India’s path to sustainable growth

Equipping the research community with the best tools to support sustainable growth in India is one of the main aims of a project led by Cambridge Econometrics (CE) and the Regulatory Assistance Project (RAP).

The organisations are working together to adapt an advanced software tool, which is both fit-for-purpose and scientifically robust, in order to assess and evaluate energy and climate policy in India as the country acts to meet its obligations under the United Nations Framework Convention on Climate Change (UNFCCC).

The E3 India approach serves to advance an evidence-based policy-making approach that is both technically rigorous, transparent and replicable – the fundamental attributes of sound policy-making practice.  It could be applied more widely as other countries implement their Nationally Determined Contributions (NDCs).

Locally tested and accessible

Once fully developed the model will be tested by local researchers, some of whom will receive free-of-charge licences to use it.  The model helps researchers assess, and policy-makers understand, the economic impacts of:

• Changes in the power sector energy mix, including the share of renewables in the mix;
• Policies to promote renewable uptake, such as Feed-in-Tariffs or direct subsidies;
• Direct regulation on energy efficiency;
• Energy and carbon pricing instruments; and
• Policies beyond the energy and environment domains where assessment of economic impacts is relevant.

Hector Pollitt, recently back from Delhi, explains: “What’s so unique about this tool is that it has been designed for use at state level unlike any other tool that exists in India today, which is typically able to assess only national-level impacts.

With each state differing so widely in its demography, geography, economy, resource endowments and energy consumption this is really crucial for our Indian partners.  Furthermore, it has been designed through a collaborative process, capturing local knowledge and expertise.

Lastly, but most importantly from a policy-making perspective, the easy access to this tool and its transparency will vastly improve the ability of stakeholders to develop a shared or common understanding of various issues thereby creating space for consensus-building that until now doesn’t really exist.”

Context

The U.N. Framework Convention on Climate Change (UNFCCC) Paris Agreement entered into force on 4 November 2016.  The long-term goals of this Agreement are to hold the increase in global average temperature to well below 2°C, to pursue efforts to limit the increase to 1.5°C and to achieve net zero emissions in the second half of this century.  India has committed to dramatically increasing its share of renewable energy as a result, whilst tackling the primary goal of reducing poverty.

According to India’s own submission to the UNFCCC, achieving sustainable growth is a formidable challenge: “India realises that economic growth and development have to be guided by the key concerns of sustainability, because none of us have the luxury, any longer, of ignoring the economic as well as the environmental threat that a fast-deteriorating ecosystem poses to our fragile planet” (p6, UNFCCC Submission).

By providing an advanced macroeconomic simulation model to assess different energy policy scenarios and ensuring that local partners are trained to use it, this project goes some way in responding to the significant challenges faced by India in meeting its UN obligations.

For more information about this project and the adaptability of our macroeconomic tools to different sectors and countries, please contact Hector Pollitt.