Shadow Price of CO2 Emissions in Indian Thermal Power Sector

Rakesh Kumar Jain and Surender Kumar
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Rakesh Kumar Jain: Indian Railways & Department of Business Economics South Campus, University of Delhi

No 287, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: This paper estimates production efficiency and shadow prices of CO2 emissions for thermal power plants in India. It employs a unique sample of 56 power plants for 2000-2013 acquired primarily by invoking the Right to Information (RTI) Act, 2005. It estimates parametric quadratic directional output distance function using linear programming approach. We find that CO2 intensity of electricity generation could be reduced about 16 and 23 percent if the power plants were made to operate efficiently. The estimated average shadow prices of US$ 14.54 and 18.68 for a ton of CO2 emission, depending upon a plant’s strategies for enhancing electricity and reducing CO2 emissions, reflects that the prevailing Clean Energy Cess of US$ 6.15 a ton of coal or US$ 3.81 a ton of CO2 emissions is not enough to induce the required emission mitigation. Significant variation in the estimates of shadow prices calls for the application of economic instruments for cost effective reduction of the emissions.

Keywords: CO2 emissions; shadow price; directional distance function; thermal power plants; India (search for similar items in EconPapers)
JEL-codes: D24 Q25 Q52 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2018-04
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Shadow price of CO2 emissions in Indian thermal power sector (2018)
Working Paper: Shadow Price of CO 2 Emissions in Indian Thermal Power Sector (2018)
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