Economics of Reducing Greenhouse Gas Emissions in South Asia: Options and Costs

Publication | March 2013

What can governments do to influence the development of clean energy technologies and move toward low-carbon growth in the South Asian states of Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka?

South Asia is considered vulnerable to the impacts and consequences of climate change, including sea level rise, melting Himalayan glaciers, and increased frequency of typhoons. Notwithstanding these challenges, sustained and rapid economic growth is necessary for the region to achieve significant poverty reduction, uplift the economic well-being of its people, and increase its resilience to environmental shocks and natural disasters, including those associated with climate change.

Against a backdrop, continuing increase in the emission of greenhouse gases (GHGs) that are responsible for global climate change, energy consumption and use of fossil fuels in South Asia DMCs are growing rapidly.

The report

This report synthesizes the results of studies conducted under an ADB technical assistance on the Regional Economics of Climate Change in South Asia Phase 1 (RECCSA 1) in five countries - Bangladesh, Bhutan, the Maldives, Nepal, and Sri Lanka.

The studies estimated the likely growth of GHG emissions to 2030 under a scenario of expected energy-use mixes, including penetration of some clean technologies, and the impact of a climate policy in the form of a carbon tax to stabilize GHG production at an acceptable level.

Without any climate policy interventions (under the base case), South Asia would become increasingly carbon intensive during 2005-2030. However, in a carbon tax regime that is considered necessary to stabilize GHG concentration at 550 parts per million by volume (ppmv) of carbon dioxide equivalent (CO2e), the primary energy mix of the five South Asian countries (without India) would move toward more aggressive use of cleaner resources, i.e., natural gas, hydropower, biomass, municipal solid waste, wind, and nuclear energy.

Crucially, not all cleaner options are expensive. The study found a number of clean technology options that are cost-effective even without any climate policy interventions. These technologies range from energy-efficient lamps, air conditioners, and solar and electrical cooking stoves in residential and commercial sectors, energy-efficient electric motors and diesel boilers in industrial sector, efficient diesel tractors in agriculture to partial modal shifts in the road freight to railways in the transport sector.

GHG abatement cost analysis shows that a total reduction potential of about 13.3 million t CO2e emissions could be achieved in 2020 in the five countries at no additional cost, by deploying 'no-regret' clean and energy-efficient options.

Conclusions

Overall, technology access, policy and financing issues will continue to influence the development of clean technologies and move toward low-carbon growth in South Asia. Large-scale development of clean energy resources to significantly reduce carbon intensity and GHG emissions will be crucial. This can be achieved by South Asian countries by prioritizing investments in technologies across sectors with low incremental abatement costs and other co-benefits, such as reducing emissions of other locally-damaging pollutants and providing economic opportunities for communities.

The scope of these investments can cover:

  • promotion of energy efficiency and development of renewable energy;
  • low-carbon transport infrastructure;
  • urban services, including employing cost-effective and income-generating waste management mechanisms;
  • energy-efficient buildings and other infrastructure; and
  • energy-efficient irrigation pumps, including use of solar energy.

Regional energy cooperation and trade as well as south-south and north-south cooperation on technology and knowledge sharing will pave the way for a move towards low-carbon and green development in South Asia.

Contents 

  • Foreword
  • Executive Summary
  • Introduction
  • Regional Overview
  • Methodology
  • Options and Costs to Reduce GHG Emissions in 2005-2030
  • Challenges and Enabling Conditions
  • Conclusion and Way Forward
  • Appendixes
  • References