Economic reforms, energy consumption changes and CO2 emissions in India: A quantitative analysis

Abstract

Energy based on fossil fuel consumption is very closely linked with environmental pollution in the form of CO2 emissions, a major element in global climate change. This paper analyses the changes in India’s energy consumption and CO2 emissions during the five-year period following the 1991 reforms, i.e. 1991/92 to 1996/97. The authors extend the energy Input-Output Structural Decomposition Analysis (SDA) to identify changes in energy consumption during this period. Results indicate that India’s energy consumption, which increased by 5.7 per cent a year in this period, was determined by a number of forces. The most significant role was played by the final demand structure followed by technical change and interaction between final demand structure and technical change. The CO2 emission trends reveal that the most dominating sectors have been petroleum products and electricity. The paper makes some broad policy recommendations for the future pattern of energy use in India.