Cleaner the better: Macro-economic assessment of ambitious decarbonisation pathways across Indian states

Abstract

In first of its kind, this study evaluates socio -economic impacts of two ambitious decarbonisation pathways for India (i) aligned with India's Nationally Determined Commitments (NDC) negotiated through Paris agreement in 2015 and (ii) more ambitious NDC plus decarbonisation trajectory aligned with India's recent COP26 commitments at subnational level. The analysis uses a newly developed dynamic macro-econometric regional simulation model - E3-India to evaluate changes in key economic and emission parameter due to energy transition at both national and state level for India. Impacts on emission intensity of the economy, GDP, employment and income are assessed to highlight the larger macro-economic and regional distributive impacts of existing NDC targets for India . The results provide three key insights, (i) overall socio-economic impacts of committing to an ambitious decarbonisation trajectory primarily articulated through NDCs for India will be positive, but the transition trajectory will have unequal distributive impacts across states and sectors. (ii)The NDC trajectories will have an expansive impact on the harder to abate construction sector so along with decarbonisation of energy sector, steel and cement sector would also need focussed decarbonisation measures. (iii) In absence of policies promoting ‘Just transitions’ smaller coal bearing states will be worst off, stuck with expansion of only primary and extractive mining sectors while high renewable energy potential states will show expansion in technology focussed sectors and high skilled sectors