Industrial energy use and environment quality: a case study of Ahmedabad

Abstract

The pursuit of modern economic growth generates environmental degradation in some form. Much debate is generated regarding the environmental impacts of major development projects. But, the growth of industries in urban industrial centers continues with little public interest regarding its environmental implications. A review of literature shows that combustion of fossil fuels has been identified as the principal source of two common air pollutants viz., Sulphur dioxide and particulate matter. But energy planning exercises are mainly concerned with demand forecasts and not with environmental implications of the estimated fuel consumption. Also, the major thrust of environment management is addressed to regulating the pollutant emission by cleaning up a fraction of the generated load. Little attention is paid to exploring the pollution regulation implications of influencing the fuel consumption and industrial activity pattern in a region. Policies for industrial growth and environment control need to be based on an understanding of the interaction among these. There is need to develop a separate methodology of policy analysis for control of pollution generated due to industrial energy consumption. A variety of case studies may be necessary for this purpose. We propose to undertake a case study of Ahmedabad to investigate strategies of environment control in reference to its industrial energy usage. The methodology of our exercise lies at the intersection of industrial energy planning and environment control planning. The nature of a strategy for environment control may lies between two extreme approaches: a) superficial measures to treat a fraction of the generated load and b) pervasive measures to regulate the industry structure towards an optimal pattern for minimizing the pollutant load. We propose to explore alternate strategies corresponding to different positions between these extreme approaches. Alternate, internally consistent scenarios that will be equivalent in terms of their levels of economic activity and environment quality are proposed to be constructed. An evaluation of these scenarios will be undertaken to select a preferred scenario. The insights generated will be relevant for environment control for Ahmedabad and also for design of policy instruments for environment control in similar situations. An analytical framework combining engineering and economic analysis is proposed for undertaking our enquiry in Ahmedabad. A linear matrix model is proposed to relate industrial activity with environment quality in region. This model is to be alloyed for casting four alternate scenarios assuming different policy interventions. A scheme of fuel tax is proposed for distributing the cost of environment regulation among the industries in proportion to their contribution to the total pollutant load. The impact of the trend in technological change is to be estimated separately using an extended input-output analysis technique. The coefficients in the model are to be estimated from secondary data. The sets of interventions are to be prescribed on basis of interviews, secondary data and industry case studies. The enquiry is conducted for the case of Ahmedabad. Four scenarios are generated for the year 1995. If the present industrial growth trend continues, it is estimated that the atmospheric particulate load will rise by 31%. When the estimated level of economic activity is attained, the resources requirements for maintain the particulate load to its present level are estimated for different policy interventions. The policy interventions for the four scenarios are: 1) treatment of additional particulate load, 2) fuel conservation, and marginal alteration in industrial fuel consumption mix and industry mix, 4) regulation of the industry mix to an optimal pattern for minimizing the pollutant load and treatment of the excess four scenarios are estimated to be around Rs. 10 crores, Rs. 5 crores, nil and Rs. 1 crores, respectively. The third scenario is evaluated to be preferred scenario. The incidence of the fuel tax in different industries is estimated to be less than one percent. A separate analysis shows that the impact of the trend of technological change in some industries is unfavorable for environment quality. The findings of the case study are summarized. Possibilities for improving the efficiency of present analysis are examined. A discussion of the findings shows that suitable policy instruments to attain a desired optimal industry mix are not available. An extension of our model for multi-region analysis is suggested for minimizing the total cost of environment regulation. The necessary policy instruments at local and national level are discussed.