Implications of emissions trading scheme for India’s net-zero strategy: A modelling-based assessment

Aman Malik, Vaibhav Chaturvedi, Medhavi Sandhani, P. Das, Chetna Arora, Nishtha Singh, Ryna Cui, Gokul Iyer, Alicia Zhao
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Abstract

To help meet its near-term NDC goals and long-term net-zero 2070 target, the Government of India has planned to establish a Carbon Credit Trading Scheme (CCTS), i.e., a domestic emission trading scheme (ETS). An ETS is an inherently cost-effective policy instrument for emission reduction, providing the greatest flexibility to reduce emissions from within and across sectors. An effective ETS requires design features that consider country-specific challenges and reflect its role within the larger policy package to achieve long-term emission reduction. Within the Indian context and in this study we therefore investigate - i) What might be the role of the ETS in achieving India’s long-term mitigation targets? ii) How might the various sectors interact under an emissions cap? iii) How might the ETS interact with existing energy and climate policies? We do this analysis by running four main scenarios using the integrated assessment model GCAM (v6.0), adapted to India-specific assumptions and expectations. These scenarios are - i) NZ (net-zero), ii) NZ + ETS, iii) NZ + CC (command and control), and iv) NZ + RPO (renewables purchase obligations) + ETS. The NZ scenario assumes India’s near-term and long-term climate commitments of net zero by 2070. Scenarios with ETS (ii and iv) apply an emissions cap on four sectors - electricity, iron and steel, cement, and fertilizer. The scenario with CC applies a homogenous emission cap on each of the chosen sectors but doesn’t allow cross-sectoral trading. The last scenario includes renewables purchase obligations (RPOs along with an ETS. We show that under a specific ETS emissions cap: i) the electricity sector emerges as the largest source of cost-effective greenhouse gas (GHG) reduction options; ii) ETS with trading across sectors is 30-50% more cost-effective than ETS with trading only within sectors, iii) RPOs can be complementary to an ETS although the impact of RPOs on GHG reductions in the electricity sector would need to be considered when setting the level of the ETS cap (or emissions intensity targets) or the RPO targets to avoid low carbon prices, and iv) the direction and volume of financial transfers across sectors depends on allocation targets set by the government. Based on these results we provide design recommendations for India’s ETS.
排放贸易计划对印度净零排放战略的影响:基于模型的评估
为了帮助实现近期的 NDC 目标和 2070 年的长期净零排放目标,印度政府计划建立碳信用交易计划(CCTS),即国内排放交易计划(ETS)。排放交易计划本质上是一种具有成本效益的减排政策工具,为部门内部和跨部门减排提供了最大的灵活性。一个有效的排放交易计划需要考虑国家的具体挑战,并反映其在实现长期减排的更大一揽子政策中的作用。因此,在印度的背景下,我们在本研究中调查了:i) 排放交易计划在实现印度长期减排目标方面可能发挥什么作用? ii) 在排放上限下,各部门可能如何互动?iii) 排放交易计划可能如何与现有能源和气候政策互动?我们通过使用综合评估模型 GCAM(v6.0)进行四种主要情景分析,并根据印度的具体假设和预期进行了调整。这些方案是:i) NZ(净零),ii) NZ + 排放交易计划,iii) NZ + CC(指令与控制),以及 iv) NZ + RPO(可再生能源购买义务)+ 排放交易计划。NZ 情景假定印度的近期和长期气候承诺是到 2070 年实现净零排放。有排放交易计划的情景(ii 和 iv)对四个部门--电力、钢铁、水泥和化肥--实行排放上限。有 CC 的方案对所选的每个部门都设定了相同的排放上限,但不允许跨部门交易。最后一种方案包括可再生能源购买义务(RPO)和排放交易计划。我们表明,在特定的排放交易计划排放上限下i)电力行业是最具成本效益的温室气体减排方案的最大来源;ii)跨行业交易的排放交易计划比仅在行业内进行交易的排放交易计划的成本效益高 30-50%;iii)可再生能源购买义务可作为排放交易计划的补充,但在设定排放交易计划上限水平(或排放强度目标)或可再生能源购买义务目标时,需要考虑可再生能源购买义务对电力行业温室气体减排的影响,以避免低碳价格;iv)跨行业资金转移的方向和数量取决于政府设定的分配目标。基于这些结果,我们为印度的排放交易计划提供了设计建议。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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