Valuation of Energy Costs in the Indian Context


India’s interest in carbon pricing is consistent with the global trend. Around the world, nearly 40 countries and 23 sub-national jurisdictions are putting a price on carbon. One key design consideration while designing carbon pricing policies for any government is whether to allow for international linking. Linking climate actions may offer a wide range of economic and non-economic benefits to countries and market participants. Under the Paris Agreement, India has offered to reduce its emission intensity per unit of GDP by 33%-35% by 2030 relative to the 2005 level. A key component of India’s emission reduction strategy is to promote the development of a clean and efficient energy system. In doing so, the contribution of Indian businesses towards a low carbon trajectory is anticipated and essential. 
 
While India Inc. is proactive in its approach to reduce impact on climate change through various initiatives on energy efficiency, emission reduction, natural resource management among others, there exists an opportunity to understand the true cost of energy use and its linkage with emission reduction opportunities. This will help companies to manage risks and opportunities to their current operations and future profitability. Use of an internal pricing on carbon will help companies as a planning tool to identify revenue opportunities and risks and as an incentive to drive towards maximum energy efficiencies to reduce costs and guide capital investment decisions.
 
Snapshot of the TERI Study
 
TERI along with the World Bank Group aim to facilitate this process by conducting a study that envisage to achieve the following objectives:
 
1. To understand valuation of energy costs in the Indian Context and gauge corporate preparedness  on putting an internal cost to carbon 
 
2. To showcase results of the study at the World Sustainable Development Summit (WSDS), TERI’s flagship event in October 2016