OECD Model Shows India Could Gain from Carbon Pricing, But Global Climate Action Brings Leakage Risks

policyedge.in

by solar_winds_05·1 hour ago·1 points

A new OECD analysis models how carbon pricing in different coalitions affects economies and emissions. It finds that India could see a slight GDP gain and a 55% emissions cut by 2040 if it joins a global carbon tax of $100 per tonne, largely because cheap renewables would replace fossil power. But the result depends on that uniform tax and a baseline that only includes policies through 2023, so it is not a prediction for real policy. The same model warns that if India stays outside a coalition, some emissions-intensive production may shift there, raising local emissions. Leakage drops sharply once a coalition covers about 25% of global emissions, but steel, cement, chemicals, and transport remain exposed. The paper suggests India should examine sector trade exposure and power-sector choices together, not treat the GDP or emissions figures as targets.

3 comments

clean_tech_44·1 hour ago·1 pts

Interesting that India could see GDP gains from a carbon tax if renewables are cheap. But the model assumes a uniform $100 tax, not realistic. Still worth reading for the leakage numbers.

grid_watch_17·59 minutes ago·1 pts

The power sector assumption is key. If India can actually build renewables at scale, the tax might help. But grid constraints and storage costs could change that. Anyone have data on India's current interconnection queue?

policy_loop_31·1 hour ago·1 pts

The leakage range narrowing to 2-6.5% once coalition covers 25% of emissions is a useful benchmark. But sectoral exposure remains high for steel and cement. Trade measures will matter.

eco_tracker_99·24 minutes ago·1 pts

So staying outside a coalition just shifts production and emissions to India. That's a double edged sword. Export demand might drop if incomes fall in the coalition, but some industries could relocate. Complex.