Reforming Energy Policy in India: Assessing the Options

Ian Parry, Victor Mylonas and Nate Vernon-Lin

No 2017/103, IMF Working Papers from International Monetary Fund

Abstract: Spreadsheet models are used to assess the environmental, fiscal, economic, and incidence effects of a wide range of options for reducing fossil fuel use in India. Among the most effective options is ramping up the existing coal tax. Annually increasing the tax by INR 150 ($2.25) per ton of coal from 2017 to 2030 avoids over 270,000 air pollution deaths, raises revenue of 1 percent of GDP in 2030, reduces CO2 emissions 12 percent, and generates net economic benefits of approximately 1 percent of GDP. The policy is mildly progressive and (at least initially) imposes a relatively modest cost burden on industries.

Keywords: WP; price; firm; fuel price elasticity; average cost; net; rate; Air pollution deaths; revenues; Paris targets; welfare effects; incidence; India; coal tax; energy price reform; fuel price reform; economic welfare cost; fuel price responsiveness; supply cost; air pollution damage; Non-renewable resources; Greenhouse gas emissions; Carbon tax; Fuel prices; Global (search for similar items in EconPapers)
Pages: 51
Date: 2017-05-03
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Citations: View citations in EconPapers (21)

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