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8/10/2019 The Economics of Low Carbon Cities - Kolkata, India Oct 2014 v12
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The Economics ofLow Carbon CitiesKolkata, India
Andy Gouldson, Niall Kerr,
Faye McAnulla, Stephen Hall,
Sarah Colenbrander
and Andrew Sudmant
Sustainability Research Institute,
University of Leeds, UK
Joyashree Roy, Sayantan Sarkar,
Amrita Ghatak, Debalina Chakravarty
and Diya Ganguly
Global Change Programme,
Jadavpur University, India
Centre forClimate ChangeEconomics and Policy
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The Economics of Low Carbon Cities2
Through cost
effective investmentsthat would more than
pay for themselves on
commercial terms over
their lifetime.
If, as well as the above
investments, costeffective investments in
the electricity sector were
made that could more
than pay for themselves
on commercial terms
over their lifetime.
With cost neutral
measures that couldbe paid for by
re-investing the
income generated
from cost
effective measures.
With cost neutral
measures in theelectricity sector that
could be paid for by
re-investing the
income generated from
cost-effective measures.
2000 2025
Potential to reduce CO2emissions
20.7% CO2reduction 22.1% CO
2reduction 35.9% CO
2reduction 38.7% CO
2reduction
city-
scal
eecon
omy
0.6% of GDP could beprofitably invested, every
year for ten years, to exploit
commercially attractive
energy efficiency and low
carbon opportunities.
Tomorrow
Investment
0.6% of
GDP p.a.Leads to...
9.1%ofGDPleaks
out ofthe
economy
EnergyReduction in the energy bill equalling 1.6% of GDP
Financial viability3.9 years to pay for themselves
Employmentmore jobs and skills in low carbon goods and services
Wider economic benefitsenergy security, increased competitiveness, extra GDP
Wider social benefitsreductions in fuel poverty, improvements in health
Today
9.1% of city-scale GDP leaves the local
economy every year through payment of
the energy bill. In 2025, this is forecast to
be 8.1% of GDP.
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3The Economics of Low Carbon Cities
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Figures and TablesContents
Chaper 1. 14Introduction, Context, Aims and Objectives
Chaper 2. 19Approach to the Analysis
Chaper 3. 23The Key Findings for Kolkata
Sector Focus:
The Electricity Sector 30
The Domestic Sector 33
The Commercial Buildings Sector 38
The Industrial Sector 42
The Transport Sector 49
The Waste Sector 53
Chapter 4.Discussion 58
Chapter 5.Conclusion and Recommendations 60
Appendices:Appendix A 63Participants of workshopsand expert consultations
Appendix B 64Data sources, methods and assumptions
Appendix C 68League table of the most cost-effectivemeasures for the city
Appendix D 72
League table of the most carbon-effectivemeasures for the city
Footnotes 76
Tables Pg.
1 Lists of the low carbon measures considered 21
2 League table of the most cost-effectivemeasures for the electricity sector
32
3 League table of the most carbon-effectivemeasures for the electricity sector
32
4 League table of the most cost-effectivemeasures for the domestic sector
36
5 League table of the most carbon-effectivemeasures for the domestic sector
37
6 League table of the most cost-effectivemeasures for the commercial sector
41
7 League table of the most carbon-effectivemeasures for the commercial sector
41
8 League table of the most cost-effectivemeasures for the industry sector
45
9 League table of the most carbon-effectivemeasures for the industry sector
47
10 League table of the most cost-effective
measures for the transport sector
52
11 League table of the most carbon-effectivemeasures for the transport sector
52
12 League table of the most cost-effectivemeasures for the waste sector
56
13 League table of the most carbon-effectivemeasures for the waste sector
56
Appendices Tables Pg.
C: League table of the most cost-effectivemeasures for the city
68
D: League table of the most carbon-effectivemeasures for the city
72
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5The Economics of Low Carbon Cities
Figures Pg.
Executive Summary
1 Indexed energy use total, per unit of GDP and per capita
8
2 Indexed energy prices and total energy bill 9
3 Indexed carbon emissions total, per unit ofenergy, per unit of GDP and per capita
10
4 Emissions from Kolkata under six differentscenarios between 2000 and 2025.
12
Key Findings
1 Indexed energy use total, per unit of GDP and per capita
24
2 Indexed energy prices and total energy bill 25
3 Indexed total emissions per unit of energy,per unit of GDP and per capita
26
4 Energy consumption in Kolkata (TWh)between 2000 and 2025
27
5 The energy bill for Kolkata (INR billions)
between 2000 and 2025
27
6 Emissions from Kolkata (MtCO2-e)
between 2000 and 202527
7 Emissions from Kolkata under six differentscenarios, as a function of 2012 emissions,between 2000 and 2025
29
8 Energy bills for Kolkata under threedifferent investment scenarios, as afunction of 2014 emissions, between2000 and 2025
29
Electricity
9 Electricity consumption in Kolkata (TWh)between 2000 and 2025
31
10 Emissions from the electricity sector underthree different scenarios, as a function of2014 emissions, between 2000 and 2025
32
Figures Pg.
Domestic
11 Domestic sector: domestic energy use,energy bills and emissions
34
12 Emissions from the domestic sector in fourdifferent scenarios, as a function of 2014emissions, between 2000 and 2025
35
Commercial
13 Commercial sector: indexed energy use,bills and emissions
39
14 Emissions from the commercial buildingssector under four different scenarios, as afunction of 2014 emissions, between 2000and 2025
40
Industry
15 Industrial sector: indexed energy use,bills and emissions
43
16 Emissions from the industry sector underthree different scenarios, as a function of2014 emissions, between 2000 and 2025
44
Transport
17 Transport sector: indexed energy use,energy bills and emissions
50
18 Emissions from the transport sector underthree different investment scenarios, as afunction of 2014 emissions, between 2000and 2025
51
Waste
19 Emissions from the waste sector (MtCO2-e)between 2000 and 2025
54
20 Emissions from waste under three differentinvestment scenarios,as a function of 2014emissions, between 2000 and 2025
55
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The Economics of Low Carbon Cities6
Executive Summary
More than half of the worlds population lives in cities, and up to
70% of production and consumption takes place in cities.1Currently,
activities in cities consume up to 70% of all energy and are
responsible for up to 70% of all carbon emissions.2
Energy is obviously central to the future development of cities but
is it possible that cities could shift to energy efficient, low carbon
development paths? Focusing on the Kolkata Metropolitan Area,
this report considers the ways in which the relationship between
energy, carbon and development could be changed in a rapidlygrowing city with pressing development needs.
Although the report considers energy supply, the main aim is to
review the cost and carbon effectiveness of a wide range of energy
efficient and low carbon measures that could be applied in different
sectors in Kolkata. It then considers whether there is an economic
case for major investments in these measures across the city, and
whether these investments have the potential to shift the city on to amore energy efficient, low carbon development path.
The Indian Context
India has the largest energy demand in the world afterChina and the United States, and its demand is risingrapidly it has more than doubled since 1990, and isforecast to grow by a factor of 4.5 between 2012 and2035. However, per capita energy demand in India
remains low per capita demand is 14% of the OECDaverage, 34% of the average Chinese level and 87%of the average African level.3Even though Indianenergy is relatively carbon intensive, these levels ofconsumption mean per capita emissions in India areonly one third of the world average.
India has stated that it must be able to increase energyuse per capita and correspondingly its absolutelevels of carbon emissions to allow it to achieveinclusive growth and eliminate poverty.4It hashowever committed to emission intensity reductiontargets of 20-25% on 2005 levels by 2020 (excluding
emissions from agriculture) and plans to meet thesepredominantly through support for energy efficienttechnologies and energy conservation measures.5
The Economics of a
Low Carbon Kolkata
India has already made substantial progress towardsthis goal, having achieved economic growth rates of9% per annum and constrained its energy growth rateto less than 4% per annum since 2004.6
The future development of India and the rolethat energy plays in development will depend to asignificant extent on what happens in Indian cities.Currently, 32% (384m) of the 1.2 billion populationof India lives in cities7, and by 2030 it is predicted thatup to 40% (600m) people of the forecast 1.5 billionpopulation will live in cities.8Economically, 58% ofIndian GDP comes from cities, and this is forecastto grow to 70% by 2030.9Socially, there are majorinequalities in Indian cities, with a small but growingurban elite, a larger and more rapidly growing urbanmiddle class, and a very substantial urban poorwho frequently live in informal settlements with
multiple development challenges including chronicovercrowding and limited access to modern energy.
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7The Economics of Low Carbon Cities
Kolkata
Kolkata is the third largest city in India and the 19th
largest urban area in the world.10
Some forecastssuggest that Kolkatas population could reach 23m by2030.11There are significant inequalities and pressingdevelopment needs in Kolkata, but institutionalcapacities to address these are over-stretched. Someestimates suggest that Kolkata will require US$109bnin capital expenditure between 2010 and 2030 to meetits human development goals.12
While imposing substantial challenges, the highgrowth rates that the city is encountering and the needfor new infrastructure to support this growth createopportunities for interventions that could influence
the citys development trajectory. If Kolkata achievesits target growth rates of 6-7% a year, more than halfof the urban economy that will exist in 2025 has yetto be developed or built. Integrating energy efficiencyand low carbon goals into the citys developmenttherefore offers the chance to shift the city on to amore efficient and sustainable energy trajectory.Initial investment requirements might be higher,but ongoing costs will be lower and the city economywill be more efficient and resilient. If done well, thiscould also improve the quality of life for all residentsin the city.
Our Aims
What is the best way to shift Kolkata to a more energyefficient, low carbon development path? Even wherethere is broad interest in such a transition, there aresome major obstacles that often prevent action onsuch a broad agenda. The absence of a credible andlocally appropriate evidence base makes it particularlydifficult for decision makers to act.
This study aims to provide such an evidence base forKolkata, and to use this to examine whether there isan economic case that can be used to secure large-
scale investments in energy efficiency and low carbondevelopment in the city. The more specific aim is toprovide prioritized l ists of the most cost and carboneffective measures that could realistically be adoptedacross the energy, housing, commercial buildings,transport, industry and waste sectors within the city.
Our Approach
We start the analysis by collecting data on levels and
composition of energy use in Kolkata. We do this fora range of different sectors including the electricitysector on the supply side and the housing, commercialbuildings, transport and industry sectors on thedemand side. We also evaluate the waste sector as itboth generates greenhouse gas emissions and has thepotential to generate energy.
For each of these sectors, and for the city as a whole,we examine the influence of recent trends, for examplein economic growth, population growth, consumerbehavior and energy efficiency, and develop businessas usual baselines that continue these trends through
to 2025. These baselines allow us to predict futurelevels and forms of energy supply and demand, as wellas future energy bills and carbon emissions.
We then compile lists of many of the energy efficiency,small-scale renewables and low carbon measures thatcould potentially be applied in each of the differentsectors in the city. We assess the performance ofeach measure by conducting a realistic assessmentof its costs and likely lifetime savings, and considerthe scope for deploying each one in Kolkata in theperiod to 2025. These appraisals are subjected to aparticipatory review in expert workshops to ensurethat they are as realistic as possible. We then comparethe impact of all future activities against the businessas usual baselines.
We draw together the results from our assessmentto determine the potential impact of the combinedmeasures across the different sectors of the city as awhole. This allows us to understand the scale of thedevelopment opportunity, the associated investmentneeds and paybacks, as well as impacts on energysupply and demand, bills and carbon emissions in thedifferent sectors in the city. These aggregations alsoallow us to generate league tables of the most cost andcarbon effective measures that could be adopted both
in each sector and across the city as a whole.
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The Economics of Low Carbon Cities8
Figure 1: Indexed energy use total, per unit of GDP and per capita.
The Changing Context and the Impacts ofBusiness as Usual Trends
We find that Kolkatas GDP in 2014 was INR 1.84tril lion (US$31.5 billion), and if recent trendscontinue we forecast that GDP will grow to INR 4.4tril lion (US$75.2 billion) by 2025. This means thatthe average per capita income in Kolkata was INR125,109 (US$2,139) in 2014 and that with projectedrates of economic and population growth we predictthat this will grow to INR 278,710 (US$4,766) by2025. We also find that the total energy bill for Kolkatain 2014 was INR 169.2 billion (US$2.9 bill ion), whichequates to 9.1% of GDP. In other words, we find that9.1% of all income earned in Kolkata is currently spenton energy.
Business as usual trends in Kolkata show a rapiddecoupling of economic output and energy usebetween 2000 and 2025 (see Fig. 1). However, GDPand energy demand per capita are both rising steadily,while the population of Kolkata is also growing. Theseeffects are offsetting the improvements in energyintensity and leading to a net increase in energy use.
Real energy prices are projected to increase steadily,with the exception of coal. The rising real energyprices combined with increasing energy consumptionmeans that the total energy bill for Kolkata will morethan double its 2012 level by 2025 in a business as
usual scenario.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
2000 2005 2010 2015 2020 2025
Energy use
Energy use per unit GDP
Energy use per capita
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9The Economics of Low Carbon Cities
Our analysis finds that the emissions intensity ofenergy production is projected to remain largelyconstant until 2025, but increasing energy efficiencyin the wider economy means that the emissionsproduced per unit of GDP will fall dramaticallybetween 2000 and 2025. This is significant becausethis is the index that India is using in their nationalcarbon targets in international negotiations. It isimportant to note that, despite declining emissionintensity per unit of GDP, rapid economic growth stillmeans that emissions per capita and total emissionsare continuing to rise. In a business as usual scenario,total emissions from Kolkata are therefore forecast toincrease by 54.0% on 2014 levels by 2025.
The total energy bill for
Kolkata in 2014 was INR
169.2 billion (US$2.89
billion). 9.1% of all income
earned in Kolkata is
spent on energy.
Figure 2: Indexed energy prices and total energy bill.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
2000 2005 2010 2015 2020 2025
Electricity
Kerosene
Coal
LPG
Total energy bill
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The Economics of Low Carbon Cities10
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
2000 2005 2010 2015 2020 2025
Total emissions
Emissions per unit energy
Emissions per unit GDP
Emissions per capita
A continuation
of business as usual trends
in Kolkata will see energy
use rise by 44.1%, total
energy bills by 111.6% and
carbon emissions by
54.0% by 2025.
Figure 3: Indexed carbon emissions total, per unit of energy, per unit of GDP and per capita.
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11The Economics of Low Carbon Cities
The Potential for Carbon Reduction
For Kolkata as a whole, we predict that compared to
2014 a continuation of recent business as usual trendsin the period to 2025 would see total energy use risingby 44.1% from current levels, with energy bills risingby 111.6% and carbon footprints rising by 54.0%.
We find that compared to business as usualtrends Kolkata could reduce its carbonemissions by 2025 by:
- 20.7% through cost effective investmentsthat would more than pay for themselves oncommercial terms over their lifetime. This wouldrequire an investment of INR 119.3 billion(US$2.0 billion), generating annual savings ofINR 30.4 billion (US$520.7 million), payingback the investment in 3.9 years and generatingannual savings for the lifetime of the measures.
- 22.1% if, as well as the above investments, costeffective investments in the electricity sector weremade that could more than pay for themselves oncommercial terms over their lifetime. This wouldrequire an investment of INR 39.7 billion (US$679 million), generating annual savings of INR18.2 billion (US$ 311.8 million), paying back theinvestment in 2.2 years and generating annualsavings across West Bengal for the lifetime of themeasures.
- 35.9% with cost neutral measures that could bepaid for by re-investing the income generatedfrom cost-effective measures. This would requirean investment of INR 205.6 billion (US$ 3.6billion), generating annual cost savings of INR33.5 billion (US$ 573.6 million), paying back the
investment in 6.2 years and generating annualsavings for the lifetime of the measures.
- 38.7% with cost neutral measures in the electricitysector that could be paid for by re-investing theincome generated from cost-effective measures.This would require an investment of INR 210.4billion (US$ 3.6 billion), generating annual costsavings of INR 27.0 billion (US$ 462.0 million),paying back the investment in 7.9 years andgenerating annual savings across West Bengal forthe lifetime of the measures.
- 43.5% with the exploitation of all of the realisticpotential of all the different measures with
carbon saving potential. This would requirean investment of INR 473.8 billion (US$8.4billion), generating annual savings of INR24.5 billion (US$462 million), paying back theinvestment in 7.9 years and generating annualsavings for the lifetime of the measures.
The impacts of all of these levels of change are shownin Figure 4 on the page opposite.
Kolkata could
reduce its energy bills
by INR 30.4 billion
(US$520.7 million) and
its carbon emissions
by 20.7% through
investments
that would pay
for themselvesin 3.9 years.
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The Economics of Low Carbon Cities12
Figure 4: Emissions from Kolkata under six different scenarios between 2000 and 2025.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
Business as usual
Cost-effective
Cost-effective (electricity)
Cost-neutral
Cost-neutral (electricity)
Realistic potential
2000 2005 2010 2015 2020 2025
The study reveals a
compelling economic case
for large-scale investment in
energy efficiency, renewable
energy and low carbon
development in Kolkata.
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13The Economics of Low Carbon Cities
Discussion
Our analysis reveals that business as usual trends
in Kolkata show a rapid decoupling of economicoutput, energy use and carbon emissions between2000 and 2025. In other words, the carbon intensityof GDP is decreasing rapidly and in relative terms the city is already transitioning to a more energyefficient and low carbon development model. Therates of reduction in the carbon intensity of GDP aresubstantially higher than those targeted by the Indiangovernment in the National Climate Action Plan.
However, population and economic growth in Kolkatais so rapid that it offsets the improvements in energyand carbon intensity. Absolute levels of energy use are
projected to rise at a rate of 3.31% per annum between2014 and 2025. This will lead to an increase in annualenergy bills of 111.6% to INR 357.9 billion ($US 6.1billion) per year and of net emissions of 54.0% to37.8MtCO
2-e over the same period.
This study reveals a compelling economic case forlarge-scale investment in energy efficiency, renewableenergy and low carbon development in Kolkata aboveand beyond these background trends. By 2025, thecity can cut its emissions by 20.7% when compared tothe business as usual scenario through cost-effectiveinvestments that, by reducing energy bills, would payfor themselves on commercial terms in 3.9 years. Ifthe profits from these investments are re-invested inlow carbon measures, Kolkata can slash its emissionsto 35.9% relative to business as usual trends andrecover its investment in 6.2 years. These low carbonmeasures would continue to generate savings onenergy bills throughout their lifetime.
The massive expansion of infrastructure projected forKolkata like most cities in fast-growing emergingeconomies provides an opportunity to integrateclimate considerations into urban planning at arelatively early stage. Such an approach improves boththe cost and carbon effectiveness of most low carbon
options and would significantly enhance Kolkatasefforts to transition to a more energy efficient and lowcarbon economy/society.
Conclusions and Recommendations
This research reveals that there are many
economically attractive opportunities to increaseenergy efficiency and stimulate renewable energy,which would in turn improve the economiccompetitiveness, energy security and carbon intensityof Kolkata.
Clearly, however, the presence of such opportunitiesdoes not mean that they will actually be exploited. Byproviding evidence on the scale and the compositionof these opportunities, we hope that this report wil lhelp to build political commitment and institutionalcapacities for change. We also hope this reportwill help Kolkata to secure the investments and to
develop the delivery models needed to implementchange. Some of the energy efficiency and low carbonopportunities could be commercially attractive whilstothers may only be accessible with developmentassistance. Many of the opportunities wouldbenefit from the support of enabling policies fromgovernment.
But fundamentally, we should recognise thateconomics is not the only discipline that hassomething useful to say on the transition to a lowcarbon economy/society. A wider analysis should alsoconsider the social desirability of the different options,as well as issues relating to the equity, inclusivityand broader sustainability of the different pathwaystowards a low carbon economy and society in Kolkata.
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Chapter 1.
Introduction, Context,Aims and Objectives
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15The Economics of Low Carbon Cities
Cities, Energy, Carbon and Climate
The influence and impact of cities cannot be overstated. More
than half of the worlds population lives in cities, and up to 70%of production and consumption takes place in cities.13Cities are
the places where many of the worlds institutions and much of its
infrastructure are located, and where many of the worlds major
social, economic and environmental challenges are created,
experienced and sometimes tackled. Cities are also the places where
many international and national policies and plans must ultimately
take effect. Global action frequently relies on urban action our
common future depends to a large degree on the way that wedevelop, organise, live and work in cities.
One of the key issues in the future of cities is energy.Currently, activities in cities consume up to 70% of allenergy and are responsible for up to 70% of all carbonemissions.14Some estimates suggest that around10% of all income that is earned in cities is spent onenergy.3Despite its costs and impacts, modern energyis critical to human wellbeing. It enhances quality
of life and enables economic activity. Increasingenergy supplies and improving energy access enablesdevelopment. The challenge is achieving sustainableand affordable energy provision how can cities shiftto energy efficient, low carbon development paths?
Cities share of global emissions is high and risingfast, but their institutional capacity and socio-economic dynamism also means that cities areuniquely positioned to tackle climate change. This isparticularly true in fast-growing emerging economieswhere massive investment in infrastructure providesan opportunity to slash the energy and carbon
intensity of social and economic activity. It is oftensuggested that preparing for climate change at anearly stage of development is more effective andeconomically attractive than replacing or upgradingestablished infrastructure. Mainstreaming energyefficiency and low carbon objectives into planningprocesses has the potential to reduce energy bills,increase energy access, improve air quality, easecongestion, create jobs and mitigate the impacts ofclimate change.
Focusing on greater Kolkata, this report considers theways in which the relationship between energy anddevelopment in a rapidly growing city with pressingdevelopment needs could be changed. Although thereport considers energy supply, the main aim is toreview the cost and carbon effectiveness of a widerange of energy efficient, renewable energy and low
carbon options that could be applied in differentsectors in Kolkata. It then considers whether thereis an economic case for major investments in theseoptions across the city, and whether these investmentshave the potential to shift the city on to a more energyefficient, low carbon development path.
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The Economics of Low Carbon Cities16
The Indian Context
Indias energy demand more than doubled between
1990 and 2009, from 319 million tonnes of oilequivalent (Mtoe) to 669 Mtoe.15Today, it hasthe third largest energy demand in the world afterChina and the United States. Recent increases inenergy consumption have predominately comefrom the power sector as it meets growing demandfor electricity in the industrial, residential andcommercial sectors. The power sectors share oftotal primary energy demand increased from 23%to 38% between 1990 and 2009. Transport has alsocontributed significantly, with an increase from 8%to 14% of energy demand in the same period.16Forthe future, Indias total primary energy demand is
forecast to more than double to 1,464Mtoe by 2035.17
If realised, this would mean that demand for energyin India has risen by 450% in 45 years. In 2009 Indiasfuel mix comprised 42% coal, 25% biomass, 24% oiland 7% natural gas.18However, the share of biomass ispredicted to fall to 15% of the fuel mix by 2035, withenergy generated from coal in particular more thandoubling in this period.19
Individual energy consumption remains low in Indiaat 0.58toe per capita, compared to the OECD averageof 4.28, China of 1.7 or Africa at 0.67.20Even thoughenergy is relatively carbon intensive, these levels ofconsumption mean per capita emissions in Indiaare only one third of the world average and 14% ofthe OECD average. As a result, India has explicitlyrejected absolute carbon reduction targets21and statedthat it must be able to increase carbon emissions toallow it to achieve inclusive growth and eliminatepoverty.22
Nonetheless, in its National Action Plan on ClimateChange, the national government has committedto emission intensity reduction targets of 20-25%on 2005 levels by 2020 (excluding emissions from
agriculture), predominately through support forenergy efficient technologies and energy conservationmeasures.23India has already made substantialprogress towards this goal, having achieved economicgrowth rates of 9% per annum and constrainedenergy growth rate to less than 4% per annumsince 2004.24India is also seeking to expand thecontribution of clean energy technologies throughimposing a carbon levy on coal to fund clean energyprogrammes and by accessing financial and technicalassistance from developed countries.
This broader context on energy and climate in India
is directly relevant to cities. Currently, 32% (384m) ofthe 1.2 billion population of India lives in cities,and by2030 it is predicted that up to 40% (600m) people ofthe forecast 1.5 billion population will live in cities.25Economically, 58% of Indian GDP comes fromcities, and this is forecast to grow to 70% by 2030.26Socially, there are major inequalities in Indian cities,with a small but growing urban elite, a larger andmore rapidly growing urban middle class, and a verysubstantial urban poor who frequently live in informalsettlements with multiple development challengesincluding chronic overcrowding and limited accessto modern energy as well as a range of other critically
important services. The inter-relationships betweenenergy and cities are therefore pronounced.
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17The Economics of Low Carbon Cities
The West Bengal Context
Industry consumes the largest share of energy in
West Bengal (47%), followed by domestic (25%)and commercial (11%) energy use, predominatelyin the form of electricity.27The state also directlyconsumes5.5Mt of petroleum products, predominatelyfor transport (42%) and cooking/lighting in thedomestic and commercial sectors (26%).28
The installed electricity capacity of the West BengalPower Utility was 9892MW in 2011, with 96% ofelectricity generated from coal-based power stations.29
These are primarily supplied with low-grade, non-coking domestic coal. This type of coal dominatesIndian reserves and is regarded as suitable mostly for
use in the power sector rather than industry. Its poorquality and high ash content contribute significantlyto the carbon-intensive and polluting nature of theelectricity sector in India. Moreover, the grid servingWest Bengal is particularly carbon inefficient. Globalbest practice from this grade of coal generates lessthan 0.75tCO
2-e/MWh30and most electricity in India
has a carbon intensity of 0.8tCO2-e/MWh.31
We calculate that the electricity consumed in Kolkatahas a carbon intensity of 1.52tCO
2-e/MWh.
This dependence on hydrocarbons looks likely tocontinue as the state invests in increasing electricitycapacity to help meet growing energy needs, withadditional coal-fired and gas-based power stationsrecently completed and currently under construction.The state utility is also adopting efficiency measuresto improve the energy intensity of economic activity:notably, distribution losses were reduced from 34.4% to22.8% between 2004 and 2009. Substantial investmentin new capacity and energy efficiency will stil l berequired to meet growing electricity demand, which isprojected to increase by a factor of 3.5 by 2031.32
There is a marked divide between the urban andrural energy mix in West Bengal. Rural householdsuse kerosene for 65% of lighting needs while urbanhouseholds overwhelmingly use electricity (87%);biomass provides 74% of energy for cooking in ruralhouseholds, but LPG (46%) and coal (19%) arethe main cooking fuels in urban areas. 24The stateis seeking to redress this inequality in clean energyaccess through ambitious rural electrification andkerosene-to-LPG programmes, though this willalso likely increase the carbon intensity of ruralenergy consumption.
There is a preliminary West Bengal State ClimateChange Action Plan. The states climate changemitigation strategy entails increasing the share of
renewable energy, particularly large-scale solarphotovoltaic power, increasing supply-side energyefficiency in the grid and supporting the adoptionof demand-side energy efficiency measures.These currently include mandatory energy ratingprogrammes for domestic appliances, waste heatrecovery policies in industry, an LED street lightingcampaign and public awareness programmes. TheState Climate Change Action Plan however, does notspecify carbon intensity or renewable energy targets.
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The Economics of Low Carbon Cities18
Kolkata
Kolkata is the third largest and the most densely
populated city in India and the 19th largest urban areain the world.33Officially, its population is 14.1m and itis currently growing at a rate of 6.9% per year.34Someforecasts suggest that Kolkatas population could growto 23m by 2030.35There are stark inequalities withinKolkata. More than a third of Kolkatas populationlive in slums, where a third of the population areunemployed.3640% of the citys population and amajority of the slum population work in the informalsector.37 Kolkatas residents often face insufficientwater supplies, inadequate sanitation systems, poor airquality, limited housing stock and scarce green space.38
Institutionally, public budgets in Kolkata areoverstretched, but massive additional investment inKolkatas urban infrastructure is necessary to fulfilIndias human development goals. Recent assessmentshave predicted that Kolkata will require $109bn incapital expenditure between 2010 and 2030 to meetits human development goals.39Even if it is accurate,of course this figure need not be fixed: clearly thereare better and worse ways of investing in development,and different development pathways are available. Butit is equally clear that new forms of investment will beneeded not least in energy supply and demand toenable development to take place.
The proposed spatial distribution and type ofinfrastructure outlined in the Kolkata MetropolitanDevelopment Authority (KMDA)s Vision 2025 iskey to predicting energy and carbon trends in thecity. KMDA has planned massive infrastructureexpansion programmes in industry, housing andtransport.40This is intended to redress historicaldeficits in infrastructure investment and maintaincurrent economic growth rates. While imposingsubstantial challenges, the inadequacy of establishedinfrastructure and the high growth rates also offeropportunities to influence the citys developmenttrajectory to ensure that environmental limitations donot curtail human development or economic growth.If Kolkata achieves its target growth rates of 6-7%a year, more than half of the urban economy thatwill exist in 2025 has not been built yet. Integratingenergy efficiency and low carbon goals into the citysdevelopment therefore offers the chance to shift thecity on to a more cost-efficient and sustainable energytrajectory. Initial investment requirements might behigher, but ongoing costs will be lower and the cityeconomy will be more resilient to volatile fuel pricesand climate change impacts.
Aims and Objectives
What is the best way to shift a city to a more energy
efficient, low carbon development path? Even wherethere is broad interest in such a transition, there aresome major obstacles that often prevent cities fromacting on such a broad agenda. The absence of acredible and locally appropriate evidence base makesit particularly difficult for decision makers to act.
This study aims to provide such an evidence base forKolkata, and to use this to examine whether there isan economic case that can be used to secure large-scale investments in energy efficiency and low carbondevelopment in the city. The more specific aim is toprovide prioritised lists of the most cost and carbon
effective measures that could realistically be promotedacross the energy, housing, commercial buildings,transport, industry and waste within the city.
We seek to map broad trends in energy use, energyexpenditure and carbon emissions in Kolkata, andexamine the implications of business as usualdevelopment in the city. This macro-level contextaims to demonstrate the importance of energyefficiency and energy security at the city scale withthe goal of mobilising high-level action aroundthese issues.
The evidence base is intended to inform
policymaking and programme design both withinindividual sectors and at the city scale. By identifyingthe most cost- and carbon-effective measures, weaim to help development agencies, government,industry and civil society organisations to designlow carbon strategies that exploit the most attractiveopportunities. Notably, the evidence base hasthe potential to underpin national applications tointernational climate funds, development banks andother financial organisations, thereby helping tounlock and direct large-scale investment into energyefficient, low carbon development.
The study also aims to evaluate the scope forgreen growth in urban India. It is intended toidentify all significant win-win low carbonopportunities, and to inform the extent to whicheconomic development and energy use can bedecoupled in an economically feasible way. This inturn is intended to inform broad discussions aboutthe costs, benefits and realities of climate changemitigation in a developing country context.
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Chapter 2.
Approach to the Analysis
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The Economics of Low Carbon Cities20
Our analysis has a number
of key stages.
Baseline analysis.We start by collecting data that enables us tounderstand the levels and composition of energysupply to, and demand in Kolkata. We do this for arange of different sectors including the energy sectoron the supply side and the housing, commercialbuildings, transport and industry sectors on thedemand side. We also evaluate the waste sector as itboth generates greenhouse gas emissions, and has thepotential to generate energy.
For each of these sectors, and for the city as a whole,we examine the influence of recent trends, for examplein economic growth, population growth, consumerbehaviour and energy efficiency, and we developbusiness as usual baselines based on the continuationof these trends through to 2025. These baselines allowus to predict future levels and forms of energy supplyand demand, as well as future energy bills and carbonfootprints. We then compare all future activitiesagainst these baselines.
Identification and Assessment of MeasuresWe develop lists of all the energy efficiency, small
scale renewables and low carbon measures that couldpotentially be applied in each of the different sectors inthe city. We include both technological and behavioralmeasures. We first develop long lists of all potentialmeasures, based on extensive literature reviews andstakeholder consultations, and we then review theseto remove any options that are not applicable in theKolkata context. The outputs then form our shortlistof measures for each sector. These shortlists are notnecessarily exhaustive some measures may havebeen overlooked, others may not have been includedin the analysis due to the absence of data ontheir performance.
Again drawing on extensive literature reviews andstakeholder consultations, we assess the performanceof each measure on the shortlist. We consider thecapital, running and maintenance costs of eachmeasure, focusing on the marginal or extra costsof adopting a more energy efficient or lower carbonalternative. We then conduct a realistic assessmentof the likely savings of each option over its lifetime,taking into account installation and performancegaps. As each measure could be in place for manyyears, we take into account changing carbonintensities of energy use and assume an average
annual rise of 3% in real prices (including energy).
Some of the measures interact with each other, sotheir performance depends on whether/to what extentanother option is also adopted. For example, thecarbon saving from most measures depends on thecarbon intensity of electricity supply, and this in turndepends on whether various low carbon measureshave been adopted in the electricity supply sector.Similarly, the carbon savings from adopting greenbuilding standards depend on whether there are alsoenergy efficiency standards for air conditioners. Totake these interactions into account, we calculate the
impacts of each measure if adopted independentlywith business as usual conditions in energy supply.
These calculations underpin the figures in the leaguetables. When we are determining the potentialsavings across a sector or across the city economy, wecalculate the effect of each measure on the potentialenergy savings of other measures to develop realisticassessment of their combined impacts. For example,any electricity savings from efficiency improvementsin the housing sector are deducted from the emissionreductions associated with reducing the carbonintensity of the grid.
In many cases, a single measure has beenconsidered under varying policy conditions:for example, solar photovoltaic panels with andwithout feed-in tariffs. When compiling the sector oreconomy-wide summaries, the cost-effective optionswhich require the least enabling policies have beenincluded unless these are already established at scale.Therefore, the total investment needs, energy savingsand payback periods reflect those of solar PV panelswithout feed-in tariffs.
These appraisals and scenarios are then subjected toa participatory review in expert workshops to ensure
that they are as realistic as possible. Lists of all of themeasures considered in the analysis are presented inTable 1. Lists of all of the participants in the expertworkshops are presented in Appendix A.
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21The Economics of Low Carbon Cities
Energy Retrofitting coal generation (6045 MW), wind generation (450MW), solar PV (450 MW), solar PV (900 MW)
Domestic Air conditioners energy efficiency standards; banningincandescent light bulbs; biomass boilers; entertainment appliances standby; fuel switching (coal to LPG, cow-dung cake to LPG);green building standards; kitchen appliances energy efficiencystandards; raising thermostat 1C; retrofitting with mineral wooland fibreglass urethane; setting LED targets; solar lamps foroutdoor lighting; solar photovoltaic panels with and without FiT;
solar water heaters with and without FiT; turning off lights; washingmachines energy efficiency standards; water heaters energyefficiency standards.
Commercial buildings Air conditioners energy efficiency standards; banningincandescent light bulbs; computers energy management;copiers energy management; elevators and escalators energyefficiency standards; green building standards; monitors energymanagement; printers energy management; raising thermostat1C; retrofitting with mineral wool and fibreglass urethane; settingLED targets; solar photovoltaic panels with and without a feed-intariff (FiT); turning off lights.
Industry* Benchmarking; energy management systems;process integration; efficient motor systems; boiler upgrades;furnace upgrades; lighting upgrades; HVAC (heating, ventilationand air conditioning) upgrades; fuel switching; renewables; powerrecovery; co-generation; feedstock change; product changes;material efficiencies.
Transport Metro East West Expansion; Metro Phase 2 Expansion; highquality Bus Rapid Transit (42.5km); tram network recapitalisationand roadway designation;cycling infrastructure; car vehicle
efficiency standards; parking demand management; Light RailTransit line; CNG bus replacement.
Waste Improved recycling; gasification; refuse-derived fuels; landfillgas flaring; windrow composting; anaerobic digestion; in-vesselcomposting; incineration; sanitary semi-aerobic landfills.
*Industrial measures are based on the groupings of 62 sector specific measures into broader categories to aid analysis andpresentation. Full details of the sector specific measures are included in Chapter 4 and in Appendices C and D.
Table 1: Lists of the low carbon measures considered.
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The Economics of Low Carbon Cities22
Assessment of the scope for deployment.
We evaluate the potential scope for deploying each of
the measures in the various sectors in Kolkata in theperiod to 2025. We calculate deployment not only forthe sectors as a whole, but also for sub-sectors, takinginto account for example the scope for change inhouseholds with different income levels and forms ofenergy consumption, or the scope for an option to beadopted in a particular industrial sub-sector.
Based on stakeholder consultations, we developrealistic and ambitious rates of deployment withrealistic rates being based on readily achievablelevels of up-take, and ambitious rates assuming ratesof deployment or take-up that could be achieved if
supporting policies and favourable conditions werein place. These assessments take into account thelifespans and rates of renewal of existing measuresthat could be replaced with more energy efficient orlower carbon alternatives, and also rates of change andgrowth in the relevant sectors of the city.
Again, we subject our assessments of the scope for/rates of deployment to participatory review inexpert workshops to ensure that they are as realisticas possible.
Aggregation, assessment of investment needsand opportunities.
We draw together the results from our assessment ofthe performance of each measure, and the scope fordeploying each measure, to develop aggregations ofthe potential influence of each measure across thedifferent sectors of the city as a whole. This allows usto understand overall investment needs and paybacks,as well as impacts on energy supply and demand inthe different sectors in the city. It also allows us togenerate league tables of the most cost and carboneffective measures that could be adopted both in eachsector and across the city as a whole.
More detailed explanations of the data sources,
methods and assumptions used for each sector arepresented in Appendix B.
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Chapter 3.
The Key Findings for Kolkata
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The Economics of Low Carbon Cities24
The Changing Context and the Impacts ofBusiness as Usual Trends
We find that Kolkatas GDP in 2014 was INR 1.84trillion (US$31.7 billion), if recent trends continuewe forecast that they will grow to INR 4.4 (US$75.2billion) by 2025. We therefore find that per capitaincomes in Kolkata were INR 125,109 (US$2,139)in 2014 and that with projected rates of economic andpopulation growth they will grow to INR278,710(US$4,766) by 2025. We also find that the totalenergy bill for Kolkata in 2014 was INR 169.2 billion(US$2.9 bil lion), which equates to 9.1% of GDP. Inother words, 9.1% of all income earned in Kolkata iscurrently spent on energy.
Figure 1: Indexed energy use total, per unit of GDP and per capita.
Business as usual trends in Kolkata show a rapiddecoupling of economic output, energy use andcarbon emissions between 2000 and 2025 (see Fig.1).However, GDP and energy demand per capita areboth rising steadily, while the population of Kolkatais also growing. These effects are offsetting theseimprovements in energy intensity and leading to a netincrease in energy use.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
2000 2005 2010 2015 2020 2025
Energy use
Energy use per unit GDP
Energy use per capita
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25The Economics of Low Carbon Cities
We have assumed an increase of 3% per annumfor real energy prices. The rising real energy pricescombined with increasing energy consumptionmeans that the total energy bill for Kolkata will morethan double its 2014 level by 2025 in a business asusual scenario.
Figure 2: Indexed energy prices and total energy bill.
The emissions intensity of energy production isprojected to remain largely constant until 2025,but increasing energy efficiency in the widereconomy means that the emissions produced perunit of GDP will fall dramatically between 2000 and2025. This is significant because this is the indexthat India isusing in their national carbon targets ininternational negotiations. It is important to note that,despite declining emission intensity per unit of GDP,rapid economic growth still means that emissionsper capita and total emissions are continuing to rise.Ina business as usual scenario, total emissions fromKolkata are therefore forecast to increase by 54.0%on 2012 levels by 2025.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
2000 2005 2010 2015 2020 2025
Electricity
Kerosene
Coal
LPG
Total energy bill
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The Economics of Low Carbon Cities26
For Kolkata, business as usual trends will lead totalenergy consumption to rise by 44.1% from 41.6 TWhin 2014 to a forecast level of 56.0 TWh in 2025(see Fig. 4).
When combined with increasing real energy prices,this leads to the total expenditure on energy toincrease by 111.6% from INR 169.2 billion (US$2.9billion) in 2014 to a forecast level of INR 357.9 billion(US$6.1 billion) in 2025 (see Fig. 5).
When combined with relatively stable levels of carbonemissions per unit of energy consumed, this leads tocarbon emissions attributed to domestic consumptionincreasing by 54.0% from 24.9 MtCO
2-e in 2014 to a
forecast level of 37.9 MtCO2-e in 2025 (see Fig. 6).
Figure 3: Indexed total emissions per unit of energy, per unit of GDP and per capita.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
2000 2005 2010 2015 2020 2025
Total emissions
Emissions per unit energy
Emissions per unit GDP
Emissions per capita
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27The Economics of Low Carbon Cities
Figure 4: Energy consumption in Kolkata (TWh) between 2000 and 2025.
Figure 5: The energy bill for Kolkata (INR billions) between 2000 and 2025.
Figure 6: Emissions from Kolkata (MtCO2-e) between 2000 and 2025.
Water
Transport
Residential
Industry
Commercial
2000 2005 2010 2015 2020 2025
10.0
20.0
30.0
40.0
50.0
60.0
70.0
00.0
TW
h
2000 2005 2010 2015 2020 2025
Water
Transport
Residential
Industry
Commercial
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
INRbillions
Waste
2000 2005 2010 2015 2020 2025
Water
Transport
Residential
Industry
Commercial
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
MtCO2--e
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The Economics of Low Carbon Cities28
Carbon Development
We find that - compared to business as usual trends
the KMA could reduce its carbon emissions by 2025by:
20.7% through cost effective investmentsthat would more than pay for themselves oncommercial terms over their lifetime. This wouldrequire an investment of INR 119.3 billion(US$2.0 billion), generating annual savingsby reducing energy bills by INR 30.4 bill ion(US$520.7 million), paying back the investmentin 3.9 years and generating annual savings for thelifetime of the measures.
22.1% if, as well as the above investments, cost
effective investments in the electricity sector weremade that could more than pay for themselves oncommercial terms over their lifetime. This wouldrequire an investment of INR 39.7 billion (US$679.0 billion), generating annual savings of INR18.2 billion (US$ 311.8 million), paying back theinvestment in 2.2 years and generating annualsavings across West Bengal for the lifetime ofthe measures.
35.9% with cost neutral measures that could bepaid for by re-investing the income generatedfrom cost-effective measures. This would requirean investment of INR 205.6 billion (US$ 3.6
billion), generating annual cost savings of INR33.5 billion (US$ 573.6 million), paying back theinvestment in 6.2 years and generating annualsavings for the lifetime of the measures.
38.7% with cost neutral measures in theelectricity sector that could be paid for byre-investing the income generated from cost-effective measures. This would require aninvestment of INR 210.4 billion (US$ 3.6billion), generating annual cost savings of INR27.0 billion (US$ 462.0 million), paying back theinvestment in 7.9 years and generating annualsavings across West Bengal for the lifetime ofthe measures.
43.5% with the exploitation of all of the realisticpotential of the different measures withcarbon saving potential. This would requirean investment of INR 473.8 billion (US$8.4billion), generating annual savings of INR60.1 billion (US$1.1 billion), paying back theinvestment in 7.9 years and generating annualsavings for the lifetime of the measures.
The impacts of all of these levels of change are shownin Figures 7 and 8 on the next page.
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29The Economics of Low Carbon Cities
Figure 7: Emissions from Kolkata under six different scenarios,as a function of 2012 emissions, between 2000 and 2025.
Figure 8: Energy bills for Kolkata under three different investment scenarios,as a function of 2014 emissions, between 2000 and 2025.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
Baseline
Cost-effective
Cost-effective (electricity)
Cost-neutral
Cost-neutral (electricity)
Technical potential
2000 2005 2010 2015 2020 2025
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%Business as usual
Cost-effective
Cost-neutral
2000 2005 2010 2015 2020 2025
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Sector Focus
The Electricity Sector
ON
OFF
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31The Economics of Low Carbon Cities
The Electricity Sector
The Changing Context and the Impacts ofBusiness as Usual Trends
For the electricity sector, background trends suggestsubstantial growth in electricity consumption,dominated by the residential sector. This leads energyconsumption to rise by 66.8% from 10.8 TWh in 2014to a forecast level of 18.1 TWh in 2025 (see Fig. 9).
When combined with relatively stable levels ofcarbon emissions per unit of energy consumed, thisleads to carbon emissions from the electricity sectorincreasing by 60.6% from 16.5 MtCO
2-e in 2014 to a
forecast level of 27.8 MtCO2-e in 2025 in a business as
usual scenario.
Figure 9: Electricity consumption in Kolkata (TWh) between 2000 and 2025.
0.0
2.0
4.0
6.0
8.0
10.0Residential
Industry
Commercial
Other
2000 2005 2010 2015 2020 2025
TWh
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The Economics of Low Carbon Cities32
The Potential for Carbon Reduction Investments and Returns
We find that compared to 2014 these business asusual trends in carbon emissions from the electricitysector could be reduced by:
11.6% through cost effective investmentsthat would more than pay for themselves oncommercial terms over their lifetime. Thiswould require an investment of INR 39.7 billion(US$679 million), generating annual savingsof INR 18.2 billion (US$311.8 million), payingback the investment in 2.2 years but generatingannual savings for the lifetime of the measures.
17.6% with cost neutral measures that could be
paid for by re-investing the income generatedfrom all cost-effective measures. This wouldrequire an investment of INR 210.4 billion(US$3.6 billion), generating annual savings ofINR 27.0 billion (US$462 million), paying backthe investment in 7.9 years but generating annualsavings for the lifetime of the measures.
Figure 10: Emissions from the electricity sector under three dif ferent scenarios,as a function of 2014 emissions, between 2000 and 2025 .
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
Business as usual
Cost-effective
Cost-neutral
2000 2005 2010 2015 2020 2025
Table 2:League table of the most cost-effective measures
for the electricity sector.
Rank: Measure: INR/ tCO
2-e
USD/tCO
2-e
1 Coal retrofit (6045MW) -4,155 -71
2 Solar PV (900 MW) 1,024 18
3 Solar PV (450 MW) 1,408 24
4 Wind (450 MW) 1,419 24
Table 3:League table of the most carbon-effective
measures for the electricity sector.
Rank: Measure: ktCO2-e
1 Coal retrofit (6045MW) 61,435
2 Solar PV (900 MW) 14,083
3 Wind (450 MW) 8,450
4 Solar PV (450 MW) 7,041
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Sector Focus
The Domestic Sector
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The Economics of Low Carbon Cities34
The Domestic Sector
The Changing Context and the Impacts ofBusiness as Usual Trends
For the domestic sector, background trends suggestsubstantial growth both in the number of householdsand in the average levels of energy consumption perhousehold. These combined trends lead domesticsector energy consumption to rise by 40.7% from16.5 TWh in 2014 to a forecast level of 23.3 TWhin 2025 (see Fig. 11).
When combined with increasing real energy prices,this leads to the total spend from the domestic sectoron energy to increase by 89.3% from INR 38.1 billion(US$544 million) in 2014 to a forecast level of INR72.1 billion (US$ 1.15 bill ion) in 2025.
When combined with relatively stable levels of carbonemissions per unit of energy consumed, this leads tocarbon emissions attributed to domestic consumptionincreasing by 55.4% from 9.1 MtCO
2-e in 2014 to a
forecast level of 14.0 MtCO2-e in 2025.
Figure 11: Domestic sector: indexed energy use, energy bills and emissions.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
Energy
Energy bills
Emissions
2000 2005 2010 2015 2020 2025
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35The Economics of Low Carbon Cities
The Potential for Carbon Reduction Investments and Returns
We find that for the domestic sector comparedto 2014 these business as usual trends in carbonemissions could be reduced by:
26.4% through cost effective investmentsthat would more than pay for themselves oncommercial terms over their lifetime. Thiswould require an investment of INR 13.5 billion(US$230.9 million), generating annual savingsof INR 5.5 billion (US$94.1 million), payingback the investment in 2.4 years and generatingannual savings for the lifetime of the measures.
41.7% with cost neutral measures that could be
paid for by re-investing the income generatedfrom all cost-effective measures. This wouldrequire an investment of INR 38.8 billion(US$663.5 million), generating annual savingsof INR 6.5 billion (US$111.2 million), payingback the investment in 6.0 years and generatingannual savings for the lifetime of the measures.
45.1% with the exploitation of all of the realisticpotential of the different measures withcarbon saving potential. This would requirean investment of INR 45.2 billion (US$ 772.2million), generating annual savings of INR 6.4billion (US$ 108.9 million), paying back theinvestment in 7.1 years and generating annualsavings for the lifetime of the measures. Thesefigures are based on the optimistic deploymentscenarios and do not include the revenue fromfeed-in tariff schemes.
Figure 12: Emissions from the domestic sector in four different investment scenarios,as a function of 2014 emissions, between 2000 and 2025.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%Business as usual
Cost-effective measures
Cost-neutral measures
Technical potential
2000 2005 2010 2015 2020 2025
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The Economics of Low Carbon Cities36
Table 4: League table of the most cost-effective measures for the domestic sector.
Cost effective
Cost neutral
All others including cost ineffective and those mutually exclusive with other measures
Rank: Measure: INR/ tCO
2-e
USD/tCO
2-e
1 Solar water heatingwith FiT
-5,521 -94
2 4kWp solar PV panelwith FiT
-4,963 -85
3 Banning incandescentlight bulbs
-3,308 -57
4 Raising thermostat 1C -2,488 -43
5 Entertainmentappliances - standby
-2,461 -42
6 Air conditioner - EEStandard 1
-2,333 -40
7 Air conditioner - EEStandard 2
-2,259 -39
8 4kWp solar PV panel -2,218 -38
9 Turning off lights -2,113 -36
10 Green BuildingStandard 1 (40% of newhouseholds from 2015)
-2,036 -35
11 Green BuildingStandard 2 (20% of newhouseholds from 2015)
-2,036 -35
12 Water heater - EEStandard 2
-1,855 -32
13 Water heater - EEStandard 1
-1,845 -32
14 Setting LED targetof 25%
-1,841 -31
Rank: Measure: INR/ tCO
2-e
USD/tCO
2-e
15 Solar water heating -1,794 -31
16 Entertainmentappliances - EEStandard 1
-1,731 -30
17 Entertainmentappliances - EE
Standard 2
-1,572 -27
18 Retrofitting mineralwool insulation
-556 -10
19 Retrofitting fibreglassurethane insulation
-452 -8
20 Refrigerator - EEStandard 2
-286 -5
21 Solar lamps for outdoorlighting
-2 0
22 Refrigerator - EEStandard 1
354 6
23 Washing machine -
EE Standard 1
602 10
24 Fuel switching -coal to LPG
1,685 29
25 Washing machine - EEStandard 2
1,710 29
26 Fuel switching - cow-dung cake to LPG
5,902 101
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37The Economics of Low Carbon Cities
Table 5: League table of the most carbon-effective measures for the domestic sector.
Cost effective
Cost neutral
All others including cost ineffective and those mutually exclusive with other measures
Rank: Measure: ktCO2-e
1 Air conditioner - EE Standard 2 6,003
2 Retrofitting fibreglass urethaneinsulation (20% of existinghouseholds by 2025)
4,989
3 Air conditioner - EE Standard 1 4,560
4 Entertainment appliances - EE
Standard 2
3,529
5 Turning off lights 3,519
6 Entertainment appliances - EEStandard 1
2,937
7 Retrofitting mineral woolinsulation (20% of existinghouseholds by 2025)
2,661
8 Retrofitting fibreglass urethaneinsulation (10% of existinghouseholds by 2025)
2,494
9 Water heater - EE Standard 2 2,205
10 Entertainment appliances -standby
1,710
11 Banning incandescentlight bulbs
1,426
12 Retrofitting mineral woolinsulation (10% of existinghouseholds by 2025)
1,330
13 Raising thermostat 1C 1,174
14 Water heater - EE Standard 1 938
15 4kWp solar PV panel with FiT(10MW by 2025)
887
16 4kWp solar PV panel (10MWby 2025)
887
17 Solar water heating with FiT(10% of households by 2025)
852
Rank: Measure: ktCO2-e
18 Solar water heating(10% of households by 2025)
852
19 Refrigerator - EE Standard 2 617
20 4kWp solar PV panel(5MW by 2025)
444
21 Solar water heating(5% of households by 2025)
426
22 Setting LED target of 25% 423
23 Fuel switching - coal to LPG 190
24 Washing machine - EEStandard 2
174
25 Washing machine -EE Standard 1
136
26 Refrigerator - EE Standard 1 123
27 Green Building Standard 2(40% of new householdsfrom 2015)
119
28 Green Building Standard 1(40% of new householdsfrom 2015)
60
29 Solar lamps for outdoor lighting(100% of outdoor lamps sold)
45
30 Green Building Standard 2(20% of new householdsfrom 2015)
30
31 Green Building Standard 1(20% of new householdsfrom 2015)
30
32 Solar lamps for outdoor lighting
(50% of outdoor lamps sold)
22
33 Fuel switching - cow-dung caketo LPG
0.5
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The Economics of Low Carbon Cities38
Sector Focus
The Commercial Buildings Sector
ON
OFF
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39The Economics of Low Carbon Cities
The Changing Context and theImpacts of Business as Usual Trends
For the commercial sector, background trends suggestsubstantial growth both in commercial floor spaceand in the average levels of energy consumption ineach commercial building. These combined trendslead commercial sector energy consumption to rise by114.7% from 4.1 TWh in 2014 to a forecast level of 8.7TWh in 2025 (see Fig. 13).
When combined with increasing real energy prices,this leads to the total expenditure on energy by thecommercial sector to increase by 190.1% from INR16.4 billion (US$211 million) in 2014 to a forecastlevel of INR 47.5 billion (US$760 million) in 2025.
When combined with relatively stable levels of carbonemissions per unit of energy consumed, this leads tocarbon emissions attributed to domestic consumptionincreasing by 130.7% from 4.1 MtCO
2-e in 2014 to a
forecast level of 9.3 MtCO2-e in 2025.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
350.0%
400.0%Energy
Energy bills
Emissions
2000 2005 2010 2015 2020 2025
Figure 13: Commercial sector: indexed energy use, bills and emissions.
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We find that for the commercial buildings sector compared to 2014 these business as usualtrends in carbon emissions could be reduced by:
19.3% through cost effective investmentsthat would more than pay for themselves oncommercial terms over their lifetime. Thiswould require investment of INR 39.6 billion(US$676.8 million), generating annual savingsof INR 5.6 billion (US$95.8 million), payingback the investment in 7.0 years but generatingannual savings for the lifetime of the measures.
19.4% through cost-neutral investments thatcould be paid for by re-investing the incomegenerated from the cost-effective measures. Thiswould require an investment of INR 39.7 billion
(US$678.6 million), generating annual savingsof INR 5.6 billion (US$95.8 million), payingback the investment in 7.1 years but generatingannual savings for the lifetime of the measures.
26.0% with the exploitation of all of therealistic potential of the different measures withcarbon saving potential. This would requirean investment of INR 107.9 billion (US$ 1.8billion), generating annual savings of INR 7.8billion (US$ 133.1 million), paying back theinvestment in 13.9 years and generating annualsavings for the lifetime of the measures. Thesefigures are based on the optimistic deploymentscenarios and do not include the revenue fromfeed-in tariff schemes.
Figure 14: Emissions from the commercial buildings sector under four different investment scenarios,as a function of 2014 emissions, between 2000 and 2025.
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
Business as usual
Cost-effective measures
Cost-neutral measures
Technical potential
2000 2005 2010 2015 2020 2025
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Table 6: League table of the most cost-ef fective measures for the commercial sector.
Table 7: League table of the most carbon-effective measures for the commercial sector.
Cost effective
Cost neutral
All others including cost ineffective and those mutually exclusive with other measures
Rank: Measure: IDR/ tCO
2-e
USD/tCO
2-e
1 20kWp solar PV panel with FiT -11,353 -194
2 Banning incandescent light bulbs -4,674 -80
3 Electronics - energy management -2,643 -45
4 Raising thermostat 1C -2,475 -42
5 Elevators and escalators - EE Standard 1 -2,167 -37
6 Elevators and escalators - EE Standard 2 -2,167 -37
7 Air conditioner - EE Standard 2 -1,307 -22
8 Air conditioner - EE Standard 1 -1,260 -22
9 Setting LED target of 25% -3 0
10 Turning off lights - BAU -3 0
11 Green Buildings Standard 1 -2 0
12 Green Buildings Standard 2 -2 0
13 20kWp solar PV panel 24 0
Rank: Measure: ktCO2-e
1 Green Buildings Standard 2 (100% of new buildings) 6,768
2 Air conditioner - EE Standard 2 3,688
3 Green Buildings Standard 1 (100% of new buildings) 3,384
4 Green Buildings Standard 2 (50% of new buildings) 3,384
5 Air conditioner - EE Standard 1 1,844
6 Electronics - energy management 1,830
7 Green Buildings Standard 1 (50% of new buildings) 1,692
8 Turning off lights 999
9 Raising thermostat 1C 548
10 Banning incandescent light bulbs 477
11 Elevators and escalators - EE Standard 2 469
12 Elevators and escalators - EE Standard 1 235
13 Setting LED target of 25% 178
14 20kWp solar PV panel (80% of buildings) 15
15 20kWp solar PV panel with FiT (80% of buildings) 15
16 20kWp solar PV panel (40% of buildings) 8
17 20kWp solar PV panel with FiT (40% of buildings) 8
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Sector Focus
The Industrial Sector
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43The Economics of Low Carbon Cities
The Changing Context and theImpacts ofBusiness as Usual Trends
For the industrial sector, background trends show thatindustrial energy use peaked in 2008 and has declinedsince. This is because current government policy ispreferentially locating heavy industry outside of theKMA. This explains why energy use in industryappears to have plateaued at 2.9 TWh (see Fig. 15).
When combined with increasing real energy prices,this leads to the total spend from the industrial sectoron energy to increase by 38.2% from INR 17.5 billion(US$298.8 mil lion) in 2014 to a forecast level of INR24.2 billion (US$413.1 million) in 2025.
When combined with relatively stable levels of carbonemissions per unit of energy consumed, this leads tocarbon emissions attributed to industrial consumptionstaying roughly constant at 4.45 MtCO
2-e.
Figure 15: Industrial sector: indexed energy use, bills and emissions.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%Energy
Energy bills
Emissions
2000 2005 2010 2015 2020 2025
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Figure 16: Emissions from the industrial sector under three different investment scenarios,as a function of 2014 emissions, between 2000 and 2025.
The Potential for Carbon Reduction Investments and Returns
We find that for the industrial sector these business asusual carbon emissions could be reduced by:
27.8% through cost effective investmentsthat would more than pay for themselves oncommercial terms over their lifetime. Thiswould require an investment of INR 6.3 billion(US$107.7 million), generating annual savings ofINR 3.1 billion (US$53.0 million), paying backthe investment in 2.0 years but generating annualsavings for the lifetime of the measures.
63.1% with the exploitation of all of the realisticpotential of the different measures with
carbon saving potential. This would requirean investment of INR 9.6 billion (US$ 164 .2million), generating annual savings of INR4.1 billion (US$70.1 mil lion), paying back theinvestment in 2.3 years but generating annualsavings for the lifetime of the measures.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Business as usual
Cost effective measures
Cost-neutral measures
2000 2005 2010 2015 2020 2025
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Table 8: League table of the most cost-effective measures for the industry sector.
Cost effective
Cost neutral
All others including cost ineffective and those mutually exclusive with other measures
Rank: Subsector Measure: INR/tCO
2-e
USD/
tCO2-e
1 Basic metals & fabrication Waste heat recovery (oil-fired melting) -22390 -383
2 Paper, wood, printing and products Pressurised head box -21770 -372
3 Basic metals & fabrication Wood gasifier (oil-fired melting) -20141 -344
4 Basic metals & fabrication Waste heat recovery (coke-fired melting) -16335 -279
5 Chemicals, rubber and plastics Insulation of cyclone system in spray dryers -14634 -250
6 Basic metals & fabrication Induction furnace for melting -14591 -249
7 Basic metals & fabrication Wood gasifier (coke-fired melting) -14506 -248
8 Chemicals, rubber and plastics Installation of exhaust gas heat recovery system in spray dryer -13909 -238
9 Non-metallic Installation of recuperator in tunnel kiln -11435 -196
10 Non-metallic Use of hot air of cooling zone of tunnel kiln as combustion air -11299 -193
11 Non-metallic Installation of low thermal mass cars in tunnel kiln for sanitary wares -9634 -165
12 Paper, wood, printing and products Energy efficiency improvements in process pumps -9520 -163
13 Paper, wood, printing and products Boiler feed water pressure drop -9039 -155
14 Paper, wood, printing and products Flash steam recovery -8974 -153
15 Paper, wood, printing and products Boiler feed water pump efficiency improvement -8969 -153
16 Non-metallic Use of energy efficient motor for polishing line -8149 -139
17 Paper, wood, printing and products Installation of screw press -8061 -138
18 Non-metallic Installation of natural gas turbine for electricity generation and use of
exhaust flue gas of turbine in spray dryer
-7995 -137
19 Basic metals & fabrication Energy efficient pit furnace (coke-fired melting) -7705 -132
20 Chemicals, rubber and plastics Matching the centre of motor axis with ball mill axis -7341 -126
21 Paper, wood, printing and products Installation of high consistency pulper -6833 -117
22 Chemicals, rubber and plastics Replacement of conventional gear system with planetary gear system inreaction vessels
-6778 -116
23 Textiles Variable frequency drives -6552 -112
24 Textiles Tri-generation micro turbine -6442 -110
25 Textiles Energy efficient pumps -6361 -109
26 Chemicals, rubber and plastics Energy efficient motors -6354 -109
27 Chemicals, rubber and plastics Replacement of conventional V belts with flat belts in various drives -6281 -107
28 Non-metallic Use of hot air of final cooling of tunnel kiln -6009 -103
29 Non-metallic Installation of briquette fired hot air generator -5782 -99
30 Basic metals & fabrication Thermo couples for annealing furnace -5724 -98
31 Basic metals & fabrication Modified wood fired annealing furnace -5636 -96
32 Textiles Natural gas generator with co-generation -5041 -86
33 Chemicals, rubber and plastics Replacement of conventional horizontal agitator system with vertical
agitator system
-4666 -80
34 Textiles Steam based co-generation system -4464 -76
35 Non-metallic Installation of natural gas engine for electricity generation and use ofexhaust flue gas of engine in spray dryer
-4346 -74
36 Basic metals & fabrication Wood gasifier for annealing -3974 -68
37 Chemicals, rubber and plastics Improvements in hot air distribution system -3811 -65
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Rank: Subsector Measure: INR/
tCO2-e
USD/
tCO2-e
38 Chemicals, rubber and plastics Improving insulation of hot air generator -3764 -64
39 Chemicals, rubber and plastics Energy efficient hot air generator system -3414 -58
40 Chemicals, rubber and plastics Energy efficient wood-fired boiler -3383 -58
41 Chemicals, rubber and plastics Replacement of conventional tray dryer system with energy efficient tray
dryer system
-3354 -57
42 Non-metallic Improvement in kiln, spray dryer & other hot surfaces insulation -3076 -53
43 Chemicals, rubber and plastics Replacement of manual filter press with mechanical filter press -2911 -50
44 Chemicals, rubber and plastics Replacement of conventional filter press (recess plates) with membranefilters press
-2892 -49
45 Chemicals, rubber and plastics Replacement of conventional wood fired tray dryer system with solartray dryer system
-2682 -46
46 Non-metallic Energy efficiency improvements in motors of agitation section -2540 -43
47 Textiles Heat recovery system -2440 -42
48 Textiles Online flue gas monitoring system -2266 -39
49 Textiles Energy efficient boilers -1478 -25
50 Non-metallic Preheating of input slurry of spray dryer through solar energy -1474 -25
51 Non-metallic Implementation of ON - OFF system (10 minutes ON and 5 minutesOFF) for agitation motors
-1342 -23
52 Chemicals, rubber and plastics Replacement of conventional wood fired hot air generator system with
energy efficient gas fired hot air generator system
-1017 -17
53 Paper, wood, printing and products Boiler fans efficiency improvements -801 -14
54 Paper, wood, printing and products Boiler efficiency improvement -796 -14
55 Paper, wood, printing and products Digester blow heat recovery -742 -13
56 Paper, wood, printing and products Steam consumption reduction by efficient condensate evacuation -549 -9
57 Non-metallic Preheating of combustion air by smoke air through recuperator inceramic tiles
-520 -9
58 Paper, wood, printing and products Installation of pocket ventilation system -275 -5
59 Non-metallic Installation of variable frequency drive (VFD) in motors of agitationsystem
-102 -2
60 Textiles Energy efficiency stenters 0 0
61 Non-metallic Installation of variable frequency drive (VFD) in ball mill and blunger 52 1
62 Textiles Pressure powered pumping packing unit 223 4
Table 8 continued
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Cost effective
Cost neutral
All others including cost ineffective and those mutually exclusive with other measures
Rank: Subsector Measure: ktCO2-e
1 Textiles Heat recovery system 2507
2 Non-metallic Installation of natural gas turbine for electricity generation and use of exhaust fluegas of turbine in spray dryer
2318
3 Non-metallic Installation of natural gas engine for electricity generation and use of exhaust fluegas of engine in spray dryer
2200
4 Textiles Energy efficient boilers 2146
5 Non-metallic Preheating of combustion air by smoke air through recuperator in ceramic tiles 2085
6 Textiles Steam based co-generation system 1666
7 Textiles Tri-generation micro turbine 1489
8 Textiles Online flue gas monitoring system 1399
9 Textiles Energy efficient pumps 1210
10 Paper, wood, printing and products Boiler efficiency improvement 889
11 Non-metallic Preheating of input slurry of spray dryer through solar energy 835
12 Textiles Natural gas generator with co-generation 786
13 Non-metallic Installation of briquette fired hot air generator 688
14 Non-metallic Improvement in kiln, spray dryer & other hot surfaces insulation 646
15 Non-metallic Installation of variable frequency drive (VFD) in ball mill and blunger 591
16 Chemicals, rubber and plastics Energy efficient wood-fired boiler 571
17 Chemicals, rubber and plastics Energy efficient tray dryer system 533
18 Chemicals, rubber and plastics Replacement of conventional wood fired hot air generator system with energy
efficient gas fired hot air generator system
479
19 Chemicals, rubber and plastics Replacement of conventional filter press (recess plates) with membrane filters press 429
20 Chemicals, rubber and plastics Replacement of conventional wood fired tray dryer system with solar tray dryer system 343
21 Paper, wood, printing and products Digester blow heat recovery 324
22 Chemicals, rubber and plastics Energy efficient hot air generator systems 311
23 Chemicals, rubber and plastics Installation of exhaust gas heat recovery system in spray dryer 288
24 Paper, wood, printing and products Boiler fans efficiency improvement 272
25 Chemicals, rubber and plastics Replacement of manual filter press with mechanical filter press 267
26 Paper, wood, printing and products Steam consumption reduction by efficient condensate evacuation 242
27 Textiles Pressure powered pumping packing unit 200
28 Non-metallic Implementation of ON - OFF system (10 minutes ON and 5 minutes OFF) foragitation motors
192
29 Chemicals, rubber and plastics Improvements in hot air distribution system 139
30 Paper, wood, printing and products Installation of pocket ventilation system 119
31 Non-metallic Energy efficient motors in agitation section 117
32 Non-metallic Installation of variable frequency drive (VFD) in motors of agitation system 98
33 Chemicals, rubber and plastics Replacement of conventional horizontal agitator system with vertical agitator system 97
34 Chemicals, rubber and plastics Improving insulation of hot air generator 87
35 Textiles Energy efficiency stenters 86
36 Non-metallic Use of energy efficient motor for polishing line 81
37 Basic metals & fabrication Wood gasifier (coke-fired melting) 72
Table 9: League table of the most carbon-effective measures for the industry sector.
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Table 9 continued
Rank: Subsector Measure: ktCO2-e
38 Textiles Variable frequency drives 64
39 Non-metallic Use of hot air of final cooling of tunnel kiln for preheating the input material 63
40 Basic metals & fabrication Thermo couples for annealing furnace 57
41 Basic metals & fabrication Wood gasifier for annealing 57
42 Chemicals, rubber and plastics Replacement of conventional motors with energy efficient motors 56
43 Basic metals &