IMF Working Papers

Reforming Energy Policy in India: Assessing the Options

By Ian W.H. Parry, Victor Mylonas, Nate Vernon

May 3, 2017

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Ian W.H. Parry, Victor Mylonas, and Nate Vernon. Reforming Energy Policy in India: Assessing the Options, (USA: International Monetary Fund, 2017) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Spreadsheet models are used to assess the environmental, fiscal, economic, and incidence effects of a wide range of options for reducing fossil fuel use in India. Among the most effective options is ramping up the existing coal tax. Annually increasing the tax by INR 150 ($2.25) per ton of coal from 2017 to 2030 avoids over 270,000 air pollution deaths, raises revenue of 1 percent of GDP in 2030, reduces CO2 emissions 12 percent, and generates net economic benefits of approximately 1 percent of GDP. The policy is mildly progressive and (at least initially) imposes a relatively modest cost burden on industries.

Subject: Carbon tax, Environment, Fuel prices, Greenhouse gas emissions, Non-renewable resources, Prices, Taxes

Keywords: Air pollution damage, Air pollution deaths, Average cost, Carbon tax, Coal tax, Economic welfare cost, Energy price reform, Firm, Fuel price elasticity, Fuel price reform, Fuel price responsiveness, Fuel prices, Global, Greenhouse gas emissions, Incidence, India, Net, Non-renewable resources, Paris targets, Price, Rate, Revenues, Supply cost, Welfare effects, WP

Publication Details

  • Pages:

    51

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/103

  • Stock No:

    WPIEA2017103

  • ISBN:

    9781475595734

  • ISSN:

    1018-5941