Costs of Reducing Greenhouse Gas Emissions: A Case Study of India’s Power Generation Sector

Research, Preprint OPEN
Manish Gupta (2006)
  • Publisher: Milano: Fondazione Eni Enrico Mattei (FEEM)
  • Subject: Marginal Abatement Costs, Distance Function, CO2 Emissions, Shadow Prices, Power Generation Sector | Distance Function | Power Generation Sector | Marginal Abatement Costs | Q40 | CO2 Emissions | Shadow Prices
    • ddc: ddc:330
      jel: jel:Q40

If India were to participate in any international effort towards mitigating CO2 emissions, the power sector which is one of the largest emitters of CO2 in the country would be required to play a major role. In this context the study estimates the marginal abatement costs, which correspond to the costs incurred by the power plants to reduce one unit of CO2 from the current level. The study uses an output distance function approach and its duality with the revenue function to derive these costs for a sample of thermal plants in India. Two sets of exercises have been undertaken. The average shadow prices of CO2 for the sample of thermal plants for the period 1991-92 to 1999-2000 was estimated to be respectively Rs.3380.59 and Rs.2401.99 per ton for the two models. These shadow prices can be used for designing environmental policies and market-based instruments for controlling pollution in the power sector in India.
  • References (19)
    19 references, page 1 of 2

    Government of India (1998), Economic Survey 1997-98, Economic Department, Ministry of Finance, Government of India, New Delhi.

    Baumol, W.J. and W. Oates (1988), The Theory of Environmental Policy, Cambridge University Press, Cambridge, United Kingdom.

    Titenberg, T.H. (1985), Emissions Trading: An Exercise in Reforming Pollution Policy, Resources For the Future, Washington DC.

    Debreu, G. (1951), “The Coefficient of Resource Utilization”, Econometrica, vol. 22, pp. 14-22.

    Malmquist, S. (1953), “Index Numbers and Indifference surfaces,” Trabajos de Estatistica, vol. 4, pp. 209-242.

    Shephard, Ronald W. (1953), Cost and Production Functions, Princeton University Press, Princeton.

    Shephard, Ronald W. (1970), Theory of Cost and Production Functions, Princeton University Press, Princeton.

    Färe, Rolf, S. Grosskopf, C.A.K. Lovell, and S. Yaisawarng (1993), “Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach,” The Review of Economics and Statistics, vol. 75, pp. 374-380.

    Coggins, J.S., and J.R. Swinton (1996), “The Price of Pollution: A Dual Approach to Valuing SO2 Allowances,” Journal of Environmental Economics and Management, vol. 30, pp. 58-72.

    Hetemäki L. (1996), “Essays on the Impact of Pollution Control on a Firm: A Distance Function Approach”, Finnish Forest Research Institute Research Paper 609, Helsinki Research Centre, Helsinki.

  • Metrics
    No metrics available
Share - Bookmark