Aligning decarbonization of energy systems and sustainable development in India: synergies and tradeoffs

Abstract

Although a rapidly growing economy, India faces many challenges on energy access and clean energy echoing some of the Sustainable Development Goals of the United Nations. Moreover, post-2020 climate actions outlined in India’s Nationally Determined Contribution (NDC) under the Paris agreement envision development along low-carbon emission pathways. With coal providing almost 3/4th of Indian electricity, achieving such targets will have wide-ranging implications for economic activity. My research uses a hybrid modelling architecture that combines the strengths of the AIM/Enduse bottom-up model of energy systems and the IMACLIM top-down economy-wide model to assess low-carbon growth. This hybrid architecture rests upon an original dataset that brings into consistency national accounting, energy balance and energy price data. Its macro-economic side also accounts for imperfections in the goods and labour markets that can raise obstacles to the transition. We analyse 6 scenarios ranging to mid-century: business-as-usual (BAU), 2oC, 2oC high growth, 2oC low growth, sustainable 2oC and 1.5oC. Our 2°C pathway proves compatible with economic growth close to 5.8% annual rate of BAU from 2012 to 2050, despite high investment costs. Scenario results show that low carbon high growth can be achieved with some trade-offs. Further mitigation efforts backing the 1.5oC scenario shows slightly higher annual GDP growth, thereby revealing potential synergies between deep environmental performance and higher economic growth possibilities. Moving away from fossil fuel-based energy systems would result in foreign exchange savings to the tune of $1 trillion from 2012 to 2050 for oil imports. The envisioned transition will require appropriate policies to manage e.g. the conflicting interests of entrenched players in conventional sectors like coal and oil, and the emerging players of the low-carbon economy. 3 As renewables play a critical role in low carbon pathways, we also analyse the relationship between financial support provided for wind power and annual wind power generation in 15 countries and 10 US states over 2006-2017. Our analysis indicates that support increases initially and then decreases beyond a point vis-a-vis the share of wind power to total power generated in a country. The inflection point exists for all countries but the value varies across countries. The relationships are statistically significant and provide compelling policy insights.