Energy system transitions and macroeconomic assessment of the Indian building sector

Abstract

India’s energy sector has grown rapidly in recent years with buildings playing a major role as they constitute about 40% of India’s final energy demand. This paper provides a quantitative model-based assessment of the evolution of India’s building sector in terms of both energy systems transition and its macroeconomic implications. The coupling of a bottom-up technology-rich energy system model with a macroeconomic computable general equilibrium (CGE) model provides an innovative approach for the in-depth robust analysis of the energy transition in India’s building stock and the induced macroeconomic and employment impacts on the Indian economy. Two main scenarios are explored, namely: the business-as-usual (BAU) and the advanced nationally determined contribution (Adv. NDC) scenarios. The investigation shows that efficiency improvements are vital to counteract the upward pressure on energy demand in the building sector. Energy demand in the building sector results in an increase of CO2 emissions by 27% between 2015 and 2030 due to the technology transition from inefficient solid fuels (traditional biomass) to cleaner energy (liquefied petroleum gas (LPG), piped natural gas (PNG)) before shifting to electricity. The Adv. NDC scenario also leads to a shift in employment from agriculture and towards sectors that benefit from the implementation of Adv. NDC, especially in the construction sectors, electricity and manufacturing sectors.