Céline Guivarch

GHG emissions and development: What if developing countries baselines were not so optimal?

Energy and economic scenarios related to emerging countries usually associate high growth rates and significant energy-GDP decoupling as the ones projected in successive International Energy Agency’s World Energy Outlook since many years. The outcome of such assumptions is moderate GHG emissions. However, a recent literature (Raupach et al. 2008, Pielke et al. 2008) points out the fact that current GHG emission trends in emerging countries which have been observed since a few years are not in line with such projections: current GHG emissions are higher and are growing much faster than for example the large panel of IPCC SRES modeling exercises. Energy intensity of GDP even increases again in China, after a decade of decrease (Blanford et al., 2008). This article aims at studying the reasons for this kind of mismatch between modeling exercises and real trends and, considering these reasons, at drawing conclusions related to long term GHG emissions projections in emerging countries. Our demonstration will focus on an illustrative example on India. Our methodology will start from a description of the current Indian technico-economic system that will highlight market and institutional failures that lead to sub-optimalities. We will in particular show that these market and institutional failures are rooted in a system with important inertia and vested by social interests, which gives the intuition that they are likely to last over a significant period of time. Following this intuition, we develop a baseline scenario for India over the 2008-2050 period taking into account the sub-optimalities identified previously. To do so, we adopt a modeling framework which although considering general equilibrium effects does not assume a first best world: IMACLIM-R (Crassous et al., 2006). We compare our projection results to existing projections for both economic growth and energy supply and consumption, and show our scenario is characterized by moderate energy-GDP decoupling and associated high GHG emissions, which is in line with observed current trends but appears pessimistic compared to other prospective scenarios, from the International Energy Agency’s World Energy Outlook in particular. We then try and disentangle the mechanisms at play behind our baseline scenario explaining the differences with other prospective exercises. Finally, we give conclusions both for a methodological perspective and for the design of climate policies perspective. From a methodological point of view, our results call for the use modeling architectures that allow representing sub-optimalities in the projected scenarios. From a mitigation point of view, we identify a potential for synergies between development policies and climate policies.