of second generation model (SGM) and found that
tradable permits represent a lower cost method to stabilize Indian emissions than carbon taxes.
• Gambhir et al., (2014) found the potential benefits for India by engaging in international carbon permit
trading and found that India can earn significant revenues through selling international carbon credits
by offsetting some of the costs of decarbonization.
Need for Low carbon scenarios
• The search for optimal developmental pathways, infrastructure and energy futures are yet
to be shaped in developing countries.
• Green energy modelling and low carbon scenarios can serve as powerful tools to avoid
locking into carbon intensive pathways.
• Assess impacts of different developments under certain outcomes which are critical in
framing policy recommendation.
• Scenarios can be critical to decision-makers in providing scientific evidences on energy and
climate.
• Can provide helpful inputs regarding environmental and cost effectiveness of different
policy instruments in a scientific and systematic manner.
Coverage of GHG emissions by emissions trading schemes (IETA, 2013) (blue process, rules for use of credits, coverage of sources, emissions
line shows total emissions, green line shows percentage of emissions covered) caps)
India's CO2 emission pathways to 2050: What role Gabriel Anandrajah, Ajay Gambhir
1
can renewables play? 2014
scenarios
Ajay Gambhir, Tamaryn A. Napp,
India’s CO2 emissions pathways to 2050: with and
2 Christopher J.M. Emmott, Gabrial
• Modeling rationale without carbon trading
Anandarajah 2014
• Model types 3
Low carbon and clean energy scenarios for India:
P R Shukla, Vaibhav Chaturvedi 2012
Analysis of targets approach
• Baselines P R Shukla, Subhash Dhar,
4 Low carbon society scenarios for India
Diptiranjan Mahapatra 2011
• Policy considerations and mitigation
India's energy transition- Pathways for a low
5 B S Reddy 2014 IGIDR WP
carbon economy
drivers
Projecting India's Energy requirements for policy Kirit S Parikh, Vivek Karandikar,
6
formulation Ashish Rana, Prasana Dani 2009
7 India's energy needs and low carbon options Jyoti Parikh, Kirit Parikh 2011
• Model projections also indicate increase in GDP and energy efficiency gains over the
modeling period (which vary from 2030-2100).
• Different studies use different metrics for setting up the targets in terms of ppmv of
CO2 concentration, overall carbon budgets (GT CO2), or energy targets.
• Most of the studies have relied on a baseline scenario with no explicit carbon price,
which is mostly coal dominated.
5 B S Reddy 2014 IGIDR WP Implementation of low carbon technologies, low carbon activities in
manufacturing and services
Kirit S Parikh, Vivek Karandikar,
6
Ashish Rana, Prasana Dani 2009 only targets considered
7 Emanuele Massetti 2011 carbon price drives uptake of low carbon technologies and increase in energy
efficiency
Economic growth, demographic profile, technological change, energy
8 P R Shukla 2006 resource endowments, geographic integration of markets, institutions and
policies
Introduction Literature review Assessment of Policy Instruments
Other Studies
• Mathur et al., (2003) studied the impact of introducing carbon taxes in power sector using MARKAL for four
different trajectories.
(The study found that there exists a potential of 25% reduction in greenhouse gas emissions in comparison to BAU
scenario for a time period 2000-2025.)
• Chaturvedi and Shukla (2013) analyzed the role of end use efficiency improvements as a part of climate change
mitigation policy and co benefits associated with it using GCAM model with six scenarios (with and without energy
efficiency at BAU, 450ppm and 550ppm stabilization)
(The study found that final energy and emissions get significantly reduced with energy efficiency improvements
especially in buildings and transportation sector but climate policy is still necessary for achieving mitigation targets.)
• Shukla et al., (2010) used a soft linked integrated modeling approach (AIM CGE, ANSWER MARKAL, Land Use
model, AIM strategic Database and end use demand model) to model a conventional and sustainable development
pattern leading to a 450ppmv CO2-eq trajectory.
(The study found a low carbon future would be good for renewable energy with a higher share in sustainable
development pathway. The study also concluded that with a competition from other low carbon technologies like
nuclear and CCS, deployment of renewables depends critically on the reduction in costs. )
• Underlying methodology
• Timeframe
• Mathematical approach
• Geographical coverage
• Sectoral Coverage
• Time Horizon
• Dynamic recursive models (optimize only for subsets of planning period and decisions in
earlier periods become inputs for later periods)
• Mixed integer programming allows for greater detail in formulating problems and relations in
energy system by incorporating decision variables into integer values like (0, 1, 2, 3) or (yes/no).
• Dynamic programming models work by dividing original problem into smaller subproblems whose
solutions are calculated.
Macro-economic models
• frame entire economy and sectoral interactions by
Econometric Models taking energy demand analysis from a Neo-
• Apply statistical techniques to Keynesian perspective (output is demand
extrapolate past trends and predict determined).
future. • Input output tables are used for determining
• Do not possess technological detail. transactions and energy economy interactions.
• Can be only used by experienced • These models have a limitation that they can only be
econometricians and have high data used if the returns to scale remain constant and
requirements. Munasinghe (1988) and aggregation is perfect.
APDC (1985) • Do not represent specific technologies and require
high expertise.
• Time Horizon- short (5 years or less), medium (between 3-15 years), long term (10 or more)
Grubb et al., (1993)
Model Structure
• The degree of endogenization.
• The extent of the description of the non-energy sector components of the economy.
• The extent of the description of energy end-uses.
• The extent of the description of energy supply technologies.
• Although all the above studies analyze the cost effectiveness of carbon tax for renewables,
potential environmental effectiveness of carbon tax & co-benefits of mitigation, none of them
focuses specifically on current policy regimes under implementation.
• Limited studies on trading mechanisms.
• Limited studies focused on mitigation at sectoral level in Indian context.
• This study targets this research gap and analyzes the implications of implementing a market based
policy regime against command and control policy options in electricity sector which has the
largest share in total emissions.
General Objective
The objective of this study is to generate technologically detailed low carbon policy scenarios for
Indian electricity sector using an energy model while specifically assessing role of market based
instruments.
2. What can be the potential role of market based instruments as a part of India’s electricity sector decarbonization
policy?
3. How would India's energy mix change in low carbon policy regimes? What challenges does it imply?
4. What can be the suitable design elements for market based policy?
2. What can be the potential role of market based instruments as a part of India’s electricity sector decarbonization
policy?
Specific Objectives
a. To create a carbon tax scenario with stabilization targets.
b. To create a market based policy scenario with stabilization targets.
3. How would India's energy mix change in low carbon policy regimes? What challenges does it imply?
Specific Objectives
a. To analyze the changes in energy mix, technology options and assess the investment needs for low carbon
scenarios.
4. What can be the suitable design elements for market based policy?
Specific Objectives
a. To establish the optimal choice of design elements for market based trading/crediting system.
• Top down models lack technological detail which can be addressed with bottom up models like TIMES.
• Use of a bottom up model like TIMES provides an adequate representation of technology options in terms
of costs, availability etc.
• TIMES is dyamic in nature and optimizes over the entire timeframe while also considering retirement of
technologies in accordance with their lifetimes and investment in new ones for entire modeling period.
• TIMES can create user defined constraints and optimize scenarios within them which can be created for
reflecting emission bounds or limitations on resources.
• Partial equilibrium models do not consider all the impacts on economy but macroeconomic performance is
not within the focus of this study.
Components
• System wide parameters (discount rate and temporal disaggregation)
• Energy service demands (specific energy end use services which cater to individuals and companies.
Eg. Lighting, cooling etc.)
• Energy carriers (various forms of energy produced and consumed in the system which include fossil
fuels, electricity, heat, synthetic fuels and renewable energy)
• Technology parameters (technology costs, input and output commodities, technical efficiencies,
start year of new technology, availability factors and current existing installed capacity, user limits,
technology specific discount rates)
• Environmental component
Where ANNCOST(t) is the annual cost for period t, d is the general discount rate, p is the number of periods
in the planning horizon and y is the number of years in each period t.
Modeling Baseline
• Demographic trends
• electricity sector trends (energy efficiency improvements, penetration of low carbon technologies as
well as current government policy trends)
• timeframe taken from 2015 to 2050.
Mitigation policy options for low carbon scenarios
Market Based Instruments
Command and Control
Taxes/Subsidies Trading
coal cess
Renewable Purchase Obligation
REC Markets
JNNSM targets
Emission standards RE Tariffs
Generation Based Incentives
Emissions Trading
Accelerated Depreciation
Scheme
Tax exemption
Introduction Literature Review Assessment of Policy Instruments
Way Ahead
Deliverables
a. Sectoral energy demand projections
b. Reference energy system
c. Baseline scenario with existing policies
d. Carbon tax scenario with stabilization targets
e. Market based policy scenario with stabilization targets.
d. Diagnosis of low carbon scenarios.
e. Optimal design elements.
Timeline
Sept Oct Nov Dec Jan Feb March April May June July Aug
Literature review and data
collection
Ang, B. (2005). The LMDI approach to decomposition analysis: a practical guide. Energy Policy, 33(7), pp.867-871.
Ang, B. and Liu, F. (2001). A new energy decomposition method: perfect in decomposition and consistent in aggregation. Energy, 26(6), pp.537-548.
Ang, B., Liu, F. and Chew, E. (2003). Perfect decomposition techniques in energy and environmental analysis. Energy Policy, 31(14), pp.1561-1566.
APDC, (1985). Integrated Energy Planing: A Manual. Vol. 1: Energy Data, Energy Demand. Kuala Lumpur: Asian and Pacific Development Centre.
Baldwin, R., Cave, M. and Lodge, M. (2012). Understanding regulation. New York: Oxford University Press.
Baumol, W. and Oates, W. (1975). The theory of environmental policy. Englewood Cliffs, N.J.: Prentice-Hall.
Bohringer, C. and Rutherford, T. (n.d.). Combining Top-Down and Bottom-Up in Energy Policy Analysis: A Decomposition Approach. SSRN Electronic Journal.
Edenhofer, O., Jakob, M., Creutzig, F., Flachsland, C., Fuss, S., Kowarsch, M., Lessmann, K., Mattauch, L., Siegmeier, J. and Steckel, J. (2015). Closing the emission price gap. Global
Environmental Change, 31, pp.132-143.
Fisher-Vanden, K., Shukla, P., Edmonds, J., Kim, S. and Pitcher, H. (1997). Carbon taxes and India. Energy Economics, 19(3), pp.289-325.
Gambhir, A., Napp, T., Emmott, C. and Anandarajah, G. (2014). India's CO2 emissions
pathways to 2050: Energy system, economic and fossil fuel impacts with and without carbon permit trading. Energy, 77, pp.791-801.
Grubb, M., Edmonds, J., ten Brink, P. and Morrison, M. (1993). The Costs of Limiting Fossil-Fuel CO2 Emissions: A Survey and Analysis. Annual Review of Energy and the
Environment, 18(1), pp.397-478.
Harrington, W. and Morgenstern, R. (2007). Economic Incentives Versus Command and Control: What is the Best Approach for Solving Environmental Problems?. Acid in the
Environment, pp.233-240.
Hourcade, J. and Robinson, J. (1996). Mitigating factors. Energy Policy, 24(10-11), pp.863-873.
Hourcade, J., Halsnaes, K., Jaccard, M., Montgomery, W., Richels, R., Robinson, J., Shukla, P. and Sturm, P. (1995). A Review of Mitigation Cost Studies. Climate Change 1995:
Contribution of Working Group III to the Second Assessment of the Intergovernmental Panel on Climate Change. Cambridge University Press.
Hourcade, J., Jaccard, M., Bataille, C. and Ghersi, F. (2006). Hybrid Modeling: New Answers to Old Challenges Introduction to the Special Issue of The Energy Journal. EJ, SI2006(01).
IEA, (2012). Making Markets: Unpacking Design and Governance of Carbon Markets.
IEA, (2015). IEA website. [online] Available at: http://www.iea.org/statistics/statisticssearch/report/?country=India&product=indicators&year=2012 [Accessed 23 Aug. 2015].
IETA, (2013). The World’s Carbon Markets: A Case Study Guide to Emissions Trading. [online] Available at:
http://www.ieta.org/assets/Reports/EmissionsTradingAroundTheWorld/edf_ieta_india_case_study_may_2013.pdf [Accessed 24 Aug. 2015].
IIASA, (1995). Model-Based Decision Support in Energy Planning. Working Paper WP-95-119. Laxenburg, Austria: IIASA.
INCCA, (2007). India: Greenhouse Gas Emissions 2007. [online] MOEF. Available at: http://www.moef.nic.in/downloads/public-information/Report_INCCA.pdf [Accessed 24 Aug.
2015].
Jebaraj, S. and Iniyan, S. (2006). A review of energy models. Renewable and Sustainable Energy Reviews, 10(4), pp.281-311.
Kaya, Y. (1990). Impact of carbon di oxide emission control on GNP growth: interpretation of proposed scenarios. Paper presented to the IPCC Energy and Industry subgroup,
Responses strategies working group.
Keppo, I. and Strubegger, M. (2010). Short term decisions for long term problems – The effect of foresight on model based energy systems analysis. Energy, 35(5), pp.2033-2042.
Kleinpeter, M. (1996). Energy planning and policy. Fuel and Energy Abstracts, 37(3), p.235.
Kumar, R. and Agarwala, A. (2013). Renewable Energy Certificate and Perform, Achieve, Trade mechanisms to enhance the energy security for India. Energy Policy, 55, pp.669-676.
Loschel, A. (2002). Technological change in economic models of environmental policy: a survey. Ecological Economics, 43(2-3), pp.105-126.
Loulou, R. (2007). ETSAP-TIAM: the TIMES integrated assessment model. part II: mathematical formulation. CMS, 5(1-2), pp.41-66.
Loulou, R. and Labriet, M. (2007). ETSAP-TIAM: the TIMES integrated assessment model Part I: Model structure. CMS, 5(1-2), pp.7-40.
Massetti, E. (2011). A Tale of Two Countries: Emission Scenarios for China and India. Sustainable Development series.
Mathur, J., Bansal, N. and Wagner, H. (2003). Investigation of greenhouse gas reduction potential and change in technological selection in Indian power sector. Energy Policy, 31(12),
pp.1235-1244.
Menon-Choudhary, D., Shukla, P. and Garg, A. (2005). Assessing Policy Choices For Managing SO2 Emissions From Indian Power Sector.
MOEF, (2009). India’s GHG Emissions Profile: Results of Five Climate Modelling Studies.
Montgomery, W. (1972). Markets in licenses and efficient pollution control programs. Journal of Economic Theory, 5(3), pp.395-418.
Munasinghe, M. (1988). Integrated National Energy Planning and Management: Methodology and Application to Sri Lanka. World Bank Technical Paper 86. Washington D.C.:
World Bank.
Newell, R., Pizer, W. and Raimi, D. (2012). Carbon markets. Cambridge, Mass.: National Bureau of Economic Research.
OECD, (1989). Economic Instruments for Environmental Protection. Organization for Economic Cooperation and Development, Paris.
OECD, (1994). Applying Economic Instruments to Environmental Policies in OECD and Dynamic Non-Member Countries. Organization for Economic Cooperation and
Development, Paris.
OECD, (1997). Evaluating Economic Instruments for Environmental Policy.. Organization for Economic Cooperation and Development, Paris.
Parikh, J. and Parikh, K. (2011). India’s energy needs and low carbon options. Energy, 36(6), pp.3650-3658.
Parikh, K. (2012). Sustainable development and low carbon growth strategy for India. Energy, 40(1), pp.31-38.
Planning Commission, (2006). Integrated Energy Policy. [online] Available at: http://planningcommission.nic.in/reports/genrep/rep_intengy.pdf [Accessed 23 Aug. 2015].
Portney, P. and Stavins, R. (1998). Market-based environmental policies. [Cambridge, Mass.]: Belfer Center for Science and International Affairs, John F. Kennedy School of
Government, Harvard University.
Reddy, B. (2014). India's Energy Transition Pathways For a Low Carbon Economy. IGIDR WP/2014-025. [online] Available at: http://www.igidr.ac.in/pdf/publication/WP-2014-
025.pdf [Accessed 24 Aug. 2015].
Remme, U., Trudeau, N., Graczyk, D. and Taylor, P. (2011). Technology Development Prospects for the Indian Power Sector. Paris: OECD Publishing.
Shukla, P. (2006). India’s GHG emission scenarios: Aligning development and stabilization paths. Current Science, 90(3), pp.384-395.
Shukla, P. and Chaturvedi, V. (2011). Sustainable energy transformations in India under climate policy. Sustainable Development, 21(1), pp.48-59.
Shukla, P. and Chaturvedi, V. (2012). Low carbon and clean energy scenarios for India: Analysis of targets approach. Energy Economics, 34, pp.S487-S495.
Shukla, P., Dhar, S. and Fujino, J. (2010). Renewable energy and low carbon economy transition in India. J. Renewable Sustainable Energy, 2(3), p.031005.
SHUKLA, P., DHAR, S. and MAHAPATRA, D. (2008). Low-carbon society scenarios for India. Climate Policy, 8(sup1), pp.S156-S176.
Springer, U. (2003). The market for tradable GHG permits under the Kyoto Protocol: a survey of model studies. Energy Economics, 25(5), pp.527-551.
Stavins, R. (2000). Market-Based Environmental Policies. In: P. Portney and R. Stavins, ed., Public Policies for Environmental Protection, 1st ed. Washington D.C.: Resources for the Future.
Stavins, R. (n.d.). Experience with Market-Based Environmental Policy Instruments. SSRN Electronic Journal.
TERI, (2006). National Energy Map for India: Technology Vision 2030.
Tietenberg, T. (1985). Emissions Trading: An Exercise in Reforming Pollution Policy. Resources for the Future.
Tietenberg, T. (1995). Tradeable permits for pollution control when emission location matters: What have we learned?. Environ Resource Econ, 5(2), pp.95-113.
UNFCCC, (2006). Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol on its first session, held at Montreal from 28 November to 10 December 2005: Decisions adopted by the Conference of the Parties serving as the meeting of the Parties to
the Kyoto Protocol.. [online] Available at: http://unfccc.int/resource/docs/2005/cmp1/eng/08a01.pdf [Accessed 24 Aug. 2015].
Van Beeck, (1999). Classification of Energy Models. Tilburg: Tilburg University & Eindhoven University of Technology.
Wang, C., Zhang, X., Wang, F., Lei, J. and Zhang, L. (2014). Decomposition of energy-related carbon emissions in Xinjiang and relative mitigation policy recommendations. Frontiers of Earth Science, 9(1), pp.65-76.
WDI, (2015). World Development Indicators | Data. [online] Available at: http://data.worldbank.org/data-catalog/world-development-indicators [Accessed 23 Aug. 2015].
Wiener, J. (2001). Designing Global Climate Regulation. In: S. Schneider, A. Rosencranz and J. Niles, ed., Climate Change Policy: A Survey, 1st ed.
Wilson, D. and Swisher, J. (1993). Exploring the gap. Energy Policy, 21(3), pp.249-263.