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Input-Output Analysis of Climate Change:
Case Study of Efficiency Driven Policy Choice
of Indian Response Strategy
Joyashree Roy
Jadavpur University, Kolkata, India
with
Jayant Sathaye
Lawrence Berkeley National Laboratory
Berkeley CA
and
Sarmistha Das, Raman Khaddaria
Jadavpur University
Issues
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Economics of Climate Change
Impact of climate variability on economic activities
Response analysis: Climate , Non-Climate Policies.
Technology policy, energy policies etc. with indirect
climate mitigation potential.
National through regional to global scale.
Global scale models are facing challenges: high level of
aggregation, lack of flexibility in scaling down
National level impact on sustainable development goals of
mitigation policies ?
Mainstreaming of of climate policy ?
Reference case: carbon emission
900
800
700
Carbon emission (tonnes)
600
India(default)
India (derived)
500
Korea (default)
Korea (derived)
400
Brazil (default)
Brazil (derived)
300
200
100
0
1990
2000
2010
2020
Year
2030
2040
2050
Marginal Abatement Cost (2030): India
1400
1200
Carbon tax (Rps.)
1000
800
Default elasticity values
Derived elasticity values
600
400
200
0
0
5
10
15
20
25
Carbon abatem ent (%)
30
35
40
Goal and Motivation
Goal
• To estimate macro level impact on employment,
output of Indian economy of an “increased
efficiency”
Motivation
To address :
• Shortage in electricity and capacity addition
through Reduction of electricity intensity
Methodology
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Efficiency-Employment Integrated Model (EEIM) for the
Indian economy
Investment balance framework
Model that arithmetically matches annual capacity
expansion plans and efficiency options
Multipliers from I-O model
Six energy efficiency measures
– four target the productive industrial, commercial and
agricultural sectors
– efficient refrigerators and half of the compact fluorescent
lamps (CFLs) target the residential or consumptive sectors.
Overview of electricity sector
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Generation capacity (end 9th Plan): 103 GW
(Th=63%, Hy=21%,N=2%, NU=14%)
GDP increased 3.5 times (1970-1999)
Electricity Consumption increased 7 times (1970-1999)
Per capita Consumption is 360 kWh in 1998-99
Consumption in 2000-01:
– Domestic and agricultural – 52%
– Industrial consumption – 31%
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T&D loss 25% in 1998-99
Shortfall in capacity addition 9th Plan: 53% (A=19015 MW
T=40245 MW)
Tenth plan target is 41110 MW
Electricity Generation Increased Faster than GDP Until 1991 but has
Increased at the Same Rate Since Then
(About $0.75 GDP per kWh)
GDP and Electricity Generation, India
(1970,1980, and1990,'91,'93,'95,'96-2000)
GDP (Bn.1993 Rs.)
14000
12000
10000
8000
6000
GDP vs. Generation
4000
Elec./GDP Ratio, 1990
indexed to 10,000
2000
0
0
100
200
300
400
Generation (Bn. kWh)
500
600
Proposed Capacity Addition (MW)in the
Tenth Five Year Plan (2002-2007)
Central
State
Private
Total
Thermal
12790
6676
5951
25417 (62%)
Hydro
8742
4481
1170
14393 (35%)
Nuclear
1300
-
-
1300 (3%)
Total
22832
11157
7121
41110 (100%)
Increasing Efficiency in Electricity Use
Tenth Plan Goal
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improve efficiency in all segments—generation,
transmission and distribution and also power
consumption.
achieve through Implementation of Energy
conservation act, 2001.
 Determine minimum power consumption standard,
 Label for identified appliances,
 Introduce norms/ rules and regulations for power intensive
industries,
 Formulate energy consumption code,
 Establish a energy conservation fund both at the state and the
central level,
 Establishment of Bureau of Energy Efficiency (BEE) in place of
Energy Management Centre (EMC)
 Declare a user or a class of user of energy as a designated consumer
10th Plan Employment Projections
– Unemployment will grow from 9.2% at
the beginning to 11% at the end of the
plan period on the basis of base line
scenario of 6.5% growth of GDP.
– New employment opportunities are
needed.
Investment scenario
 At
an average cost of US $ 900 /kW
for 41,110 MW capacity 10th plan
additions
– Corresponding Total investment
for the 10th Plan: Rs. 1,548 billion
or US $ 36 billion
Alternative Investment Scenarios
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Capacity Addition Scenario
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Target: 41,110 MW
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Anticipated achievement based
on 9th plan experience
(actual/target): 22,552 MW
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Investment @ USD900/Kw
: $ 20,297 million
– Maintaining same
investment in both
scenarios
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10th plan capacity shortage :
13,159 MW
Compare
Efficiency Scenario
Goal
Adopt available efficiency
options
Estimate MW gain due to
efficiency
Remaining demand to be
met through capacity
addition
output and employment impact
Efficiency Scenario: Investment Estimate
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Gain from Efficiency
options:16, 701 MW
– Variable speed drives in
industry = 3,440 MW
– Ag. Pump rectification =
3,039 MW
– Motor rewinding downsizing
= 3,315 MW
– High efficiency agricultural
pump sets = 3,315 MW
– Improved high efficiency
refrigerators= 829 MW
– CFLs and Electronic Ballasts
= 2,763 MW
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Assumptions:
Electricity (kWh) demand –
supply gap: 6%
PLF : 66%
Corresponding electricity
savings:
52,347 GWh or
US $ 10,156 million
Total supply capacity
added: 19,116 MW
Total investment: US $ 3,112
million
Ratio : million US $ 19/MW
efficiency
Compare output and employment impact
Estimated Macro parameters:
multipliers and direct coefficients
Output multipliers (million
US $/final demand)
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Manufacturing
 2.21
 Construction
 2.05
Electricity, Gas and Water
Supply
 2.24
 Aggregate Economy
 1.79
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Employment: multiplier/coeff.
(‘000 person years per million
US $)
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Manufacturing
 5.1
 16
 Construction
 5.3
 16.6
Electricity, Gas and Water
Supply
 3.4
 10.5
 Aggregate Economy
 6.3
 19.77
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Impact on GDP and Employment
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Effect on gross output over 5
years (m.US $)
Scenario I
Capacity creation only
through investment in
construction sector
multiplier effect would
generate $ 41, 608 million.
Scenario II
Efficiency +capacity addition
$ 42,147 (additional US $ 538
million)
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Effect on employment
(person years)
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Scenario I
107.8 million
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Scenario II
107.3 million
Additional economy wide gain
from efficiency scenario
Scenario I
– Actual addition possible 22 GW.
– Additional capacity demand 35 GW
Scenario II
- capacity creation 19 GW
- Potential generation by efficiency gain 16 GW
Outcome
- Less spending by way of less capacity creation
- Surplus generated by sectors adopting efficient technologies
Makes up for less investment in capacity creation and Surplus
generated if ploughed back into the economy can additional output
and employment at the end of 10th Plan:
– US $ 18,179 million
– 64.3 million person years
Thank You