InputOutput Analysis of Climate Change:

1

• Input-Output Analysis of Climate Change
• Case Study of Efficiency Driven Policy Choice of
  Indian Response Strategy
• Joyashree Roy
• Jadavpur University, Kolkata, India
• with
• Jayant Sathaye
• Lawrence Berkeley National Laboratory
• Berkeley CA
• and
• Sarmistha Das, Raman Khaddaria
• Jadavpur University

2
Issues

• Economics of Climate Change
• Impact of climate variability on economic
  activities
• Response analysis Climate , Non-Climate
  Policies.
• Technology policy, energy policies etc. with
  indirect climate mitigation potential.
• National through regional to global scale.
• Global scale models are facing challenges high
  level of aggregation, lack of flexibility in
  scaling down
• National level impact on sustainable development
  goals of mitigation policies ?
• Mainstreaming of of climate policy ?

3
Reference case carbon emission
4
Marginal Abatement Cost (2030) India
5
Goal and Motivation

• Goal
• To estimate macro level impact on employment,
  output of Indian economy of an increased
  efficiency
• Motivation
• To address
• Shortage in electricity and capacity addition
• through Reduction of electricity intensity

6
Methodology

• Efficiency-Employment Integrated Model (EEIM) for
  the Indian economy
• Investment balance framework
• Model that arithmetically matches annual capacity
  expansion plans and efficiency options
• Multipliers from I-O model
• Six energy efficiency measures
• four target the productive industrial, commercial
  and agricultural sectors
• efficient refrigerators and half of the compact
  fluorescent lamps (CFLs) target the residential
  or consumptive sectors.

7
Overview of electricity sector

• Generation capacity (end 9th Plan) 103 GW
• (Th63, Hy21,N2, NU14)
• GDP increased 3.5 times (1970-1999)
• Electricity Consumption increased 7 times
  (1970-1999)
• Per capita Consumption is 360 kWh in 1998-99
• Consumption in 2000-01
• Domestic and agricultural 52
• Industrial consumption 31
• TD loss 25 in 1998-99
• Shortfall in capacity addition 9th Plan 53
  (A19015 MW T40245 MW)
• Tenth plan target is 41110 MW

8
Electricity Generation Increased Faster than GDP
Until 1991 but has Increased at the Same Rate
Since Then(About 0.75 GDP per kWh)
9
Proposed Capacity Addition (MW)in the Tenth Five
Year Plan (2002-2007)
10
Increasing Efficiency in Electricity Use Tenth
Plan Goal

• improve efficiency in all segmentsgeneration,
  transmission and distribution and also power
  consumption.
• achieve through Implementation of Energy
  conservation act, 2001.
• Determine minimum power consumption standard,
• Label for identified appliances,
• Introduce norms/ rules and regulations for power
  intensive industries,
• Formulate energy consumption code,
• Establish a energy conservation fund both at the
  state and the central level,
• Establishment of Bureau of Energy Efficiency
  (BEE) in place of Energy Management Centre (EMC)
• Declare a user or a class of user of energy as a
  designated consumer

11
10th Plan Employment Projections

• Unemployment will grow from 9.2 at the beginning
  to 11 at the end of the plan period on the basis
  of base line scenario of 6.5 growth of GDP.
• New employment opportunities are needed.

12
Investment scenario

• At an average cost of US 900 /kW for 41,110 MW
  capacity 10th plan additions
• Corresponding Total investment for the 10th Plan
  Rs. 1,548 billion or US 36 billion

13
Alternative Investment Scenarios

• Efficiency Scenario
• Goal
• Maintaining same investment in both scenarios
• Adopt available efficiency options
• Estimate MW gain due to efficiency
• Remaining demand to be met through capacity
  addition

• Capacity Addition Scenario
• Target 41,110 MW
• Anticipated achievement based on 9th plan
  experience (actual/target) 22,552 MW
• Investment _at_ USD900/Kw
• 20,297 million
• 10th plan capacity shortage 13,159 MW

• Compare output and employment impact

14
Efficiency Scenario Investment Estimate

• Assumptions
• Electricity (kWh) demand supply gap 6
• PLF 66
• Corresponding electricity savings
• 52,347 GWh or
• US 10,156 million
• Total supply capacity added 19,116 MW

• Gain from Efficiency options16, 701 MW
• Variable speed drives in industry 3,440 MW
• Ag. Pump rectification 3,039 MW
• Motor rewinding downsizing 3,315 MW
• High efficiency agricultural pump sets 3,315
  MW
• Improved high efficiency refrigerators 829 MW
• CFLs and Electronic Ballasts 2,763 MW
• Total investment US 3,112 million
• Ratio million US 19/MW efficiency

• Compare output and employment impact

15
Estimated Macro parameters multipliers and
direct coefficients

• Output multipliers (million US /final demand)
• Manufacturing
• 2.21
• Construction
• 2.05
• Electricity, Gas and Water Supply
• 2.24
• Aggregate Economy
• 1.79

• Employment multiplier/coeff. (000 person years
  per million US )
• Manufacturing
• 5.1
• 16
• Construction
• 5.3
• 16.6
• Electricity, Gas and Water Supply
• 3.4
• 10.5
• Aggregate Economy
• 6.3
• 19.77

16
Impact on GDP and Employment

• Effect on gross output over 5 years (m.US )
• Scenario I
• Capacity creation only through investment in
  construction sector multiplier effect would
  generate 41, 608 million.
• Scenario II
• Efficiency capacity addition
• 42,147 (additional US 538 million)

• Effect on employment (person years)
• Scenario I
• 107.8 million
• Scenario II
• 107.3 million

17
Additional economy wide gain from efficiency
scenario

• Scenario I
• Actual addition possible 22 GW.
• Additional capacity demand 35 GW
• Scenario II
• capacity creation 19 GW
• Potential generation by efficiency gain 16 GW
• Outcome
• Less spending by way of less capacity creation
• Surplus generated by sectors adopting efficient
  technologies
• Makes up for less investment in capacity creation
  and Surplus generated if ploughed back into the
  economy can additional output and employment at
  the end of 10th Plan
• US 18,179 million
• 64.3 million person years

18
Thank You