Pricing Carbon: Risks and Opportunities for India
The ongoing rollout of a domestic carbon market in India marks a shift towards policy approaches that explicitly price emissions. Designing carbon pricing policies in a way that balances emissions reduction, revenue generation and industrial competitiveness is crucial to meet India's climate and development goals.
Using the India Energy Policy Simulator (India-EPS), the Expert Note analyzes how various carbon price scenarios in the electricity and industrial sectors impact GHG emissions and government revenues.
The analysis highlights where carbon pricing can drive meaningful emissions reduction, where its impacts are more limited, and why complementary policies are needed for hard-to-abate industrial sectors. It also highlights the potential of a carbon price to mobilize revenue for the government.
