Technology adoption and the abatement of greenhouse gases: The thermal power sector in India

The main theme of this dissertation is: Can policy initiatives for reducing pollution also increase output and social welfare? This research explores the potential for achieving this complementarity through technology adoption and market-based policy measures. A major source of environmental degradation are polluting residues generated during the process of production in agriculture, energy generation, and industry. The quantity of these residues per unit output can be altered through the adoption of technologies which increase productivity and efficiency of input-use. Some of these technologies can be adopted with minor modifications in existing processes, even in the short run.;A generic analytical framework is developed at the industry level, based on micro-level production and pollution functions and stylized features of alternative technologies. These functions incorporate the inherent links between pollution and production processes derived from the law of materials balance. This framework is used to identify factors which influence technology choices among heterogeneous microunits. Conditions under which abatement can be achieved together with an increase in output are identified. The implications of alternative policies, such as technology-based taxes and standards, for input-use, output, and aggregate profits are analyzed.;This methodology is then adapted to develop strategies for abatement of carbon emissions from thermal power generation in India. This analysis brings out the role of input quality in improving efficiency of input-use when microunits are heterogeneous and capital is fixed. It shows that liberalization of trade in clean coal can lead to a complementarity between the goals of abatement and increased output, while an emissions-tax leads to a conflict between these goals.;Finally, an aggregate market-equilibrium model that derives industry supply as a function of prices and alternative policy controls, is formulated. This is used to analyze the welfare consequences of abatement under alternative domestic, trade, and environmental policy mixes. It demonstrates that policies which target market imperfections and remove constraints on technology choice are more cost effective than an emissions-tax alone.;Given pre-existing domestic and trade distortions and technical inefficiencies, policy measures undertaken in pursuit of global environmental benefits are shown to also increase social welfare and output and conserve exhaustible resources.