The base year is 2006 and the terminal year is 2031. These twenty-five years are divided into five periods consisted of five years. The discount rate of 9% is considered referring from [21]. We cover only the centralized power sector due to limited data availability. Current capacity decreases with actual lifetime, and no constraint is set on investment money used to meet increased electricity demand in the future. The commercial and transmission and distribution (T&D) losses have a large impact on electricity generation in India. These amount to 20% for the base year and the progressive decrease is assumed to reflect an improvement of the transmission loss [14]. The commercial and T&D losses reach 14% in 2031.

Specifications of power generation technologies have important impacts on power mix in the future. Table 1 shows the specification of power generation technologies determined based on [13], [15], [21].

The efficiencies of the existing plants are calculated from actual data for two grids, integrated Northern, Eastern, Western, and North-Eastern regional grids (NEWNE) and Southern grid. Advanced thermal plants and renewable energy are included as power generation technologies in addition to existing technologies. For coal-fired power generation, existing plants are based on sub-critical steam pressure systems (CSUB) whose thermal efficiency is 30.9% in the NEWNE grid and 34.4% in the Southern grid in 2006. Two types of advanced thermal plants are considered, coal supercritical (CSC) and coal ultra-supercritical (CUSC). CSC and CUSC generate electricity in higher pressure and temperature and can attain 37% and 44% efficiencies respectively. For gas-fired power generation, advanced natural gas combined cycle (ANGCC) is adapted in this analysis. ANGCC introduces a class of turbines that is more advanced than what is used in existing natural gas combined cycle (NGCC). Although IGCC and CCS are advanced thermal power plants, these technologies are not competitive without emission constraints. Thus, they are not taken into account in this study.

In addition, DeSO_x and DeNO_x technologies equipped to fossil fuel-fired power generation for the purpose of the mitigation of SO_x and NO_x emissions are specified. Flue gas desulfurization (FGD), low NO_x burner (LNB), and selective catalytic reduction (SCR) are taken into account in this study and their specifications are shown in Table 2.

The left side of the removal rate of the LNB and the SCR corresponds to coal- and oil-fired power generations and the right side corresponds to gas-fired power generations. The assumption of the FGD is based on [22], [23] and the assumptions related to the LNB and the SCR are determined through taking the technological level of the FGD into account. These technologies are installed on both the existing plants and the newly installed plants.

Energy sources of power generations are greatly dependent on fuel prices. The domestic fuel prices in the base year of 2006 are derived from [13] for gas and [24] for coal and lignite. The escalations of the fuel prices are derived from assumptions about the international prices of fossil fuels [25]. The energy prices in the time horizon are shown in Table 3.

Increase rates of fossil fuels are settled between 2011 and 2016 reflecting a large increase through 2009 with the gas prices and the oil prices. The prices rise steadily after 2016 in response to expected higher demand and lower resource availability. Thus, the oil and the gas prices rise relatively larger than the coal prices.

Nuclear power generation and renewable energy play important roles in decreasing CO₂ emissions and air pollutants. However, these technologies have social and resource constraints. Upper bound of the capacity installations are given to reflect the constraints. Table 4 shows the upper bound imposed on the model for nuclear power generation and renewable energy.

The upper bound of nuclear power generation is applied based on national electricity plan [21]. The resource constraint of renewable energy corresponds with the technological potential for wind and hydroelectric power. The potential of hydroelectric power and wind power is derived from [26] and [27] respectively.

Electricity demand is the principal driver of electricity generation and thus CO₂ emissions and air pollutants from the power sector. Electrical demand has been growing in India and is expected to rise significantly in the future. In 1990, the total electricity demand was 212 TWh and had increased to 567 TWh in 2007. The demand growth is a result of strong economic growth and greater accessibility to electricity grids during the period. This increase is expected to persist in medium and long terms. The future electricity demand is determined based on the projection of [3]. The projection is based on an econometric model which considers social and economic changes to examine future Asian energy demand. The model also contains a shift of end-use technologies. The annual electricity growth rates are 5.8% from 2007 to 2020, 5.7% from 2020 to 2030, and 5.5% from 2030 to 2035. The growth rates are assumed to be identical among each grid.

Local air pollution attributable to SO_x and NO_x emissions and climate change attributable to CO₂ are considered in this study. Marginal environmental damage costs of the emissions are required to make the emissions comparable.

There are few studies related to marginal environmental damage costs of the emissions in India due to limited available data, while a number of estimations are found in developed countries (for example [28]). They are set 549 USD per SO_x ton and 450 USD per NO_x ton derived from [29] which estimates marginal damage costs of Mumbai applying a rapid damage assessment model. The major damage from the air pollutants is human health effects. The monetary value of CO₂ emissions is assumed as 12.7 USD per ton from the actual CER price [16] in correspondence with the objective of this study. It is assumed that the offset market reflects the marginal damage costs of CO₂ emissions.

A scenario analysis enables us to assess impacts under different policies. We develop two scenarios, a BAU scenario and a CDM scenario. The BAU scenario assumes no changes in policies. The scenario is intended as a baseline to assess the additionality of CDM projects. Although energy-related CDM projects intend to reduce CO₂ emissions, some of the projects contribute to decrease air pollutants. The CDM scenario takes into account of the ten CDM projects of the coal-fired plants in India that are under registration and validation. These ten projects are aggregated in this study to examine the difference of CO₂ emissions and air pollutants caused by these. To examine the additionality of the projects, the installed capacity and the power generation of nuclear power generation and renewable energy are fixed from the BAU scenario. The 10 CDM projects are referred from [30] and [31]. The name, the start year of operation, and the installed capacity depicted in PDD are listed in Table 5.

There are ten PDDs related to coal-fired power generation CDM projects under registration and validation in India’s power sector by May 2011. The operation starts after the validation and the start year of the operation ranges from 2011 to 2014. All projects shown in Table 5 cover CSC and there exist no projects of CUSC, IGCC, and CCS in India. The projected CSC plants have higher thermal efficiency than the expected thermal efficiency in India shown in Table 1. Once higher thermal efficiency of advanced thermal plants is in place, India learns the generation technology and starts to commercialize. Thus, the thermal efficiency level of the plants will disseminate to all plants of India in response to the technology transfer induced by the CDM projects. It is assumed that the thermal efficiency of the CSC increases to 40% after the first introduction of CSC in 2011 in the CDM scenario. In addition, CSC installed through CDM projects must be up to date, which indicates that they equip DeSOx and DeNOx technologies. However, there is no incentive to reduce SOx and NOx emissions from power generation in India currently. Thus, this study assumes that DeSOx and DeNOx technologies do not spill over to other coal-fired power plants.

Total power generation increases from 663 TWh to 2517 TWh. Coal-fired generation has been dominant through the objective term and accounts for 90% of total power generation after 2011. CSC starts to expand since 2011 as a base load power plant owing to a higher efficiency than CSUB and reaches 41.5% of total power generation in 2031. CSUB steadily increases as a peak load power plant with a low investment cost. CSUB increases substantially to satisfy increased peak load in 2031 and reaches 49.9% of total generation in 2031. CUSC is not installed until 2031 since coal price is relatively cheap in India. Although hydro requires no fuel, the low availability and the high O&M cost prevent hydro to expand and be only used in the base year. Nuclear power and wind power increase electricity generation but reach only 5.5% and 1.9% of total power generation in 2031 respectively. Figure 2 shows power generations for two scenarios.

Figure 2.

Power generations for two scenarios

When CSC is introduced through the CDM projects which are currently under registration and validation, the share of the generation type varies from the BAU scenario through the objective years. Since the power generation of nuclear power generation and renewable energy are fixed to examine the additionality of the CDM projects, their share of total generation remains unchanged from the BAU scenario. CSUB falls in substitution for CSC in 2011 and 2016. CSC expands after the CDM with improved thermal efficiency invoked by the CDM projects and substitutes for CSUB after terminating CSC as CDM projects. CSC reaches 49.8% of total power generation while CSUB falls to 41.6%.

CO₂ emissions increase monotonically in the BAU scenario and reach 2,384 Mt CO₂ four times as the base year in 2,031. CO₂ emissions reach 2,305 Mt CO₂ in the CDM scenario and decrease 79 Mt CO₂ as compared to the BAU scenario at the end of the time horizon. CDM contributes to reduce CO₂ emissions in the longer term than in the term when CDM is implemented. CO₂ emissions in the CDM scenario are 36 Mt CO₂ lower than in the BAU scenario in 2016 when most of the CDM projects are implemented due to installation of CSC in substitution of CSUB. Higher reduction can be achieved after the implementation associated with increase of higher thermal efficiency of CSC. CO₂ emissions fall to 1,227 Mt CO₂ through the objective period. Figure 3 shows CO₂ emissions for two scenarios.

Figure 3.

CO₂ emissions for two scenarios

CO₂ emissions increase monotonically in the BAU scenario and reach 2,384 Mt CO₂ four times as the base year in 2,031. CO₂ emissions reach 2,305 Mt CO₂ in the CDM scenario and decrease 79 Mt CO₂ as compared to the BAU scenario at the end of the time horizon. CDM contributes to reduce CO₂ emissions in the longer term than in the term when CDM is implemented. CO₂ emissions in the CDM scenario are 36 Mt CO₂ lower than in the BAU scenario in 2016 when most of the CDM projects are implemented due to installation of CSC in substitution of CSUB. Higher reduction can be achieved after the implementation associated with increase of higher thermal efficiency of CSC. CO₂ emissions fall to 1,227 Mt CO₂ through the objective period.

Figure 4 shows SO_x and NO_x emissions for two scenarios.

Figure 4.

SO_x and NO_x emissions for two scenarios

SO_x and NO_x emissions rise during the whole time horizon in both scenarios. The increase of the generation from CSUB and CSC raises SO_x and NO_x emissions. In the BAU scenario, SO_x emissions increase from 2.3 Mt SO_x to 10.4 Mt SO_x and NO_x emissions from 1.8 Mt NO_x to 7.8 Mt NO_x. In the CDM scenario, the SO_x and NO_x emissions decline 14.4 Mt SO_x and 10.4 Mt NO_x from the BAU scenario through the objective period. This indicates that the ten coal-fired generations CDM projects which are currently under registration and validation in India’s power sector achieve co-benefits. The SO_x and NO_x emissions decrease in 2011 with a higher efficiency of installed CSC through the CDM projects. In addition, this decrease is associated with the introduction of CSC from the CDM projects which are assumed to equip DeSO_x and DeNO_x technologies. If energy-related CDM projects include co-benefits, investors of fossil fuel-fired power generation will increase investment with DeSO_x and DeNO_x technologies which contribute to sustainable development in host countries.

SO_x and NO_x emissions rise during the whole time horizon in both scenarios. The increase of the generation from CSUB and CSC raises SO_x and NO_x emissions. In the BAU scenario, SO_x emissions increase from 2.3 Mt SO_x to 10.4 Mt SO_x and NO_x emissions from 1.8 Mt NO_x to 7.8 Mt NO_x. In the CDM scenario, the SO_x and NO_x emissions decline 14.4 Mt SO_x and 10.4 Mt NO_x from the BAU scenario through the objective period. This indicates that the ten coal-fired generations CDM projects which are currently under registration and validation in India’s power sector achieve co-benefits. The SO_x and NO_x emissions decrease in 2011 with a higher efficiency of installed CSC through the CDM projects. In addition, this decrease is associated with the introduction of CSC from the CDM projects which are assumed to equip DeSO_x and DeNO_x technologies. If energy-related CDM projects include co-benefits, investors of fossil fuel-fired power generation will increase investment with DeSO_x and DeNO_x technologies which contribute to sustainable development in host countries.

Table 6 shows emission reduction benefits of the CDM projects in 2031.

The benefits are split into each emission to identify the contribution of each emission. The emissions reductions from the BAU scenario are shown as Figure 3 and Figure 4. The resulting benefits from all the emissions indicate that the CDM projects listed in Table 5 have more beneficial to developing countries than currently considered. The benefits from the reduction of the air pollutants should be addressed in addition to CERs. Thus, the benefit from the aggregated projects should be raised 1.7 times higher than CERs in 2031. The benefits from CO₂ reduction account for 59% of total benefits. If the benefits from reduction of air pollutants are included into CDM, contribution to sustainable development will be visible and investors will increase their investment on energy-related CDM projects at a lower CER price. This benefits developing countries to achieve sustainable development and also investors from developed countries to meet their reduction target cost-effectively.