Energy Intensive Sectors of the Indian Economy Path to Low Carbon Development
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Report No. 54607-IN Energy Intensive Sectors of the Indian Economy Path to Low Carbon Development Energy, Environment, Water Resources and Climate Change Units Sustainable Development Department, South Asia Region The World Bank Copyright © 2011 The International Bank for Reconstruction and Development/THE WORLD BANK GROUP 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing November 2011 The fi ndings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affi li- ated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. 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Adapted by: Maryland Composition, Inc. Printing: Automated Graphics Systems, Inc. Production Editor: Marjorie K. Araya Report No. 54607-IN En Energy Intensive Sectors of the Indian Economy PATH TO LOW CARBON DEVELOPMENT KWAWU MENSAN GABA CHARLES JOSEPH CORMIER JOHN ALLEN ROGERS Energy, Environment, Water Resources and Climate Change Units Sustainable Development Department, South Asia Region The World Bank Contents Abbreviations...............................................................................................vi Acknowledgments ......................................................................................vii Executive Summary .....................................................................................ix Conclusions and Implications .............................................................xii I. Introduction: India’s Current Carbon Footprint and Challenges for Future Development ......................................................................1 Context ....................................................................................................1 Challenges Ahead ....................................................................................4 Objectives of the Study ...........................................................................5 Scope and Methodology .........................................................................5 II. Sectoral Overview and Study Approach .............................................9 Power Generation, Transmission, and Distribution .............................9 Household Electricity Consumption ...................................................14 Nonresidential Buildings ......................................................................16 Industrial S ector ....................................................................................17 Road Transport Sector ..........................................................................18 General Energy Effi ciency Improvement .............................................22 III. Scenario 1 | Five Year Plans ...............................................................23 Key Assumptions...................................................................................23 Key Fi ndings ..........................................................................................25 IV. Scenario 2 | Delayed Implementation of Supply Measures .............29 Key Assumptions...................................................................................29 Key Fi ndings ..........................................................................................29 V. Scenario 3 | “All-Out Stretch” Scenario.............................................33 Key Assumptions...................................................................................33 Key Fi ndings ..........................................................................................34 VI. Comparison of Scenarios ..................................................................43 Implementation Costs of the Different Scenarios ...............................45 VII. Challenges in Achieving the Low Carbon Path ............................47 Annex 1 | Scope and Methodology ........................................................................................................ 51 Scenario B uilding ...............................................................................................................................51 Costs ...................................................................................................................................................51 Treatment of Terminal Year and Residual Value ..............................................................................51 Implementation Costs .......................................................................................................................52 Annex 2 | Sources of Data and Assumptions ........................................................................................ 53 Annex 3 | Description of Industrial Sector ........................................................................................... 61 Iron and Steel .....................................................................................................................................61 Aluminum ..........................................................................................................................................62 Cement ...............................................................................................................................................63 Fertilizer .............................................................................................................................................63 Refi ning ..............................................................................................................................................64 Pulp and Paper ...................................................................................................................................65 References................................................................................................................................................ 67 Figures Figure 1.1| Top Twenty Countries Ranked by CO2 Emissions from Fossil Fuel Combustion in Calendar 2007 ..................................................................................................................................2 Figure 1.2 | India’s Per Capita CO2 Emissions Compared to Other G-20 Economies (2007) ..................3 Figure 1.3 | CO2 Intensity of India Compared with Select G-20 Economies .............................................3 Figure 1.4 | Low Carbon Development Model Structure ...........................................................................6 Figure 2.1 | Renewable Energy Installed Capacity (2008) Compared to Potential in India ....................11 Figure 2.2 | Indian Power Sector: Institutional Framework .....................................................................12 Figure 2.3 | Household Size Distribution, Urban (left) and Rural (right), against Mean Household Expenditure.....................................................................................................................15 Figure 2.4 | Historical Trends in New Construction .................................................................................16 Figure 2.5 | Energy Intensity of the Six Energy-Intensive Industries from 1973 to 2001 ........................18 Figure 2.6 | Emission Intensity of Industries .............................................................................................18 Figure 3.1 | Total CO2 Emissions in Scenario 1 (billion tonnes) ..............................................................25 Figure 3.2 | Share of Coal-Based Generation Capacity in 2031 in Scenario 1 .........................................26 Figure 3.3 | Evolution of Grid Electricity Supply and Associated CO2 I ntensity .....................................26 Figure 3.4 | Car Ownership per Thousand People (in relation to GDP per capita) 1990–2008 .............28 Figure 3.5 | Emission Profi le for Lower GDP Growth Sensitivity Analysis ..............................................28 Figure 4.1 | Total CO2 Emissions in Scenario 2 (billion tonnes) ..............................................................30 Figure 4.2 | Impact of Delayed Implementation in Scenario 2 on CO2 Intensity and Captive Power Generation .........................................................................................................30 Figure 5.1 | Total CO2 Emissions in Scenario 3 (billion