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Accelerating India's Movement up the Energy Ladder

Accelerating India's Movement up the Energy Ladder

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Published by Christopher Bennett

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Published by: Christopher Bennett on Aug 21, 2010
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Accelerating India’s Movement up the Energy Ladder:
The Potential for Pairing Dirty Subsidy Reform with CleanEnergy Interventions
Christopher BennettSubmitted in fulfillment of the requirements for Interdisciplinary HonorsGoldman Interschool Program in Environmental Science, Technology, and PolicyStanford University, CA, May 2010
Read by:Donald Kennedy, President and Professor Emeritus, Woods Institute for theEnvironment, and Senior Fellow, Freeman Spogli Institute for International StudiesStephen Schneider, Professor, Departments of Biology, Woods, and Civil &Environmental EngineeringWalter Falcon, Professor Emeritus and Senior Fellow, Freeman Spogli Institute for International Studies and Woods InstituteJulie Kennedy, Senior Lecturer, School of Earth Sciences, Earth Systems Program
I’d like to acknowledge Narasimha Rao, Ph.D. candidate in IPER for all of his help, andthank him for the invitation to help with conducting household surveys in India duringthe summer of 2008. This experience was critical to my deep interest in issues of energy poverty and the policies that might help alleviate it, because seeing the issues first handhas been essential to my ongoing intellectual excitement on the topic. The School of Earth Sciences helped to fund this experience, and I am grateful for their generosity. I’dlike to thank Professors Steve Schneider and John Weyant, co-advisors on this project,for their direction and feedback. The Earth Systems Program, and especially JulieKennedy, has been a wonderful source of academic encouragement and direction, both inmotivating me to apply to this thesis experience, and in helping me to gain all of thedifferent threads of interdisciplinary expertise that would be so invaluable in conductingthis research. I’d want to acknowledge Don Kennedy for his consistently wonderfuladvice. He has been a fantastic resource- intellectually, personally and academically-throughout my entire senior year. I’d like to thank the other students in the GoldmanProgram students, who have given me excellent perspective throughout the course of theyear- and especially Sabine Bergmann, Johnny Bartz, and Eugene Nho- whoaccompanied me to the 15
Conference of the Parties in Copenhagen this last December.Finally, on a personal note, I’d like to thank my dorm mates, Andrew Lawrence andDorian Bertsch, for embodying the words of Johann Wolfgang von Goethe- “correctiondoes much, but encouragement does more.” Finally, I acknowledge my parents Pat andTerry, who have given me a rare gift- an appreciation of adventure, and the tremendoussupport to make those journeys happen.
Energy poverty- or the deprivation of modern energy- is a serious condition that afflictsnearly 3 billion worldwide and seriously hinders human development. The condition alsogenerates significant health and environmental externalities via the combustion of indoor fuels. This study focuses on India’s energy poverty, and it examines how two types of  public policies- dirty energy subsidies and clean energy interventions- can acceleratemovement up the energy ladder towards more efficient and clean fuels. I first ask whether Indian energy subsidies- specifically, those that lower the price of existing dirty fuels likeelectricity, kerosene, and liquid petroleum gas- are a candidate for reform, and I useefficiency, equity, and externalities as criteria. I find that reform creates an all-Indiawelfare gain of $1.68 billion, a net gain of $471 million, satisfying the Kaldor-Hicksefficiency test. Reform also improves equity by eliminating a regressive distribution, andreduces emissions by 7 million tons of CO2 and health exposures by 1.13 millionDALYs- a non-market value of $1.25 billion. Among the three subsidies, keroseneelimination results in the largest welfare gain and co-benefits. While these results areencouraging, reform is not feasible on its own; household losses are substantial andconcentrated, and those who benefit most from the subsidy will vigorously oppose itsremoval. I therefore consider how reform might also be paired with clean energyinterventions that allow households in energy poverty to leapfrog out of that condition. Iconclude by describing and quantifying the co-benefit of three such options: kerosenereform with solar home systems, LPG reform with efficient cook stoves, and electricalreform with demand-side interventions. All of these interventions produce significant co- benefits, but cook stoves produces the most- at nearly $6 billion dollars worth of avertedcarbon emissions and exposure to disease from indoor air pollution.
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