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Assessing the Feasibility of Market-based Air Pollution Control: A Preliminary Look at the Indian Power Sector

Assessing the Feasibility of Market-based Air Pollution Control: A Preliminary Look at the Indian Power Sector. Mausami Desai Office of Atmospheric Programs U.S. Environmental Protection Agency. Better Air Quality (BAQ) 2004 Jaypee Palace Hotel Agra, India December 8, 2004.

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Assessing the Feasibility of Market-based Air Pollution Control: A Preliminary Look at the Indian Power Sector

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  1. Assessing the Feasibility of Market-based Air Pollution Control: A Preliminary Look at the Indian Power Sector Mausami Desai Office of Atmospheric Programs U.S. Environmental Protection Agency Better Air Quality (BAQ) 2004 Jaypee Palace Hotel Agra, India December 8, 2004

  2. Picture courtesy of salon.com Overview • Description of a hypothetical example assessing the potential for cap & trade (C&T) in a developing country

  3. India & MBIs • Numerous examples in India considering the case for market-based instruments (MBIs) for pollution control: • 1994 = National Institute of Public Finance and Policy (NIPFP) study • 1997 = Evaluation of Market-based Instruments for Industrial Pollution Abatement : Task force report • 2001 = Intl workshop on Economic Instruments for Industrial Pollution Prevention and Control in India • 2002 = Workshop on Exploring Applications of Market-Based Air Pollution Control in the Indian Power Sector • 2004 National Environmental Policy Statement “Use of economic prinicples in environmental decision-making”

  4. India’s Power Sector • Common theme in the reports to date => pilots/experiments should be initiated • Power sector is largest source of pollution • Possible pilot option? => Cap and trade of SO2 for power plants

  5. Designing Environmental Policies • There are several necessary steps to implementing a successful cap & trade program Implement Program Implement Program Design Program Design Program Outline Goal Assess Policy Options Outline Goal Identify & Assess Problem

  6. Cap & Trade Feasibility Study Two main parts: • Assessment • Define the problem • Define the goal • Is C&T the right tool? • Program Design • Setting Cap • Allocation • Measurement • Legal & Institutional

  7. Defining the Problem in India: Power Sector & SO2 Emissions • Why focus on SO2? • Ambient concentrations mostly meet national standards • India has relatively low-sulfur coal BUT…. • Continued growth in demand and continued dominance of coal, with concurrent growth in emissions

  8. Defining the Problem in India:Projected emissions • Current annual emissions: 2.45 million tonnes • Projected power sector SO2 emissions by academic research, TERI, and government agencies • In 2009-2010, 4.69 million tonnes/yr(Bhattacharya and Mitra 1998, TERI 1996)  In 2014-2015, 5.38 million tonnes/yr (World Bank 1998)   In 2050, 32.6 million tonnes/yr (CPCB 2004/CEA/NTPC)

  9. Defining the problem in India: Linking SO2 Emissions, PM, and Public Health • Sulfur dioxide emissions are transformed in the atmosphere to sulfates, which contribute to particulate pollution • RSPM is very high in India, yet unknown portion is PM2.5 • Fine particulates have major health impacts

  10. Defining the problem in India:Emission sources • Comprehensive national inventory for SO2 – not yet available • 89% of SO2 emissions (t/d) are generated from power plants (CPCB 2002, 2004) • 82% of SPM (t/d) emissions are generated from power plants (CPCB 2002, 2004) • Academic work: Reddy and Venkataraman (2002); Garg A, Kapshe, Shukla, and Ghosh (2002); Garg, A. et al (2001) • 79% of PM2.5 is from utilities (estimated for 1996-97 by Reddy and Venkataraman 2002)

  11. Defining the problem in India:Emission sources (cont.) • Preliminary analyses suggest Secondary sulfates and nitrates form some fraction of RSPM (PM10) and PM2.5 (ESMAP 2004, CPCB)

  12. Defining the goal in India • Currently only stack height requirements for SO2 in power sector • Emissions standards expected Dec. 2005 • Very little data on cost-curve of abatement options • Some benefits information • E.g. WB studies

  13. Next Steps: Is Cap & Trade the Right Tool? • Is flexibility appropriate? • Depends on pollutant • Do sources have different control costs? • Unknown, but variety of different vintages • Are there sufficient sources? • 88 thermal power plants, NTPC = 20 • 13 coal-based, 7 gas-based

  14. Next Steps: Is Cap & Trade the Right Tool? • Are measurement capabilities sufficiently accurate and consistent? • Power sector may already be moving to Continuous Emission Monitors (CEMs) • CEMs costs have come down rapidly • Non-CEMs options w/add’l QA/QC

  15. Pilot Program in India? • Institutional capacity in power sector varies widely; some segments w/ high capacity • E.g. NTPC/CenPEEP • SO2 may be low risk option since not yet shown to be significant problem • ‘Virtual’ programs possible • E.g. PEMEX, BP

  16. For more information... • Forthcoming, “Assessing the Feasibility of Market-based Air Pollution Control: A Preliminary Look at the Indian Power Sector” • Katherine Grover, US EPA • Mausami Desai, US EPA http://www.epa.gov/airmarkets/international/tools.pdf

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