CARBON TAXES AND INDIA

Using the Indian module of the Second Generation Model (SGM), we explo re a reference case and three scenarios in which greenhouse gas emissi ons were controlled. Two alternative policy instruments (carbon taxes and tradable permits) were analyzed to determine comparative costs of stabilizing emissions at (1) 1990 levels (the 1X case), (2) two times the 1990 levels (the 2X case), and (3) three times the 1990 levels (th e 3X case). The analysis takes into account India's rapidly growing po pulation and the abundance of coal and biomass relative to other fuels . We also explore the impacts of a global tradable permits market to s tabilize global carbon emissions on the Indian economy under the follo wing two emissions allowance allocation methods. 1. Grandfathered emis sions: emissions allowances are allocated based on 1990 emissions. 2. Equal per capita emissions: emissions allowances are allocated based o n share of global population. Tradable permits represent a lower-cost method to stabilize Indian emissions than carbon taxes, i.e. global ac tion would benefit India more than independent actions.