India: Dimensions and Dilemmas of Low Carbon Development Presenter: - - PowerPoint PPT Presentation

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Indian Institute of Management, Ahmedabad, India

India: Dimensions and Dilemmas

• f Low Carbon Development

Presenter: Professor P.R. Shukla Indian Institute of Management Ahmedabad, India

COP13/CMP3 Side Event Low-Carbon Asia: How to Align Climate Change and Sustainable Development? Organized by National Institute of Environment Studies and Ministry of Environment, Japan Bali, Indonesia, December 8, 2007.

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Indian Institute of Management, Ahmedabad, India

Key Dilemma: Alternate Paradigms

Two Visions of Low Carbon Society

Achieving Stabilization of GHG Concentration by: 1.Climate Centric Actions at the Margin

Margin of the

Conventional Development Path

Policies: Global Carbon Price over Conventional Development Path

2.Aligning Climate Actions with the Mainstream

Mainstream

Development Actions

Policies: Sustainable Development Path + Stabilization

What path shall best deliver national development goals while fulfilling international commitments?

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LCS Dimensions: Operational S trategy

Economic Growth Incremental Investment in climate actions

• Mitigation
• Adaptation

Climate change related Technologies

• R&D/ IPR
• Technology transfer

Climate change Risks

• Adaptation costs
• Insurance

Equity/ Fairness of global climate regime Mechanisms/ Instruments to manage climate change

• Direct (Climate) vs. Indirect (Development)
• Market vs. CC + Non-Market

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India: Demographic Transition

Population (Million) Labor Force (Million)

358 555 849 1183 1449 1593 400 800 1200 1600 1950 1970 1990 2010 2030 2050

133 210 360 595 795 915 200 400 600 800 1000 1950 1970 1990 2010 2030 2050

Year: 2000

Pop: 1021 Million Pop: 1593 Million

Year: 2050

80 60 40 20 20 40 60 80

Age

Population (million)

Female Male 15 - 60 years

Male Female

18-62 Yrs 80 60 40 20 20 40 60 80

Population (Million)

Age

80 60 40 20 20 40 60 80

Age

Population (million)

Female Male 15 - 60 years

Male Female 18-62 Yrs 80 60 40 20 20 40 60 80 Population (Million)

Age

2.22% 2.15% 1.67% 1.02% 0.47% 2.30% 2.74% 2.54% 1.46% 0.70% Growth Rate Growth Rate

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Drivers of Economic Growth

Human Capital

⎯

High Labor Supply

⎯

Increasing Education

⎯

Migration (intra & inter county)

R&D

⎯

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

Savings Rate

20.6 22.8 24.6 33.0 35.0 32 5 10 15 20 25 30 35 1980 1990 2000 2010 2020 2030 40 37 ??

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Energy Dilemma

Percentage of Primary Energy Consumption 0% 20% 40% 60% 80%

1952 1960 1970 1980 1990

Traditional Biomass Nuclear

How to transit to Modern Biomass? Food Security? Fuel Supply? Waste disposal? Safety?

• En. Security:

+Ve

2001

Hydro Coal Oil Gas

Domestic Resource: +ve Direct Employment: +ve Energy Security: -ve Foreign Exchange: -ve Geopolitical Risk: High Foreign Exchange: -ve Regional water disputes? Indirect Benefits

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Transition to LCS : India Analysis

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Analytical Framework & Base S cenario

Base Scenario Assumptions

• 1. GDP
• Ann. Growth Rate: 7.2% from 2005-50
• 2050 Economy: 24 times larger than 2005
• 2. Population
• 2000: 1021 Million
• 2050: 1593 Million
• 3. 650 ppmv CO2e Concentration

Stabilization (or 550 CO2)

• 4. 4.7 W/m2 Radiative Forcing

DATABASES

• Socio-Economic, Technologies, Energy Resources, Environmental Constraints

AIM CGE Model ANSWER-MARKAL Model AIM SNAPSHOT Model End Use Demand Model AIM Strategic Database (SDB)

Integrated Modelling Framework

DATABASES

• Socio-Economic, Technologies, Energy Resources, Environmental Constraints

AIM CGE Model ANSWER-MARKAL Model AIM SNAPSHOT Model End Use Demand Model AIM Strategic Database (SDB)

DATABASES

• Socio-Economic, Technologies, Energy Resources, Environmental Constraints

AIM CGE Model ANSWER-MARKAL Model AIM SNAPSHOT Model End Use Demand Model AIM Strategic Database (SDB)

Integrated Modelling Framework

5 10 15 20 25 2005 2020 2035 2050 Base Year 2005=1

Annual Growth Rate 2005-50: 7.3% Annual Growth Rate 2005-32: 8%

GDP

2000 4000 6000 8000 10000 12000 2000 2010 2020 2030 2040 2050

US $/person

Per Capita Income

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Low Carbon S

• ciety S

cenarios

India: LCS Scenario Assumptions

• 1. LCS Scenarios assume 550 ppmv CO2e

Concentration (or 480 CO2 Concentration

• 2. 3.4 W/m2 (or 2 to 3o centigrade temperature

increase with 50:50 probability)

• 3. Two pathways of LCS produce identical

cumulative CO2 emissions from 2005 to 2050

• 4. LCS Vision 1 scenario has same GDP and

Population as for the Base Case

• 5. LCS Vision 2, i.e. ‘Sustainability’ scenario

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Low Carbon S

• ciety Transitions

1,000 2,000 3,000 4,000 5,000 6,000 7,000 2000 2010 2020 2030 2040 2050

Million Ton CO2

Others Device Efficiency Renewable Energy Electricity (Fuel Switch) CCS

Carbon Tax 7 22 40 67 100 $/tCO2 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Others CCS Transport Mode Urban Planning Consumption Recycling Material Substitutions Appliance Efficiency Renewable Energy Building Electricity (Fuel Switch) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Million Ton CO2

Renewable Energy Renewable

LCS transition with conventional path and carbon price

• High Carbon Price
• Climate Focused Technology Push
• Top-down/Supply-side actions

LCS by aligning climate actions with sustainable development actions

• Low Carbon Price
• Bottom-up/Demand-side actions
• Behavioural change
• Demand-side technology pull
• Diverse Technology portfolio

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Demand Reduction & S ubstitution

100 200 300 400 500 600 700 2000 2010 2020 2030 2040 2050 Demand (Million Ton) Steel Conventional Development Sustainable Society Demand (Million Ton) 100 200 300 400 500 600 700 2000 2010 2020 2030 2040 2050

Steel

Conventional Development Sustainable Society 100 200 300 400 500 600 700 2000 2010 2020 2030 2040 2050 Conventional Development Conventional Development Sustainable Society 200 400 600 800 1000 Demand (Million Ton) Conventional Development Sustainable Society 200 400 600 800 1000 Demand (Million Ton) Conventional Development Sustainable Society Demand (Trillion Lumen hrs) 1000 2000 3000 Conventional Development Sustainable Society

Lighting

2000 2010 2020 2030 2040 2050 5 10 15 20 25 30 35 40 Conventional Development Sustainable Society 5 10 15 20 25 30 35 40 Conventional Development Sustainable Society 5 10 15 20 25 30 35 Demand (Million Ton) Conventional Development Sustainable Society 2000 2010 2020 2030 2040 2050

Paper Cement

2000 2010 2020 2030 2040 2050

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Energy Mix in 2050

200 400 600 800 1,000 1,200 C

• a

l O i l G a s H y d r

• N

u c l e a r B i

• m

a s s R e n e w a b l e

Mtoe

Base Case Conventional Dev. + Tax Sustainability

Share of Renewable Base 24 % C+T 34 %

• Sust. 47 %

Total Energy Demand Base 3004 Mtoe C+T 2945 Mtoe

• Sust. 2004 Mtoe

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CO2 Emissions & Price Traj ectories

1 2 3 4 5 6 7 2000 2010 2020 2030 2040 2050

Index 2000 =1

India Base Case India Carbon Tax (550 ppmv CO2e) 550 ppmv CO2e Global Base Case Base Case assumes global 650 ppmv CO2e stabilization

CO2 Emissions: Global and India

Base Case Conventional Society Sustainable Society 20 40 60 80 100 120 2010 2020 2030 2040

Price CO2 (US $/tCO2)

2050

CO2 Price

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Resolving Dilemmas: S ustainable Transition to LCS

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Mitigation Commitment: Dilemma

10000 20000 30000 40000 50000 India China Brazil Russia S Africa Germany Japan UK USA

US$/person (PPP)

Per Capita Income

2004

5 10 15 20 25 India Brazil China Germany S Africa UK Japan Russia USA

tCO2 / person

Per Capita CO2 Emissions

2004

2000 4000 6000 8000 10000 12000 2000 2010 2020 2030 2040 2050

US $/person

Per Capita Income

India: Projections

1 2 3 4 5 2000 2010 2020 2030 2040 2050

tCO2/person

Per Capita Emissions

India: Projections

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Income Effect and Co-benefits

2 4 6 8 10 12 14 2000 2010 2020 2030 2040 2050

Million tSO2

Base Case Sustainable Development + Low Carbon Tax Conventional Path + High Carbon Price

Co-benefits: SO2 Emissions

2000 4000 6000 8000 10000 100 200 400 800 1600 2400

GDP Per Capita 2000 = 100 CO2 Emissions (Million TCO2)

2 4 6 8 10 12 14

SO2 Emissions (Million TSO2) CO2 Emissions in BAU LCS CO2 Emissions SO2 Emissions in BAU

Emissions and Income

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Legend

upto 500 501 - 1000 1001 - 1500 1501 - 2000 2001 - 5000 5001 - 10000 More than 10000 Major Rivers ! ( ! (

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Legend

upto 500 501 - 1000 1001 - 1500 1501 - 2000 2001 - 5000 5001 - 10000 More than 10000 Major Rivers ! ( ! (

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Legend

upto 500 501 - 1000 1001 - 1500 1501 - 2000 2001 - 5000 5001 - 10000 More than 10000 Major Rivers ! ( ! (

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Co-benefits of Regional Co-operation

Co Co-

• benefits of South

benefits of South-

• Asia

Asia Integrated Energy Integrated Energy-

• Water Market

Water Market

0.03 10 50 Million Ton SO2 0.98 359 Total 0.08 28 5.1 Billion Ton CO2 Equiv. 0.87 321 60 Exa Joule Energy

% GDP

$ Billion Benefit (Saving)

Cumulative from 2010 to 2030

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) MDG 1: Eradicate extreme poverty and hunger, MDG 7: Environmental Sustainability

• !

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F F Ñ º Ñ º Ñ º

India China Iran Pakistan Afghanistan Oman Myanmar (Burma) Nepal Turkmenistan Saudi Arabia Tajikistan Yemen Thailand Bangladesh Sri Lanka Bhutan Uzbekistan United Arab Emirates Somalia Qatar Bahrain Malaysia Indonesia Maldives Pune Gaya Kota Gadag Kochi Patna Delhi Dahej Panvel Hassan Dispur Ambala Nangal Kanpur Jhansi Ujjain Jhabua Valsad Hazira Rajkot Solapur Chennai Nellore Kolkata Sonipat Lucknow Gwalior Chotila Palmaner Chittoor Kakinada Bathinda Bareilly Vijaypur Mahesana Vadoadra Wankaner Tuticorin Mangalore Bangalore Vijaywada Faridabad Ratnagiri Kayankulam Coimbatore Himmatnagar Jagdishpuri Shahjahanpur Vishakhapattnam Tiruchchirappalli Herat Multan Quetta Khuzdar Karachi Delaram Kandhar South-Pars Iranshahar Bandar-e-Abbas

• !

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F F Ñ º Ñ º Ñ º

India China Iran Pakistan Afghanistan Oman Myanmar (Burma) Nepal Turkmenistan Saudi Arabia Tajikistan Yemen Thailand Bangladesh Sri Lanka Bhutan Uzbekistan United Arab Emirates Somalia Qatar Bahrain Malaysia Indonesia Maldives Pune Gaya Kota Gadag Kochi Patna Delhi Dahej Panvel Hassan Dispur Ambala Nangal Kanpur Jhansi Ujjain Jhabua Valsad Hazira Rajkot Solapur Chennai Nellore Kolkata Sonipat Lucknow Gwalior Chotila Palmaner Chittoor Kakinada Bathinda Bareilly Vijaypur Mahesana Vadoadra Wankaner Tuticorin Mangalore Bangalore Vijaywada Faridabad Ratnagiri Kayankulam Coimbatore Himmatnagar Jagdishpuri Shahjahanpur Vishakhapattnam Tiruchchirappalli Herat Multan Quetta Khuzdar Karachi Delaram Kandhar South-Pars Iranshahar Bandar-e-Abbas ! . Important Places Existing Gas Pipelines Proposed Gas Pipelines

º

Existing LNG terminals

F

Proposed LNG terminals Existing Gas Basin

• Proposed Gas Basin

Gas Pipelines under construction ! . Important Places Existing Gas Pipelines Proposed Gas Pipelines

º

Existing LNG terminals

F

Proposed LNG terminals Existing Gas Basin

• Proposed Gas Basin

Gas Pipelines under construction ! . Important Places ! . ! . Important Places Existing Gas Pipelines Existing Gas Pipelines Proposed Gas Pipelines Proposed Gas Pipelines

º

Existing LNG terminals

º

Existing LNG terminals

F

Proposed LNG terminals

F

Proposed LNG terminals Existing Gas Basin

• Proposed Gas Basin

Gas Pipelines under construction Gas Pipelines under construction

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S ustainable Low Carbon Development

Low Carbon Society

Innovations Co-benefits Sustainability Technological Social/Institutional Management Modify Preferences Avoid Lock-ins Long-term Vision Win/Win Options Shared Costs/Risks Aligning Markets National Socio-economic Objectives and Targets Global Climate Change Objectives and Targets

Targets Interventions Drivers Aim Back-casting

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Conclusions

• Development vision matters to LCS transition
• Moving from Margin to Mainstream

– Managing climate change at the margin is costly, risky, and unsustainable – Opportunities to gain multiple simultaneous dividends exist and should be realized – Mainstreaming would permit adapting policies to changing dynamics and long-term goals

• LCS through Sustainability: The Post-Kyoto Regime

– Burden sharing metaphor has posed climate stabilization as a zero-sum game, thus inviting conflicts. – Grandfathering not feasible as allocation under ‘Cap and Trade’ regime if emerging economies have to play central role in Climate Regime. – Sustainability roadmap to LCS provides a practical way-out from:

• Climate-centric commitments (as in ‘Grand architecture’) that have prevented cooperation, and
• Non-binding ambiguous and ambitious goals (federalism or ‘Madisonian’ approach) which cannot

produce credible and stable policy signals.

– Even in Sustainable Low Carbon Societies, stabilization would still require climate focused policies, both for mitigation (beyond Energy) and adaptation.

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Thank you