Reforming Energy Policy in India: Assessing the Options
IMF Working Papers, May 3, 2017
Source details
- Canonical URL
- Reforming Energy Policy in India: Assessing the Options
Other formats
Bibliographic details
- Authors: Ian W.H. Parry, Victor Mylonas, Nate Vernon-Lin
- Published: May 3, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475595734.001
Summary findings
- Spreadsheet models assess environmental, fiscal, economic, and incidence effects of a wide range of options for reducing fossil fuel use in India.
- Among the most effective options identified is ramping up the existing coal tax.
Coal tax reform scenario (headline simulation)
- Policy design: Annually increasing the tax by INR 150 ($2.25) per ton of coal from 2017 to 2030.
- Air pollution: avoids over 270,000 air pollution deaths.
- Fiscal impact: raises revenue of 1 percent of GDP in 2030.
- Climate impact: reduces CO2 emissions 12 percent.
- Economic impact: generates net economic benefits of approximately 1 percent of GDP.
- Distributional impact: the policy is mildly progressive and (at least initially) imposes a relatively modest cost burden on industries.
Environmental and health impacts
- Avoided air pollution deaths: over 270,000 (aggregate outcome of the coal tax ramp-up scenario).
- CO2 emissions reduction: 12 percent under the specified coal tax path.
Fiscal and economic effects
- Revenue raised by 2030: 1 percent of GDP.
- Net economic benefits: approximately 1 percent of GDP (aggregate welfare/net benefit estimate under the scenario).
Incidence and distribution
- The coal tax scenario is characterized as mildly progressive.
- Initial cost burden on industries is described as relatively modest.
Methodology and scope
- Analytical tool: spreadsheet models.
- Dimensions assessed: environmental, fiscal, economic, and incidence effects.
- Policy focus: options for reducing fossil fuel use in India, with emphasis on coal tax increases among the most effective measures.
Keywords and thematic coverage (as listed)
- Carbon tax, Environment, Fuel prices, Greenhouse gas emissions, Non-renewable resources, Prices, Taxes
- 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
Source: Reforming Energy Policy in India: Assessing the Options, IMF Working Paper No. 2017/103 (May 3, 2017).
Content in this bundle
- Reforming Energy Policy in India: Assessing the Options, WP/17/103, May 2017