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Economics of Reducing Greenhouse Gas Emissions in South Asia Options and Costs

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Economics of Reducing Greenhouse Gas Emissions in South Asia Options and Costs Economics of Reducing Greenhouse Gas Emissions in South Asia Options and Costs Financed under ADB-Australia South Asia Development Partnership Facility Economics of Reducing Greenhouse Gas Emissions in South Asia Options and Costs Ram Manohar Shrestha Mahfuz Ahmed Suphachol Suphachalasai Rodel Lasco December 2012 Financed under ADB-Australia South Asia Development Partnership Facility © 2013 Asian Development Bank All rights reserved. Published 2013. Printed in the Philippines. ISBN 978-92-9092-143-1 (Print), 978-92-9092-383-1 (PDF) Publication Stock No. BKK135371-2 Cataloging-in-Publication Data Shrestha, R.M., M. Ahmed, S. Suphachalasai, and R.D. Lasco. Economics of reducing greenhouse gas emissions in South Asia: Options and costs. Mandaluyong City, Philippines: Asian Development Bank, 2013. 1. Climate change. 2. Mitigation. 3. South Asia. I. Asian Development Bank. the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Cover photos from ADB photo library and AFP Imageforum. Note: In this report, “$” refers to US dollars. Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Department of External Relations Fax +63 2 636 2648 [email protected] Printed on recycled paper Contents Tables, Figures, and Boxes iv Foreword vii Abbreviations ix Weights and Measures x Executive Summary xi 1 Introduction 1 2 Regional Overview 3 Socioeconomic Background 3 Energy Resources, Production, and Use 3 Activities Not Using Energy 12 GHG Emissions and Climate Trends 14 3 Methodology 26 Assessing Technology and Resource Options for Energy-Using Activities 26 Assessing Technology and Resource Options for Activities Not Using Energy 30 GHG Abatement Cost Analysis 31 Scenarios Used in the Study 33 Related Project Activities 37 Limitations of the Study 38 4 Options and Costs to Reduce GHG Emissions in 2005–2030 40 Energy-Using Activities 40 Activities Not Using Energy 62 Summary 78 5 Challenges and Enabling Conditions 80 Challenges to Clean Technology Development 80 Enabling Conditions and Policies for Promoting Low-Carbon Development 85 6 Conclusion and Way Forward 100 Technology 100 Policy 100 Finance 101 Appendixes 104 1 Country Summaries—GHG Emission Abatement Options and Costs in Energy-Using Activities and Key Sectors 104 2 Country Summaries—GHG Emission Abatement Options and Costs in Activities Not Using Energy 125 References 133 Tables, Figures, and Boxes Tables 1 Selected Social and Economic Indicators of South Asian Countries 4 2 Biomass and Biogas Production Potential and Total Number of Biogas Plants Installed in South Asia 5 3 Theoretical and Economic Hydropower Potential in South Asia 6 4 Wind Power, Solar Power, and Coal Resources in South Asia 7 5 Structure of Total Primary Energy Supply in South Asia, 2005 and 2009 10 6 Energy Indicators in South Asia, 2005 and 2009 11 7 Structure of Installed Electricity Generation Capacity in South Asia, 2011 (MW) 11 8 Total Final Energy Consumption by Sector, South Asia, 2009 (%) 12 9 Annual Growth Rates of Selected Crops and Livestock, South Asia, 2000–2010 (%) 13 10 Selected Land-Use Indicators in South Asia, 2000 and 2010 14 11 Forest Areas and Carbon Stock Biomass, South Asia 15 12 Total GHG Emissions in South Asia (million tons CO2e) 16 13 GHG Emission by Sector, South Asia, 1994 and 2000 (million tons CO2e) 17 14 GHG Emissions from Energy-Using Activities, South Asia (million tons CO2e) 17 15 Historical and Projected Climate Trends in South Asia 19 16 Data Inputs 34 17 Total Primary Energy Supply by Source under Base Case and Carbon Tax, South Asia (%) 42 18 Energy Intensity, South Asia (toe per $1,000 2005 PPP) 44 19 Share in Electricity Generation by Fuel Source under Base Case and Carbon Tax, South Asia (%) 46 20 Sector Energy Use in South Asia (PJ) 48 21 Sector Share in Total Final Energy Consumption under Base Case and Carbon Tax, South Asia (%) 50 22 Contributions to Total GHG Emissions of Energy-Using Sectors under Base Case and Carbon Tax, South Asia (%) 53 23 Local Pollutant Emission Reduction under the Base Case and Carbon Tax, South Asia (Excluding India), 2020 and 2030 (’000 tons) 59 24 Total GHG Emissions at Selected Incremental Abatement Costs in 2020, South Asia (Excluding India) 60 25 Sector Shares in Total GHG Emission Abatement at Selected Incremental Abatement Costs, South Asia (Excluding India) (%) 61 26 Base Case Total GHG Emissions from Activities Not Using Energy, South Asia, 2005 and 2030 (million tons CO2e) 65 27 Total GHG Abatement Potential and Costs from Activities Not Using Energy, South Asia (Excluding India and the Maldives), 2020 75 Tables, Figures, and Boxes v 28 Targets for Cleaner Technologies and Options in South Asia 89 29 Pipeline CDM Projects in South Asia as of June 2012 95 Figures 1 Overview of the MARKAL Framework 28 2 A Reference Energy System 28 3 GHG Abatement Cost Curve: An Illustration 32 37 5 Total Primary Energy Supply in South Asia (Excluding India), 2005–2030 41 6 Structure of Total Primary Energy Supply in South Asia (Excluding India), 2005 and 2030 41 7 Electricity Generation in South Asia (Excluding India), 2005–2030 45 8 Electricity Generation Share by Fuel Type in South Asia (Excluding India), 2005 and 2030 45 9 Sector Share in Total Final Energy Consumption, South Asia (Excluding India), 2005–2030 49 10 Sector GHG Emissions, South Asia (Excluding India), 2005–2030 51 11 Sector Shares in GHG Emissions, South Asia (Excluding India), 2005 and 2030 51 12 Primary Energy Supply under the Base Case and Carbon Tax in South Asia (Excluding India) 55 13 Electricity Generation under Base Case and Carbon Tax in South Asia (Excluding India) 56 14 Final Energy Consumption under Base Case and Carbon Tax, South Asia (Excluding India) 57 15 Sector GHG Emissions under Base Case and Carbon Tax, South Asia (Excluding India) 58 16 Total GHG Emissions from Activities Not Using Energy, South Asia (Excluding India and the Maldives), 2005–2030 64 17 Sector Share in Total GHG Emissions from Activities Not Using Energy (Except Forestry), South Asia (Excluding India and the Maldives), 2005 and 2030 64 18 Total GHG Emissions from Activities Not Using Energy (Excluding Forestry and Industrial Processes), India, 2005–2030 66 19 Sector Share in Total GHG Emissions from Activities Not Using Energy (Excluding Forestry and Industrial Processes), India, 2005 and 2030 67 20 Share in Total GHG Emissions of Agricultural Activities, South Asia (Excluding India and the Maldives), 2005 and 2030 68 21 Shares in Total GHG Emissions of Agricultural Activities, South Asia (Excluding the Maldives), 2005 and 2030 68 22 GHG Emissions from Livestock Raising, South Asia (Excluding India and the Maldives), 2005–2030 69 23 GHG Emissions from Livestock Raising, South Asia (Excluding the Maldives), 2005–2030 69 24 GHG Emissions from Crop Production-Related Activities, South Asia (Excluding India and the Maldives), 2005–2030 70 25 GHG Emissions from Crop Production-Related Activities, South Asia (Excluding the Maldives), 2005–2030 71 vi Tables, Figures, and Boxes 26 Greenhouse Gas Sink Capacity of the Forestry Sector, South Asia (Excluding India and the Maldives), 2005–2030 71 27 Greenhouse Gas Emissions from the Waste Disposal Sector, South Asia (Excluding India and the Maldives), 2005–2030 72 28 Greenhouse Gas Emissions from the Waste Disposal Sector, South Asia (Excluding the Maldives), 2005–2030 72 29 Greenhouse Gas Emissions from Industrial Processes, South Asia (Excluding India and the Maldives), 2005–2030 73 30 Subsector Shares in Industrial Process-Related Greenhouse Gas Emissions, South Asia (Excluding India and the Maldives), 2005 and 2030 74 31 Barriers to Clean Technology Development in South Asia 81 Boxes 1 Financing Barriers to Renewable Energy Projects in India 82 2 Generation-Based Incentives for Wind and Solar Power in India 91 3 Bachat Lamp Yojana in India 91 4 Solar Success in Gujarat, India 92 !" 94 6 Bhutan’s Dagachhu Hydropower Project—The First Cross-Border Clean Development Mechanism Project in the World 96 7 Success of the Grameen Shakti Solar Home System in Bangladesh 102 Foreword he major challenge for the Asian Developing Member Countries (DMCs) is how to Tachieve sustained and rapid economic growth for alleviating poverty while reducing # & # # & '# cleaner energy forms. In this context they need to examine their resource and energy options in order to develop a low-carbon path that can also provide sustained, high economic growth and abate greenhouse gas (GHG) emissions at low or even negative &#&'&' employment opportunities. South Asia, which is home to the majority of world’s poorest people, is expected to bear #*#'' change. Against a backdrop of continuing increase in the emission of GHGs, the South Asia DMCs of the Asian Development Bank (ADB) have
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