Key Drivers of Indian Greenhouse Gas Emissions

India is the third largest emitter of carbon dioxide (CO2) in the world (not including the European Union [EU]), emitting 2.3 gigatonnes (gt) CO2 in 2015. While the two larger emitters, United States (US) and China, had a decrease in emissions in 2015, India increased its emissions by 5.2% (Le Quéré et al 2016). In fact, in 2014 and 2015, the largest increase in global emissions came from India. This large increase comes after more than a decade of rapid growth, which is likely to continue for many years. New plans to install many coal-fired power plants have raised serious concerns about India’s new trajectory, which is incompatible with the country’s climate goals and may jeopardise the global effort of limiting global warming to 1.5° Celsius (C) (Shearer et al 2017a; Timperley 2017).

Measured in absolute terms, India’s emissions have been the third-highest globally since about 2008 (Le Quéré et al 2016). Projections of economic growth, energy use and emissions per energy put India on a path of continuously increasing greenhouse gas (GHG) emissions (Murthy et al 1997; Raghuvanshi et al 2006; Sharma et al 2006). While current per capita emissions are very low, projections by the United Nations (UN) suggest that India’s population will continue to increase and surpass China’s around 2025. At the same time gross domestic product (GDP) is projected to increase faster than most countries from 2013 to 2040 at an average of 6.5%/year (IEA 2015b), indicating that energy consumption and emissions may see a large increase as more people use more energy. As standards of living improve, climate change impacts pose serious challenges to India’s economic growth, agricultural outputs, public health and development (IPCC 2014; Lobell et al 2012).

In the lead-up to the United Nations Framework Convention on Climate Change (UNFCCC) 21st Conference of the Parties (COP21) meeting in Paris (December 2015), India published its Intended Nationally Determined Contributions (INDC) to help address global climate change. India’s INDC has several aims (MoEFCC 2015), including to reduce the emissions intensity of its GDP by 33% to 35% by 2030 compared with the 2005 level, and having 40% electric power installed capacity from non-fossil-fuel-based energy sources. Even if these aims are met, this could mean substantial emissions growth in the next decades (Climate Action Tracker 2016). The International Energy Agency (IEA) and other studies indicate that India’s INDC is not far from business as usual (Aldy et al 2016; IEA 2015b). In contrast to China, India has not announced when its emissions will peak, allowing India to retain some flexibility in its economic and technological development. However, it is also in India’s own interest to mitigate climate change as fast as possible, as the literature shows large negative impacts on GDP due to the consequences of global warming (Burke et al 2015). Thus, decision-makers will need to understand the underlying drivers of historic and current emissions to help shape future emissions pathways.

Previous articles have investigated specific historic causalities and drivers, that is, if coal consumption affects emissions (Chandran Govindaraju and Tang 2013), if increased household access to electricity affects India’s emissions (Pachauri 2014), what the sources of household emissions are (Das and Paul 2014) and how much trade openness affects energy consumption and emissions (Yang and Zhao 2014). However, there have not been any broad investigations into the recent drivers of Indian emissions now that India is the world’s fastest growing major economy and has at the same time promised to help combat climate change through the Paris agreement. India’s way forward may cause accelerated emissions and global warming, although signals of decarbonisation have also started to emerge, as several coal-based power projects have been put on hold and investments in renewables have increased (Bhagwat and Tiwari 2017; Shearer et al 2017b).

Given India’s importance as a global actor, and its broad possibilities, it is important to map and understand the drivers of the recent historic development in order to understand future development. This article, therefore, aims at identifying the historic and current drivers of GHG emissions and investigating emission projections based on scenarios. We first give an overview of India’s historic emissions and economic development in order to discuss the underlying drivers, before we list the data sets and methods used in our study. We use four complementary approaches to analyse the drivers of historic emissions in order to capture different effects: the Kaya identity, structural decomposition, consumption-based emissions accounting and structural path analysis. These methods highlight driving forces of Indian emissions in different parts of the economy (that is, domestic factors versus emissions embodied in trade), thus leading to different leverage points where policy can be focused. This gives an arguable broad overview, from which to highlight and contrast Indian development. Finally, we project emissions and forecast the most important drivers of future emissions, before concluding and discussing policy implications.

Historical Development

India’s recent development is characterised by increasing population and GDP (Figure 1). The average annual growth rate (AAGR) of GDP has increased from 3.6%/year (per year) in the 1970s to more than 5.3%/year in the 1980s and 1990s, to 7.3%/year in the 2000s due mostly to expanding service sectors (IEA 2015a). The most recent data shows the Indian GDP expanding 6.2%/year from 2010 to 2014 (World Bank 2015). Panagariya (2004) has argued that the liberalisation of foreign trade, the reduction in industrial licensing and opening to foreign direct investment, resulting from policies adopted since 1990, were responsible for accelerated economic growth in India. The population growth rate has declined from an average of 2.3%/year in the 1970s to an average of 1.6%/year in the 2000s. India is the second-most populous country after China, with the UN’s medium population projection peaking in about the year 2070 (United Nations 2015). In combination, GDP per capita has seen an increase in growth, where the largest was in the 2000s at an annual average of 5.8%/year. While India’s GDP per capita was only 26% of the global average GDP in 1970, this has now increased to 62% in 2014.