Course:ECON371/UBCO2009WT1/GROUP3/Article1

'Article 1: India Could Halve Emissions Growth, at a Cost'

[[ [India Could Halve Emissions Growth, at a Cost]]]

Summary

India has taken many steps to becoming a world leader in the reduction of their carbon output. The stance they have taken to pioneer the movements towards greener ways of life for both individuals and companies is quite bold as it comes at a hefty cost. It is no secret that the world is in a crisis and needs to find cleaner, more efficient methods of producing energy and fast. Small delays in doing so can have gigantic environmental impacts. India is an excellent example of a nation that can truly make a difference. "Eighty percent of what India could be in 2030 is yet to be built, providing the country an opportunity to effectively manage the economic and environmental costs of growing energy requirements"(Worldwatch). This effectively means that India has the opportunity to 'build from the ground up' and construct all new infrastructure with modern, more efficient means of energy.

Analysis

India has undercut their initial projected emissions level. In 2005, India produced 1.6 billion tonnes of carbon emissions. By 2030, India was projected to reach 5-6 billion tonnes. This astronomical amount must have been deemed far too high and initiatives were put in place to help curb the projected increase. But these initiatives don't come without a high cost. "The projection also exceeds India's expected energy infrastructure investment needs of $1.3 trillion between 2006 and 2030..."(Worldwatch). The cost of developing new methods of producing energy more efficiently tend to run very high. Those high costs will surely be felt by India's economy and could be a major bump in the road when considering implementing these new energy initiatives.

Social Efficiency

While emission reduction is always desirable in some sense, it may not be socially efficient. In this case, is India choosing a socially efficient target? According to the article "90 percent of the identified emissions-reduction opportunities for India will prove difficult or expensive to achieve"(WorldWatch). The cost of implementing initiatives to reduce emissions is put at somewhere around $2 trillion. The article also notes that renewable energy sources such as wind turbines could be used to reduce emissions and reduce India's energy import costs. This suggests that the marginal abatement curve to be considered looks like c) from figure 5-3 in the textbook. While the costs involved might seem astronomical, the marginal damage caused by emissions has the potential to be quite high considering India's population of 1.15 billion. The cost of negative health effects of emissions on such a large population could add up quickly. Divided per person, the abatement estimates to implement the program amount to about $1700 per person. This might not seem like much until you consider the average yearly income in India is around $1000. So, there are a lot of people and a lot of potential for damage but because of the costs involved an aggressive emission reduction policy might not be the most beneficial policy. What needs to be considered is the marginal damage function which can be used to determine a socially efficient policy.