DEEP DE-CARBONIZATION AND REGIONAL EQUITY

Sanjay Mitra () and Rohit Chandra ()
Additional contact information
Sanjay Mitra: School of Public Policy, IIT Delhi
Rohit Chandra: School of Public Policy, IIT Delhi

Working Papers from National Institute of Public Finance and Policy

Abstract: This paper presents a preliminary assessment of the nature and extent of the financial impact of the mitigation policies centered on deep decarbonization of India's electricity sector on the budget deficits of the states with relatively low endowments of solar and wind power. The impact could be quite substantial, adding 8.66 % to the combined deficits of the VRE poor states under fairly conservative assumptions. The impact is most severe on the three coal-rich states of Jharkhand, Odisha and Chhattisgarh. Absent an acceptable framework for an equitable sharing of costs and benefits across the states and with the centre, these developments could impede the realization of the national goals for climate change mitigation. India's ambitious targets call for a deep de-carbonization of the electricity sector through an accelerated deployment of renewable energy and reduced use of coal. This could exacerbate existing regional inequalities, between the states in the west and the south and those in the north and east. While variable renewable energy (VRE) sources namely, solar and wind are concentrated in a few states in the western and southern parts of the country, coal reserves occur mainly in the eastern part that also happen to have the lowest VRE endowments. As the share of VRE in electricity production and consumption rises, these locational characteristics and the dominant role of state ownership in the electricity sector together play into the finances of the VRE poor states through higher expenditure and lower revenues.

Pages: 27
Date: 2023-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-ger
Note: Working Paper 402, 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.nipfp.org.in/media/medialibrary/2023/10/WP_402_2023.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:23/402

Access Statistics for this paper

More papers in Working Papers from National Institute of Public Finance and Policy
Bibliographic data for series maintained by S.Siva Chidambaram ( this e-mail address is bad, please contact ).