Carbon Pricing Impact Evaluation on Transport Sector: A Comparative Analysis for India

Abstract

Carbon pricing mechanisms have been identified as a key strategy for reducing global greenhouse gas emissions to achieve the net-zero target. The present study aims to fill the gap by investigating the effects of carbon pricing under different specific target emission constraints and their potential implications for the transportation sector in India. A total of five scenarios have been developed, including a reference scenario with current policy assumptions and four climate policy scenarios. In the climate policy scenarios, emission constraints varied between the year 2030 and the year 2060, with implementation occurring in 10 y intervals until the year 2070. The net-zero year remains constant across all scenarios, which is set at the year 2070. These scenarios are developed using the global change assessment model (GCAM). The study reveals that a reduction in the time gap between the year of implementation and the year of achieving net-zero emissions will lead to an increase in carbon prices. The maximum projected cost of carbon will be 981.36 USD/t of CO2 emission ($/tCO2) if the carbon pricing is implemented starting in the year 2030 and 1062.79 $/tCO2 if it is implemented from the year 2060. The implementation of carbon prices resulted in considerable emission reductions, as well as variations in service demand and energy usage patterns in the transport sector. The findings hold promise for positively influencing SDGs 11 and 13 and have significant implications for policymakers and other stakeholders.