Key Messages

• The application of the SAVi methodology helps making a stronger case for a planned public bicycle sharing system in Dwarka, Delhi, by estimating and valuing the environmental, social and economic co-benefits and avoided costs it generates.
• The report provides evidence of how the successful implementation of the bicycle sharing system advances the realization of sustainable mobility targets in Dwarka, improves the quality of life and delivers transport policy objectives defined in the Delhi Master Plan 2021.
• Even if conservative demand numbers and low estimates for the valuation of externalities are assumed, discounted net benefits over the course of 20 years amount to more than INR 3.14 billion (~USD 44.4 million) while the most significant benefits stem from the economic value of time saved, avoided costs of air pollution and increases in retail revenues and property values.

This report presents the results of the Sustainable Asset Valuation (SAVi) applied to the planned Public Bicycle Sharing (PBS) system in Dwarka, Delhi. To strengthen the business case for the PBS system and encourage public authorities to invest in providing the baseline bicycle and safety infrastructure, it is vital to estimate and value the co-benefits, avoided costs and additional costs expected from this particular non-motorized transport system.

The SAVi assessment consists of the following elements:

• A calculation of three demand scenarios and associated changes in transport use patterns in Dwarka.
• A valuation of nine externalities resulting from a successfully implemented PBS system.
• A scenario comparison of the valued externalities.
• An integrated cost–benefit analysis of the PBS system, including valued externalities per PBS demand scenario.

The results of a conventional cost-benefit analysis indicate that the PBS system is financially deficient under all demand scenarios. If the environmental, social and economic co-benefits and avoided costs valued by SAVi are taken into account, however, the picture changes. The results of an integrated cost–benefit analysis demonstrate that each demand scenario yields a positive net value. The higher the demand for using the PBS system, the higher the positive net results. The most significant benefits stem from the economic value of time saved, avoided costs of air pollution and increases in retail revenues and property values.

Even if conservative demand numbers and low estimates for the valuation of externalities are assumed, discounted net benefits over a course of 20 years amount to more than INR 3.14 billion (~USD 44.4 million). The more optimistic high-demand scenario would yield INR 12.19 billion (~USD 172.3 million) net results if high valuation estimates for the externalities are assumed. These net results also indicate a benchmark for deciding on the investment volume for additional bicycle and road safety infrastructure in Dwarka.

Altogether, this SAVi assessment provides evidence that the PBS system is a worthwhile investment, as it advances the realization of sustainable mobility targets in Dwarka, improves the quality of life and therefore delivers transport policy objectives defined in the Delhi Master Plan 2021.

Key Messages

• Major gaps in knowledge are limiting better targeting of energy access subsidies in India. The latest distributional analyses of energy consumption subsidies—that is, how benefits are shared across different income groups—are based on 2011 census data that are now significantly dated.
• This report identifies a number of specific targeting interventions that could better target energy subsidies. It calls for dedicated research to estimate the distributional performance of existing subsidies and various targeting options in order to better inform policy design.

India’s energy access policies have succeeded in achieving almost universal electricity access and a massive uptake in clean cooking. Connection and consumption subsidies for electricity and liquefied petroleum gas (LPG) have played an important role in driving these changes. But the policies are also costly: in 2017, electricity and LPG consumption subsidies alone cost INR 87,830 crore (USD 13.1 billion).

Efforts have been ongoing for years to reduce costs by better targeting subsidies. Most recently, this includes discussions around a Direct Benefits Transfer for Power (DBT-P) for electricity and a possible “Ujjwala 2.0” for LPG. In many cases, however, knowledge gaps are limiting evidence-based decision-making. The last distributional analysis of energy consumption subsidies—that is, how benefits are shared across different income groups—is based on the 2011 census. It is also unclear who would be included or excluded under different targeting approaches.

This report calls for dedicated research on targeting energy subsidies to better inform policy. This includes data collection and analysis in the following areas:

1. Estimating the distributional performance of existing subsidies.
2. Identifying and evaluating targeting interventions. Based on a review of options, this paper recommends that this should include:
   • Opt-out schemes
   • Quota-based and volumetric targeting
   • Categorical targeting
   • Income-, asset- and consumption-based targeting, including related proxies.
3. Evaluating opt-in schemes.
4. Exploring how basic income transfers affect energy consumption.

Key Messages

• The report examines the impacts of India’s subsidies to cooking gas—and their reform—from a gender perspective.
• On average, when cooking with liquified petroleum gas (LPG) rather than biomass, women saved about one hour per day due to reduced cooking and cleaning times.
• The report recommends reviewing subsidy targeting policies so that more poor households benefit from ongoing LPG subsidies because its findings show current LPG subsidies to be inefficient and untargeted.

The report examines the impacts of India’s subsidies to cooking gas—and their reform—from a gender perspective. The research explores how liquified petroleum gas (LPG) subsidy policies and their reform affect women and girls in low-income households. These questions were answered via a survey of over 800 households, examining of secondary data, and focus group discussions.

This research found that India’s schemes to promote clean cooking are improving energy access for poor women. However, around half of the women surveyed are being left behind because they are not using LPG and continue to cook with biomass. Women saved on average about one hour per day due to reduced cooking and cleaning times when cooking with LPG rather than biomass. These women also benefited from a reduction in exposure to harmful indoor air pollution and drudgery.

According to the research, current LPG subsidies are inefficient and untargeted. India has two broad LPG subsidy types: connection subsidies called PMUY that are directed to women’s bank accounts, and consumption subsidies called PAHAL. Among surveyed households, only 48 per cent of PMUY beneficiaries were among the poorest 40 per cent of households. Similarly, under surveyed PAHAL beneficiaries, 48 per cent did not hold below the poverty line (BPL) cards.

India is reviewing its energy subsidies and aims to increase energy access and women’s empowerment. These reforms present an opportunity for policy-makers to deliver and target policies that cluster gender and energy access benefits toward the poor. The report recommends reviewing subsidy targeting policies, so more poor households benefit from ongoing LPG subsidies. It also suggests undertaking subsidy reform cautiously to avoid negative energy access impacts. The report recommends a more holistic strategy for clean cooking in India that promotes the development of non-fossil fuel-cooking technologies, including cooking on electricity.

Key Messages

• As the clean energy transition advances, the BRICS governments need to start preparing their budgets for a fiscal transition out of revenues from fossil fuel production and consumption. The clean energy transition offers alternatives to fossil fuels and thus can lead to the decrease in revenues for the BRICS governments in two ways: through a drop in fossil fuel prices and, over the longer term, through the shrinkage of absolute amounts of fossil fuel production and consumption.
• In 2017, taxes and other revenues from fossil fuel production and consumption amounted to 23.6 per cent of general government revenue in Russia, 17.8 per cent in India, 6.8 per cent in both Brazil and South Africa, and 4.2 per cent in China. These revenues should be used strategically to help diversify BRICS economies away from fossil fuels and cover the social costs of transition, including for vulnerable groups of consumers, workers and communities currently depending on fossil fuels.
• The BRICS governments’ budgets are also being eroded by subsidies to fossil fuel production and consumption. Phasing out these subsidies will both increase government revenues and promote transition beyond fossil fuels.

For the first time, this report brings together official data on governments’ revenues and subsidies associated with fossil fuels in Brazil, Russia, India, China and South Africa (referred to collectively as BRICS). It offers initial recommendations on aligning BRICS's fiscal policies with a clean energy transition. 

First, the cross-country analysis discusses external and domestic drivers of the clean energy transition and what they mean for BRICS as exporters and importers of different fuels. After an overview of the BRICS  countries’ revenues and subsidies associated with fossil fuels, the report discusses avenues for fiscal transition beyond fossil fuels. The conclusion presents policy recommendations. The cross-country analysis also includes an Annex with data tables and a methodology and scope description.

In addition to the cross-country analysis, the report includes country briefs on Brazil, Russia, India, China and South Africa that highlight the role of fossil fuels in respective economies. These briefs present the aggregated data on both revenues and subsidies related to fossil fuels in each country. The country briefs can be downloaded separately.  

This analysis has been prepared in partnership with the Leave it in the Ground Initiative.

Key Messages

• As the clean energy transition advances, India, along with the other BRICS governments, needs to start preparing its budget for a fiscal transition out of revenues from fossil fuel production and consumption. The clean energy transition offers alternatives to fossil fuels and thus can lead to the decrease in government revenues in two ways: through a drop in fossil fuel prices and, over the longer term, through the shrinkage of absolute amounts of fossil fuel production and consumption.
• In 2017, taxes and other revenues from fossil fuel production and consumption amounted to 17.8 per cent of general government revenue in India. These revenues should be used strategically to help diversify the economy away from fossil fuels and cover the social costs of transition, including for vulnerable groups of consumers, workers and communities currently depending on fossil fuels.
• The government’s budget is being eroded by subsidies to both fossil fuel production and consumption. Phasing out these subsidies in a socially equitable way will both increase government revenues and promote the transition beyond fossil fuels.

This case study is part of the report Beyond Fossil Fuels: Fiscal transition in BRICS. The report consists of a) a cross-country analysis for all BRICS countries (Brazil, Russia, India, China and South Africa), which offers initial recommendations on aligning BRICS fiscal policies with a clean energy transition, and b) five country briefs that present the aggregated data on both revenues and subsidies related to fossil fuels in each country. The cross-country analysis and each of the five country briefs can be downloaded separately from the report’s home page.

This analysis has been prepared in partnership with the Leave it in the Ground Initiative.

Key Messages

• To effectively promote off-grid solar pumps in India, it is important to understand the full landscape of central and state policies across water, energy and food (WEF) systems.
• This paper maps such policies and finds that many, including policies to promote off-grid solar pumps, do not explicitly acknowledge or account for complex WEF interactions, limiting their effectiveness and in some cases undermining objectives other areas.
• It recommends for off-grid pump policies to be coordinated with an upscaled set of efforts on addressing the sustainable use of groundwater in India. It also advises careful monitoring and evaluation of KUSUM, the government's new solar pumps scheme. 

Globally, many people do not have adequate access to water, energy and food: 2.1 billion people lack access to safely managed drinking water; almost 1 billion lack access to electricity and 2.7 billion lack access to clean cooking; and 821 million face chronic food deprivation. Yet water, energy and food systems are all under increasing pressure from rapid growth in economies, consumption patterns and population.

The Sustainable Development Goals (SDGs) recognize the need to deliver access sustainably through dedicated goals on each theme: SDG 2 (zero hunger), SDG 6 (clean water and sanitation) and SDG 7 (affordable and clean energy). As targets, the SDGs cannot themselves recognize or address linkages—but if all three targets are to be met by 2030, then it is important to weigh up potential trade-offs. The “water–energy–food (WEF) nexus” means that there are interconnections in all three areas. Implementing a policy to address one objective can have detrimental impacts on another.

This paper seeks to assist policy-makers and researchers in India who are working to promote the uptake of off-grid, solar-powered pumps for groundwater irrigation. It begins by setting out key WEF linkages of importance for off-grid solar pumps. It then establishes an approach for identifying policies across the WEF nexus that are key for off-grid solar pumps and maps these policies at the Central Government level and in two states: Bihar and Rajasthan.

It recommends for off-grid pump policies to be coordinated with an upscaled set of efforts on addressing the sustainable use of groundwater in India. It also advises careful monitoring and evaluation of KUSUM, the government's new off-grid solar pumps scheme.

Key Messages

• The total capital expenditure required to install SO_x, NO_x and PM pollution-control technology is estimated to be INR 86,135 crore (USD 12 billion), or INR 73,176 crore (USD 10 billion) if plants to be retired by 2027 are excluded.
• This will add between INR 0.32 per kWh to INR 0.72 per kWh for coal power plants (or around 9–21 per cent to average tariffs) depending on the size of the unit and other factors.
• Reflecting these costs in the price of coal-based power is necessary and appropriate to ensure that the external costs of air pollution are reflected in prices and therefore used to inform investment decisions in comparison to the alternatives to coal-based generation.
• An independent assessment of retrofit costs at a plant level by empanelled agencies would expedite the ability of private sector power plants to submit tariff increase petitions to the regulators.
• Most experts are of the view that the deadline will still see many plants not complying with the new standards. To avoid this situation, the Ministry of Power must take a stricter position which precludes all non-compliant plants from generating, unless they exhibit a clear retirement or phase-out plan or have made material progress in awarding tenders and beginning the construction process.

In 2015, the Ministry of Environment, Forest and Climate Change legislated new standards to limit the concentration of sulphur oxides (SO_x), nitrogen oxides (NO_x), particulate matter (PM) and mercury (Hg) in stack emissions for coal-fired power plants. The Ministry amended the standards in 2018; however, there was no material change in air pollution norms. Existing thermal generators were expected to comply by December 2017. For new plants, compliance was required at the point of commissioning from January 2017. However, by December 2017, almost no coal plants had installed the equipment and the deadline was extended to 2022.

This brief extends the analysis in India’s Energy Transition, 2018 Update—a report by the International Institute for Sustainable Development (IISD) and the Council on Energy, Environment and Water (CEEW) on India's energy subsidies in financial year (FY) 2017 and FY 2018—to explore in detail the cost of compliance with regulations on air pollution and implicit subsidies associated with extensions and non-compliance.

The brief examines the following: the reasons for slow progress by coal power plants; the cost of installing pollution-control equipment for the sector and implications for the price of electricity; the cost of externalities related to human health; and a comparison of the costs of installing pollution-control equipment with phasing out non-compliant coal plants.

Key Messages

• A fuel price cut by India’s central government from October 2018 to June 2019 resulted in subsidies of INR 26,957 crore (USD 3.9 billion) for gasoline and diesel.
• This far overshadowed funding for the government’s flagship electric vehicles (EV) subsidy program of INR 10,000 crore (USD 1.4 billion) over three years.
• The funds would have been better spent supporting India’s transition to EVs and renewable energy, given that together these technologies will reduce air pollution.

This brief examines how the latest support by the Government of India for electric vehicles (EVs) compares with subsidies for conventional vehicles and their main fuels, gasoline and diesel. Analysis is centred on two major policy developments.

First, when faced with rising world oil prices in October 2018, the Central Government reduced the excise tax on fuel by INR 1.5 (USD 0.02) per litre and required state-owned oil marketing companies (OMCs) to reduce their margin by INR 1 (USD 0.01). This decision was partially reversed in the 2019-2020 Union Budget.

Second, the government announced phase two of its flagship EV subsidy program, the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, or FAME II.

The rising trend for EV subsidies in India has been strengthened by the addition of INR 10,000 crore (USD 1.4 billion) for FAME II over three years. However, subsidies for oil, gasoline and diesel, which had been declining since FY 2014, have also seen a sharp increase: cuts to excise and OMC margins resulted in foregone revenue and market price support of INR 26,957 crore (USD 3.9 billion) from October 2018 to June 2019.

If improving air quality is indeed a high priority of the Central Government, as it states, the funds would have been better spent supporting India’s transition to EVs and renewable energy rather than sheltering petroleum-reliant technology from the volatile international oil market.

As part of its work on energy policy and sustainable development in India, the Global Subsidies Initiative publishes a regular briefing on issues related to energy subsidies.

Below are highlights from the July 2019 edition:

• As a result of high crude oil prices in late 2018, the government announced a reduction in excise duty for oil and gas that is expected to result in foregone revenue of INR 10,500 crore (USD 1.6 billion) in fiscal year (FY) 2019. Increasing connections to liquefied petroleum gas (LPG) cooking cylinders drives up gas subsidies.
• The Central Government launched programs to support solar power, including KUSUM and Phase-II of the Grid Connected Rooftop Solar Programme.
• India approved an INR 10,000 crore (USD 1.4 billion) electric vehicle (EV) incentive scheme through Phase-II of the FAME program.
• The Supreme Court ruled in favour of financially stressed coal-fired power stations, giving them more time before their debts will be foreclosed. While the government supported the ruling, analysts fear greater uncertainty over the future of these assets.
• The Central Electricity Regulatory Commission (CERC) announcements on the passthrough of costs are expected to further distress electricity distribution companies (DISCOMs), which faced combined losses of INR 24,000 (USD 3.4 billion) in the first nine months of FY 2019. 

For any additional or more detailed information, please do not hesitate to contact Christopher Beaton or Vibhuti Garg.

State-owned companies carry out most coal mining and power production in India.

This country study and accompanying data sheet compile publicly available information on G20 subsidies to the production and consumption of coal (including coal-fired power) in India in 2016 and 2017. It is a background paper to the report G20 Coal Subsidies: Tracking Government Support to a Fading Industry and provides a baseline to track progress on the phase-out of such subsidies as part of a wider global energy transition.