3. ENERGY AND SUSTAINABLE DEVELOPMENT
extension to carbon trading, thereby bringing carbon pricing up the policy-making value chain. In particular, revising and expanding the PAT scheme for the power sector (and potentially other sectors of interest) could provide appropriate price signals. The power sector could arguably be effectively carved out of the PAT scheme and migrated to a carbon scheme, using the PAT registry and trading platform. Many jurisdictions have introduced carbon pricing in a prudent way, with pilots for selected sectors or provinces and parameters set in a way to gradually increase the price of carbon. The GoI could use a similarly prudent approach for the power sector, which would help phase out inefficient coal and also benefit renewables and gas-powered generation. Carbon pricing can also serve as a tool to ensure effective energy pricing for industry and households. Costcovering energy prices for residential and industrial users can play an important role in India’s clean energy transition. Energy pricing reforms and carbon pricing can go hand in hand to address environmental externalities and provide appropriate price signals for enduse consumption.
Recommendations
The Government of India should:
Strengthen enforcement of environmental rules, notably on air pollution, by galvanising the authorities to trigger preventive measures at, inspect, launch procedures against, fine and close polluters. Support the adequate financing of Central and State Pollution Control Boards, notably for tighter-meshed pollution monitoring systems.
Target as yet unregulated sectors with comprehensive and stringent air pollution regulations, notably in industry, transport and buildings.
Use the PAT platform (rather than creating new schemes) for those industries as a pilot for CO2 emissions trading.
Enhance integration of policy responses to air quality, energy access and GHG emission reductions to fully harvest their co-benefits. Boost policy co-ordination across different level of government to foster the implementation of India’s NDC.
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IEA. All rights reserved.
IEA. All rights reserved.