CO₂ emissions abatement costs and drivers for Indian thermal power industry

Indian power industry contributes nearly half of its overall CO₂ emissions. In this study, we answer three related questions. First, what is the abatement cost of CO₂ emissions for the Indian thermal power industry under three different policy scenarios - business as usual, emissions reduction only, and simultaneous emissions reduction and energy efficiency enhancement. Second, what are the determinants of these abatement costs of CO₂ emissions. Third, which abatement policy scenario is more beneficial. For this, we employ a plant level dataset covering 93% of installed capacity and use a parametric quadratic directional output distance function to estimate marginal abatement costs by applying deterministic linear programming methods. Our findings are: First, the abatement costs range between US$ 46.43–71.11 per ton CO₂, depending on the policy scenario chosen. Second, plant age, location, size, ownership, and CO₂ intensity are all significant drivers of abatement costs. Third, while greater emissions reductions are possible under the emissions reduction only scenario vis-à-vis simultaneous emissions reduction and energy efficiency enhancement scenario, both scenarios are compatible with meeting the Paris agreement goals. This paper helps decision makers to allocate CO₂ abatement targets to plants in line with their abatement costs and potential.