Energy Consumption Response to Climate Change under Globalization: Options for India

The problem of mitigating climate change has continued to dominate public debates in terms of its origin, sources, potential impacts and possibly adaptation strategies. In this paper, the contributions of energy to the climate change debate are explored. The analysis based on the secondary information shows that the global use of fossil fuels has increased and dominated world energy consumption and supply. This case is quite similar to Indian case and the emissions in Indian are also increasing. To account for the change in CO2 emission, we have followed index decomposition analysis using data from the PROWESS database of the Center for Monitoring Indian Economy. Two factors are considered to account for the changes in emission intensity of Indian economy, namely, (1) output shift among three sectors of the India economy (Agriculture, Service and Manufacturing) and (2) the structural change based on the aggregate output change with respect to the emissions change for the post globalised period. Based on the estimates we found that the structural change in Indian economy from 1991-2007 plays a major role in reducing emission as compared to the output shifts across the sectors. Based on the findings and international experiences, few policy options for Indian case such as; energy pricing reforms, promoting investment in renewable energy technologies and creating public environmental awareness are suggested.