Estimating the complete CO₂ emissions and the carbon intensity in India: From the carbon transfer perspective

Highlights

• Evaluating embodied energy-related CO₂ emissions in India.

• Analyzing the change law of carbon intensity.

• EGW emitted the most production emissions.

• CON emitted the most consumption emissions.

• More than 90% of sectors’ CO₂ intensity has declined from 1995 to 2009.

Abstract

With the impacts of climate change causing widespread concerns, many scholars had discussed carbon leakage in the international trade, which ignored carbon transfer within domestic sectors. Departing from them, this paper took into account energy-related CO₂ emissions embodied in intermediate production processes. We used the SRIO model to calculate and analyze the carbon footprint of economic sectors in India during the period of 1995–2009, and also investigated the changes in the carbon emission intensity of each sector. The results showed that, from the production perspective, the most famous "high carbon" sector was EGW (electricity, gas and water supply), and this sector accounted for 60% of the CO₂ emissions of the secondary industry. From the consumption perspective, this ratio was only maintained at between 10%–16%. In contrast, traditional "low carbon" sector, CON (construction) emitted the largest CO₂ to other sectors. In addition, more than 90% of the sectors showed a decreasing trend of carbon emission intensity. The conclusions of this paper have important policy implications for the correct allocation of CO₂ emission responsibility, establishment of fair and effective emission reduction policies and the transformation of low carbon economy in India.

Introduction

During the past decade, the grim situation of climate change has been widely recognized. CO₂ (carbon dioxide) emissions¹ are large and growing rapidly in developing countries, causing widespread concern around the world. The rapid economic development of India has resulted in a large amount of energy demand and caused massive CO₂ emissions (Ahmad et al., 2016, Goodman, 2016; Trudeau et al., 2011; Schmid, 2011). According to the data of BP (2011), the annual growth rate of CO₂ emissions of India from 1995 to 2014 was 5.42%. IEA (2012) predicted that India's annual CO₂ emissions will reach 2.2GT in 2035, and India will overtake the United States to become the world's second largest CO₂ emitter, just behind China (World Energy Outlook 2012). However, India is experiencing wide inequality between the rich and the poor, uneven development and other issues (Trudeau et al., 2011; Roy et al., 2014; Parikh and Parikh, 2016). The assessment report released by IMF (2015) pointed out that India's per capita GDP was only $1688, which is 16.84% of the world average. Also, India had a population of more than 1.2 billion, of which 244 million people still had no access to electricity (IEA, 2016). Therefore, for the government, it was more important to address the challenge of poverty than to solve environmental problems. Indeed, using carbon intensity indicator which is linked to economic growth,² rather than a simple total CO₂ emissions targets,³ will be better suited to the assessment of the results of India's efforts to reduce emissions.

There are two main perspectives to calculate CO₂ emissions. The traditional approach is based on the guidelines provided by IPCC and has a production-based perspective that focuses on direct CO₂ emissions⁴ of all sectors (IPCC, 2006, IPCC, 1996). This combines with gross national product to obtain the measure for carbon emission intensity. The advantage of this method is that it is more intuitive and directly shows the carbon efficiency of each sector with the production-based process. However, this method is concentrated only on direct CO₂ emissions without considering carbon leakage and the factors that induce those direct emissions, weakening policy effects on emission reduction (Peters and Hertwich, 2008). Therefore, as an improvement on the traditional method, another approach to calculate the complete CO₂ emissions⁵ (embodied CO₂ emissions) in the supply chain is proposed. It considers the balance between the production sector and the consumption sector by calculating sectoral embodied emissions in the intermediate goods and services from other sectors, or the carbon footprint.

Lots of studies have evaluated energy-related CO₂ emission, in which, a production-based perspective that focuses only on direct CO₂ emissions is frequently adopted (Dietzenbacher and Mukhopadhyay, 2007; Bank, 2011; Sarker et al., 2013). In discussing the influencing factors of CO₂ emissions in India, most scholars did not take into account the existence of carbon leakage among various sectors (Ahmad et al., 2016, Ghosh, 2010; Nag and Parikh, 2000). Only a handful of studies have focused on embodied emissions within the supply chain, especially in India. Pandey et al. (2011) suggested that when calculating greenhouse gas emissions, it was necessary to fully consider the emission embodied in the intermediate goods and services delivered from other sectors. Especially for researches on industrial CO₂ emissions, emission reduction policies would not be able to play its role or would cause a waste of resources when government only concentrate on production emission in the demand chain. It was necessary to analyze emission in India's economic sectors and further decomposed embodied emissions according to final demand and fuel types and (Chen et al., 2016; Lindner et al., 2012; Zhang et al., 2015). In this study, on the basis of the existing CO₂ emission accounting system, we took full account of the carbon leakage among various sectors, so as to accurately estimate the real CO₂ emissions of the various sectors in India.

Obviously, as a developing country, India still has a long way to develop its industrial sector and complete its structural transformation. The relationship between input and output of each sector should be taken careful consideration. Therefore, in the process of calculating the CO₂ emission intensity, we need to take the consumption-based sectoral emissions (or embodied emissions) into account. The total carbon emission intensity is more conducive to explain the inter industry emissions, and to analyze the relationship between CO₂ emissions and added value from a global perspective. Accurate calculation of the total carbon intensity is the key premise for India to propose effective industrial and environmental policies. Despite the urgency of the situation, there are few literatures on the study of India's embodied CO₂ emissions.

In recent years, input-output model is the mainstream analysis tool to identify all life-cycle effects of production and estimate the carbon leakage. Because MRIO model⁶ takes into account the emission intensity of different countries, they have been widely used to analyze emissions embodied in international or interregional trade, while SRIO model⁷ assumes that imported goods are in accordance with the production of local technology (Weber et al., 2008, Lin and Sun, 2010; Grunewald et al., 2012, 2009). This study seeks to calculate sectoral emissions embodied in intermediate goods and services in India and combine with the estimated total carbon emission intensity of each sector. Therefore, in this paper, we applied the input-output table of world series, which is based on the world input-output database (WIOD) and used the SRIO model to analyze the embodied emissions in economic sectors of India from 1995 to 2009. In addition, the carbon emission intensity of each sector was investigated.

On the basis of previous studies, this study had three contributions. Firstly, the existing researches on CO₂ emissions in India did not take the embodied emission within economic sectors into consideration. This paper offered the consumption-based perspective and further estimates the complete carbon intensity of all sectors in India from 1995 to 2009. Moreover, the relationship between industrial relevancy and CO₂ emissions was comprehensively evaluated, and the regularity of its fluctuation over time was analyzed. Secondly, this study used the non-competitive input-output table which differs from other studies whose analysis are based on the competitive input-output table (Hansda, 2001, Lin and Sun, 2010). It fully takes into account imported goods in the supply chain, including the indirect emission caused by intermediate production processes. If the competitive input-output analysis is used, the final demand in the domestic CO₂ emissions will be overestimated. The non-competitive input-output table provided by WIOD is used to distinguish the import and domestic parts of the intermediate products and the final demand, which reduces the estimation error. Thirdly, this paper improved the method of Lin and Sun which had calculated China's CO₂ emissions. Lin and Sun (2010) and Sakai and Barrett (2016) discussed carbon leakage within imports and exports at the global scale, but they ignored domestic embodied emissions in the intermediate goods and services among various sectors. This paper would further consider the phenomenon of carbon leakage among different sectors in India's domestic sectors, and investigate the relationship between different sectors through the intermediate inputs.

The paper is organized as follows: Methodology and data are presented in Section 2. Section 3 discusses the results, and the conclusions and recommendations are presented in Section 4.