Reforming Energy Policy in India: Assessing the Options

52 Pages Posted: 16 Oct 2017

See all articles by Ian Parry

Ian Parry

International Monetary Fund (IMF)

Victor Mylonas

International Monetary Fund (IMF)

Nate Vernon

Independent

Date Written: May 2017

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: Energy policy, Excise taxes, Energy prices, Fossil fuels, Greenhouse gas emissions, Pricing reforms, India, Air pollution deaths, Paris targets, welfare effects, incidence, coal tax, energy price reform, Government Policy, Environmental Economics: Government Policy

JEL Classification: Q48, Q54, Q58, H23

Suggested Citation

Parry, Ian and Mylonas, Victor and Vernon, Nate, Reforming Energy Policy in India: Assessing the Options (May 2017). IMF Working Paper No. 17/103. Available at SSRN: https://ssrn.com/abstract=3053176

Ian Parry (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Victor Mylonas

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Nate Vernon

Independent ( email )

No Address Available

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