INTERNATIONAL CONFERENCE ON MANAGEMENT (ICM 2011) PROCEEDING

STRATEGIC RECOMMENDATION FOR INDIAN POWER SECTOR TO GENERATE CLEAN ENERGY IN THE CONTEXT OF GLOBAL ENVIRONMENTAL CRISIS AND SUSTAINABLE DEVELOPMENT
Sukanya Ghosh Assistant Professor, Head of Management Science Department, Meghnad Saha Institute of Technology, Kolkata, India. Prof.(Dr.)P.P. Sengupta, Professor of Economics, Department of Humanities & Social Science, National Institute of Technology, Durgapur, India.
Abstract Energy is an important input for economic development, but worlds energy supply is still largely based on fossil fuels and nuclear power. These sources of energy will not last forever and have proved to be contributors to our environmental problems. Indias energy demand is increasing with the robust growth in economy. The country is heavily dependent on fossil sources of energy for most of its demand. However, power generation through fossil fuels raises serious concern due to the depletion of resources and environmental pollution. Hence the challenge is to meet the energy needs in a sustainable manner. In order to insulate itself from any future supply disruption and price shocks of fossil fuels and to achieve energy security and also to meet global climate change objectives, renewable energy appears to be the most plausible option for the country to rely on. This has necessitated the country to start aggressively pursuing alternative energy sources like, solar, wind, biofuels, small hydro and more. Unfortunately India does not appear to be prepared for change over to such alternative sources due to absence of requisite technology, equipment, knowledge & investment. Therefore, present researchers have developed a model based on Auto Regressive Integrated Moving Average (ARIMA) to depict the future prospects of Indian power sector and have tried to develop some strategic recommendations from Indian point of view for gradual change over of power generation from thermal to renewable energy production through generation and maximizing the utilisation of renewable energy for sustainable development in the perspective of global environmental crisis. Key Words: Fossil fuels; Renewable energy; ARIMA; Sustainable development; Environmental crisis.

1. INTRODUCTION Indias demand for electricity is increasing due to robust growth in economy. In fact, India ranks sixth globally in terms of total electricity generation. A steady forecasted growth for manufacturing sector would need more electricity generation in future. India's total installed capacity of electricity generation has expanded from 105,045.96 MW at the end of 200102 to 1,57,229.48 MW at the end of February, 2010. 64.6 per cent of the total installed capacity depends upon thermal source, producing 1,00,598.40MW, whereas Hydel power plants come next with 24.7 per cent of the total installed capacity of 36,863.40 MW. Renewable energy sources producing 15,789 MW (as on 31.1.2010) contribute around 10 per cent to the total power generation in the country. India is one of the fastest growing country in terms of electricity consumption. Currently, it is the fifth largest consumer of electricity in the world, and will be the third largest country by 2030 as per the forecast done by economists. As per UN statistics, the per capita electricity consumption stood at 704.2 kWh in 2008. The per capita consumption at the end of the 11th five year plan (FY 2011-12) is projected to be 1000 (kWh) in India.

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Table:1 Change in Per capita Electricity Consumption in India Per Capita Electricity Consumption (kWh) Percentage (%) increase in Per Capita Electricity Consumption (kWh)

1950 1960 1970 1980 1990 2001 2004 2008

18 35 84 131 238 408 592 704

94.4 140 56 81.7 71.4 45.1 18.9

India's electricity supply-demand gap has averaged between 8 to 10 per cent over the last decade where electricity access exists. The energy requirement during FY 2008-09 was 774,324 MU while the energy availability was only 689,021 MU resulting in energy shortage of 11 %. Similarly the peak demand for energy during FY 2008-09 was 109,809 MW while peak demand met was 96,685 MW with a consequent peak shortage of 12%. The percentage change in demand & supply over different plan periods starting from 6th plan is depicted below:
Figure:1 Percentage Change in Demand- Supply Gap of Electricity in India
% gap of total demand 14 12 10 8 6 4 2 0 6th 7th 8th Plan 9th 10th 11th

Percentage of demand -supply gap

To meet this growth, India needs capacity addition of about 92,000 MW in the next 10 years. Countrys present gross generation of electricity is about 640 BU. By 2012, electricity requirement in India is expected to touch 975,222 MU and peak demand 1,571,070 MU i.e. an increase of 31.9% and 44.3% respectively from the current demand level.

India depends largely on thermal power for its electricity generation process and fossil fuels are the basic sources of energy generation for thermal power. This will raises serious concern due to depleting stock of fossil fuels and its contribution to create environmental pollution. Energy security is important for India as it is largely dependent on

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fossil fuel imports to foster its economic growth. According to the World Energy Outlook report, India will become the third largest net importer of oil before 2025 next to United States and China. It is apprehended that by 2030, the country will import 94% of its petroleum requirement. The country will also have the challenge to meet the electricity needs in a sustainable manner. This will not be sustainable in the long run due to high volatility of international crude oil prices. Coal imports are also likely to increase from 12 per cent in 2005 to 28 per cent in 2030. Current global trends in electricity supply and consumption are unsustainable from any point of view like environmental, economical and social. This situation can be changed provided we secure reliable and affordable energy and effect a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. In The Copenhagen Climate Summit India has expressed its willingness to sign on to an ambitious global target for emission reduction with equitable burden sharing, and could consider voluntarily reducing its carbon intensity by 20-25% on a purely domestic level by 2020 over 2005 levels. In order to insulate itself from any future supply disruption & price shocks of fossil fuels, to achieve energy security and to meet objective global climate change, renewables have indeed caught the attention of India. Undoubtedly, renewable energy appears to be the most plausible option for the country to rely on. This has necessitated the country to pursue aggressively exploration of alternative energy sources like solar, wind, bio-fuels, small hydro and more. This switchover will help the country to reduce its CO2 emission and to achieve the targeted level of emission control.

The remainder of the paper is organized as follows: Section 2 briefly discusses the relevant literature. Several adverse impacts of coal based thermal power sector is described in Section 3. Data selection, research methodology, and empirical models are described in Section 4. Analysis and interpretations of the empirical findings are included in Section 5. Section 6 draws the conclusion of the research paper.

2. LITERATURE REVIEW Global environmental crisis in terms of climate change is a change in the statistical distribution of weather over periods of time that range from decades to millions of years. This change of weather patterns is currently happening mainly due to global warming, which is caused by the rising emissions of carbon dioxide (CO2) and other greenhouse gases into the atmosphere that depletes the ozone layer which protects the earth from the ultra-violet rays of the sun. It also increases the heat in earths atmosphere. The world has warmed by 0.7-0.8 degree in the last century. According to Stefan Rahmstorf, Potsdam Institute Germany, if the earth can limit warming to 1.5 degrees it will still see rise of sea level by two meters in near future. Some island nations are likely to disappear. Scientists say that ice melt acquires a momentum of its own. There is no exaggeration in the fact that global warming can seriously endanger life. According to Centre for Research on the Epidemiology of Disasters (CRED) at Belgium`s Louvain University, 28 such disasters have been recorded between the years 1900 to 1909, 232 such disasters occurred between 1950 & 1959 and 1990s number of disasters increase to 2034. Global warming and sustainability is a challenging issue for today. According to Dresner (2002), Sustainability is a concept which combines post-modernist pessimism about the domination of nature with almost Enlightenment optimism about the possibility to reform human institutions. Brandon and Lombardi (2005) also focus on policy integration, as a central tenet for the evaluation of sustainable development. They claim that what is required is an integrating mechanism or framework to obviate the interconnectedness and interdependence of systems. In the existing literature of Econometric models and forecasts on CO2 emissions from coal fired thermal plant a single equation time series model is frequently used . The economic data commonly used in forecasting are normally non-stationary and it has high value of correlation coefficient (R2) due to the presence of the trend between dependent and independent variable, not to a true relationship between them. In coal, stock forecast model literature, Huntington (1994) shows that the forecasting performance of ten structural models was problematic since the errors in structural models were due to factors such as exogenous GNP assumptions, resource supply conditions outside OPEC, and demand adjustments to price changes. Lynch (2002) arrives to similar conclusions by comparing the theory and practice of oil supply forecasting. Koomey et al (2003) point out that factor like technological innovation and inaccuracy of coal reserve forecasts may also contribute to

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forecast errors. Pindyck (1999) points out that structural model may not be always accurate in long run forecast, but they are better to understand the short run fluctuation of dependent variable and other variables. Areepong (1999) purposed of methods to forecast the nonrenewable product by using forecasting techniques of regression analysis, exponential smoothing method. The forecasting technique is used to be Regression Analysis or Moving Averages. For Moving Averages can work better with stationary data. For a time series, that contains a trend or seasonal or nonstationary data, the forecasting technique that should be considered is Auto Regressive Integrated Moving Average (ARIMA). The purpose of ARIMA analysis is to find a model that accurately establish the past and future patterns of the time series data and it is able to capture then a wide variety of realistic phenomena regarding the uncertainty about the future risk.

3. EMISSIONS FROM INDIAN THERMAL POWER PLANTS AND ITS IMPACT

Although India has given more emphasis on thermal power generation during the last 26 years, the country has ignored the effect of thermal power on the environment & society. As the world has realized the direct impact of thermal power generation on global warming & health hazards due to emission of CO2, SO2, NO gases, India needs to realize the impact of such poisonous gases on environment & society.

Coal based thermal power stations mostly have negative impacts on the individual and society. The damage caused by coal based thermal power station are three fold- Individual, Social and Global. With regard to individual damage CO2, emission causes number of health hazards. Similarly, burning of coal results in emission of variety of gases like CO2, SO2, NO etc which have negative impact on the global environment. A typical 500-megawatt coal plant produces 3.5 billion kilowatt-hours of electricity per year which is enough to power a city of about 200,000 people in India. It burns 1.4 million tons of coal (the equivalent of 40 train cars of coal each day) and uses 2.2 billion gallons of water each year. In an average year, this one plant also generates the following: 10,000 tons of sulphur dioxide 10,200 tons of nitrogen oxide 3.7 million tons of carbon dioxide, equivalent to cutting down 100 million trees 500 tons of small particles 220 tons of hydrocarbons 720 tons of carbon monoxide 125,000 tons of ash and 193,000 tons of sludge from the smokestack scrubber 170 pounds of mercury, 225 pounds of arsenic, 114 pounds of lead, 4 pounds of cadmium, and other toxic heavy metals Traceable amounts of uranium

3.1 Environmental Damages The environment & society are adversely affected due to emission of carbon, sulfur and nitrogen gases arising out of burning of coal in thermal power plants. The main emissions from coal combustion at thermal power plants are carbon dioxide (CO2), nitrogen oxides (NO), sulfur oxides (SO2), chlorofluorocarbons (CFCs), and air- borne

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inorganic particles such as fly ash, soot, and other trace gas species. Carbon dioxide, methane, and chlorofluorocarbons are greenhouse gases. These emissions are considered to be responsible for heating up the atmosphere and producing a harmful global environment. Oxides of nitrogen and sulfur play an important role in atmospheric chemistry and are largely responsible for atmospheric acidity. Particulates and black carbon (soot) are of concern, in addition to possible lung tissue irritation resulting from inhalation of soot particles and various organic chemicals that are known carcinogens.

Carbon Dioxide (CO2) Emission Coal which is the main ingredient used in thermal plant, contains variety of combustible gases like hydrogen, methane & non-combustible gases like carbon dioxide, sulfur dioxide, nitrogen oxides. Also incomplete or inefficient combustion process of the coal generates the soot which spreads in the vicinity and affects both agriculture and society. Coal combustion in thermal power station emits greater amount of CO2 for every unit of electricity generated i.e. 2249lbs/mwh compare to much less of CO2 emission in case of oil i.e. 1672lbs/mwh and natural gas i.e. 1135lbs/mwh. Therefore, thermal power plants in India are highly susceptible to CO2 emission. Further, emission of CO2 and other hazardous gases has serious impact on public health. Unless otherwise the thermal power plants bring in technology changes for efficient combustion of coal, the environment and population will continue to be affected adversely. Power plants generally remove suspended particulate material (SPM) with the use of electro static precipitator. Despite this preventive measure, the residual CO2 emitted in the air contributes to health hazards. Exposure to SPM increases respiratory and cardiac mortality as it irritates the lungs and increases diseases like asthma, chronic bronchitis etc. Besides, the fly ash if not controlled, spreads in an around the agricultural field making it infertile in future. Since the thermal power plants are located in the vicinity of water resource namely river or ocean, the fly ash release from thermal power plants also kills the aquatic living creatures.

Sulfur Dioxide (So2) Emission Coal as a natural resource contains sufficient quantity of sulfur. While being burnt in the thermal power plant, coal produces sulfur dioxide gas. Concentrated SO2 gas in the environment causes acid rain which spoils the vegetation. This has been experienced all over the world including India around the vicinity of thermal power stations. Sporadic and frequent acid rain not only spoils the vegetation but also makes the agricultural field infertile. Population around the thermal power plants inhale this SO2 gas unconsciously which results in thoracic and lung cancer, cardio vascular problems etc.

Emission of Oxide of Nitrogen (NO) Oxidation of nitric oxide discharge from the coal results in formation of nitrogen dioxide. This nitrogen dioxide released in the atmosphere creates smog. It causes formation of acidity in the atmosphere and disturbs the ozone (O3) layer of troposphere. As a consequence the atmosphere is disturbed and global warming is caused. Moreover release of nitrogen dioxide in the environment adversely affects the plants and vegetation.

Carbonaceous material and black carbon (soot) Incomplete and/or inefficient combustion processes of fossil fuel generate soot. A recently conducted Indian Ocean Experiment (INDOEX) suggests that the presence of soot carbon in the atmosphere over the northern Indian Ocean hinders its natural heating processes by about 15%. Enhancement of boundary layer heating can significantly influence regional hydrological cycles and climate. The observation found that soot emissions are produced at a rate

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of 22.0 Gg per year from Indian thermal power plants. Soot emissions in India have not been studied thoroughly so far; these are the first estimates of soot emission from Indian thermal power plants.

Air pollutants Burning fossil fuels, especially coal and oil, produce a host of other air pollutants in addition to those discussed above. Among them are: Carbon monoxide (CO), which can cause headaches and place additional stress on people with heart disease Hydrocarbons (HC), which come from unburned fossil fuels and contribute to smog

Water, Land, and Thermal Pollution Electricity production and its use have profound impacts on water and lands such as oil spills and coal mining, and indirect impacts from air emissions settling out on land and water. Land and water damage can occur throughout the life cycle of fossil fuels, from mining, drilling, and refining, shipping, etc.

3.2 Health Hazards According to National Cancer Research Institute, Calcutta University Research Co2 emission with density of 2249lbs/mwh affects lungs, heart, DNA etc. of human being. The details of which are given below: Lungs: Macro phases a vital defense mechanism against bacteria and virus get busy fighting the pollution that they forget the real function, leaving the lungs vulnerable to bacteria and virus attacks. During this, an enzyme called elastase is released which degrades the lungs elastic tissues. Lung cancer is highest in metro cities at 18.4 per lakh (national average 11 per lakh). 45 per cent people in metro have reduced lung function and 50 per cent children have respiratory problem. Heart: Ultra fine particles (0.1 micron) break down low-density lipoprotein measure, forming a plaque on the arterial wall and reducing the space for blood flow. This triggers heart attacks. Liver: They stimulate blood-clothing mechanism, causing thrombosis on cardiac arrhythunia. DNA: Gene pool could be affected. Congenital problems are being detected among kids. It will take 15-20 years to know how badly we are hit.

A study done by Junfeng Liu of Princiton University and a team of researchers determined that unseen and odorless microscopic particles of air pollution wafting overseas and across continents kill some 380,000 people each year. Exhaust from diesel engines, sulfur from coal-fired power plants and desert dust swift into an insidious combination of fling particles that can be airborne for weeks.

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3.3 Costs to Society Emissions from thermal power plant resulting in global warming and health hazards have been discussed. Consequences of global warming and health hazards are far reaching. The society and its population suffer in terms of draught & flood arising out of global warming. It results in shortage of food, deforestation, and unwarranted ill health for the members of the society. Considerable amount is spent by affected human being for medicare. Therefore, the cost of draught, flood, famine, malnutrition etc., due to shortage of food and irreparable cardio-thoracic diseases are borne by the society. This invisible cost is not measured and it is direct outcome of thermal power generation. Incase we consider this cost actual cost of generation of thermal power will be much higher than that of the apparent cost of generation

The economic or financial cost of a product is often not its full cost because environmental costs are typically neglected. These costs constitute a loss of social welfare due to their negative human health and ecological impacts, and are usually referred to as externalities, as they are considered external to the market price for a product. For example, burning of fossil fuels like coal or gasoline creates air pollution which can damage the health of people who breathe the air. The full cost of this health damage is rarely ever counted in the price of the goods or services produced when the coal or gasoline is burnt, but the cost is nevertheless borne by individuals and society as a whole. Full cost accounting quantifies the economic cost of such externalities. Buyers of gasoline or coal-based electricity therefore pay less than its real cost, and are inclined to use more of it than they otherwise would. Wherever prices of goods or services do not reflect full costs, markets are distorted and society bears the burden of this loss of social welfare. Government regulators frequently attempt to reduce social welfare losses by imposing emission restrictions, but these limits are typically set with respect to estimates of permissible exposure levels, and for many critical pollutants any exposure level is damaging. The following table shows the fact:
Table:2 External Costs Of Energy Impact Pathways Of Health And Environment Effects Impact Category Human Health -mortality Pollutant/ Burden PM10*, SO2 NOx, O3 PM10, O3, SO2 PM10, O3 PM10, CO PM10 Effects Reduction in life expectancy Respiratory Hospital admissions. Restricted Activity Days Congestive Heart failure Cerebro-vascular hospital admission, Cases of chronic bronchitis, Cases of chronic cough in children, Cough in asthmatics, Lower respiratory symptoms. Asthma attacks Symptom days Ageing of galvanized steel, limestone, mortar, sandstone, paint, rendering and zinc for utilitarian buildings. Soiling of buildings Yield change for wheat, barley, rye, oats, potato, sugar beet. Yield change for wheat, barley, rye, oats, potato and sunflower seed increased need for liming.

O3 Building Material SO2 Acid deposition Combustion particles NOx, SO2 O3 Acid deposition

Crops

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Global Warming

CO2, CH4,N2O,N,S

World wide effects on morbidity, mortality, coastal impacts, agriculture, energy demand, and economic impacts due to temperature change and sea level rise

Ecosystem

Acidity and eutrophication (avoidance costs for reducing areas where critical loads are exceeded) Source:External Costs:Research results on socio-environmental damages due to electricity and transport, European Commission

Acid deposition, Nitrogen deposition.

4. DATA SELECTION & RESEARCH METHODOLOGY On the basis of last 26 years data from 1980 to 2006 published by Energy Information Administration & International Energy Annual 2006, the present research will focus on time varying trend on future projection of carbon dioxide emission from thermal power sector in India as well as in World with the help of a bench-mark time series Auto Regressive Integrated Moving Average (ARIMA) model. The results predict the future of coal fired thermal stations both for World & India. After describing the ARIMA (p, d, q) where p is the order of the autoregressive model, d is the number of differentiations to accomplish stationary; q is the order of moving average, we follow a parameter estimation procedure for the ARIMA model and an adaptive prediction scheme is then used to allow capturing the non-stationary characteristics. Based upon the work, the authors predict that the demand for electricity will continue to grow at escalating rate due to rapid industrialization in India as well as all over the World. Therefore, the emissions from coal fired thermal power stations will continue to damage the environment and will contribute to global warming. This situation will demand alternative sources of fuel in place of coal for generation of electricity and maintenance sustainability without contributing much towards global warming.

5. EMPERICAL FINDINGS Future Projection of Carbon dioxide in World and India: Based on the last twenty six years data we are analyzing the future trend of carbon dioxide emission in India and World. We apply a general ARIMA (autoregressive integrated moving average) model for prediction of carbon dioxide emission in India as well as in world. An ARIMA model is described as: AR-model:

y t = y t 1 +
t

2 2

It can be shown that

E ( y t ) = 0; V ( y t ) =

(1

corr ( y t , y t k ) =

MA-models: y t = It can be shown that

E ( yt ) = 0; V ( yt ) = corr

+
2

t 1

.
corr ( y t , y t 1 ) =

(1 +

);

(1 +
2

( y t , y tk ) = 0 , k > 1 .

ARIMA Model:

yt = xt + 1 yt 1 +L+ p yt p + t +1 t 1 +L+ q t q .
Here

xt

is the value of time period. t Error term at time t.

t 1

......

t q.

errors in previous time periods that

are incorporated in the response y t .We estimate the ARIMA model for total CO2 emissions in world & in India and

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CO2 emissions from coal fired thermal plant in India, where we apply Box-Jenkins methodology for ARIMA (p, d, q) models with time series data. In practical applications of B-J procedure, the most difficult part is the decision on the values of p, d, q. According to the Box- Jenkins method we determine whether the series is stationary or not by considering the graph of ACF. If a graph of ACF of the time series values either cuts off fairly quickly or dies down fairly quickly, then the time series values should be considered stationary. If the graph of ACF dies down extremely slowly, then the time series values should be considered non-stationary. If the series is not stationary, it can often be converted to a stationary series by applying the method of differentiation. In B-J procedure p and q can be determined by the ACF and PACF. From the characteristics of the ACF, it describes the correlation between the current states of the time series with the past. Using ACF, we can determine the moving average (MA) parameters order of q straight. From the characteristics of the PACF, it describes the correlation between the current states innovation of the time series with the past. Using ACF, we can determine the auto-regressive (AR) parameters order p directly. In such model, we use maximum likelihood method (MLE) to estimate the parameters. After estimate the model, we should checked for adequacy by considering the properties of the residuals whether the residuals from an ARIMA model is normally distributed or not. An overall check of model adequacy is provided by the Ljung-Box Q statistics. The test statistic Q is
Q = n ( n + 2 )

k = 1

2 k

The model with the highest value of Q is preferred. The estimate ARIMA equations are as follows: World Carbon dioxide emission: India Carbon dioxide emission:

yt = 9290 + 1.47xt + 0.98 yt 1 0.77 t 1

y t = 534 . 17 + 1 . 56 x t + 0 . 99 y t 1

y t = 74636 . 85 + 1 . 86 x t + 0 . 96 y t 1 0 . 53 t 1 On the basis of Akaiki Information criteria and Ljung Box statistics, (where all t values for different regression parameter are statistically significant) we can accept the ARIMA model for different dependent variable such as: ARIMA (p=1, d=0, q=1) model: for World Carbon dioxide emission, ARIMA (p=1, d=0, q=0) model: for Indias carbon dioxide emission. It can be used for predict the future trend on the basis of past data.
Table :3 ARIMA Estimation for Carbon Dioxide Emission in World & in India ARIMA Estimation for Carbon Dioxide Emission in World. Panel A: ARIMA (p=1,d=0,q=1) Log likelihood (Ljung-Box Q Statistics) Akaiki Information Criteria Analysis of Variance: Degree Of Freedom Panel B: ARIMA (p=1,d=0,q=0) Log likelihood -197.11 (Ljung-Box Q Statistics) Akaiki Information 398. Criteria 22 Analysis of Variance: Degree Adj. Sum of Residual Of Squares Variance Freedom

India thermal power generation:

-188.57097 383.14195

Adj. Sum of Squares

Residual Variance

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24 Residu als

1833244.4

61792.152

25

3457066.8

118903.8

Parameters AR1 MA1 YEARS CONSTANT

Estimated parameters Estimated value t*Statistics .98 40.69 -.77 -6.11 1.47 5.63 9290 3.67

p-values 0.000 0.000 0.000 0.000

Estimated parameters Estimated t*-statistics p-values value 0.99 61.82 0.000 1.85 9241.86 6.32 3.68 0.000 0.000

ARIMA Estimation for Carbon Dioxide Emission in India Panel A: ARIMA (p=1,d=0,q=1) Log likelihood (Ljung-Box Q Statistics) Akaiki Information Criteria Analysis of Variance: Degree Of Freedom 24 Residuals Estimated parameters Parameters Estimated value AR1 0.98 MA1 -0.12 YEARS 1.35 CONSTANT 535.72 Panel B: ARIMA (p=1,d=0,q=0) Log likelihood (Ljung-Box Q Statistics) -140.66 Akaiki Information Criteria 285.32 Analysis of Variance: Degree Adj. Sum of Residual Of Squares Variance Freedom 25 52820 1817 Estimated parameters Estimated t*-statistics value 0.99 66.33 1.56 534.17 2.14 2.75

-140.36 286.69 Adj. Sum of Squares 51702.95 Residual Variance 1847.78

t*Statistics 53.28 -3.53 3.53 2.68

p-values 0.000 0.005 0.005 0.056

p-values 0.000 0.054 0.092

From Table 3 we can consider the values of different parameters of ARIMA model for World Carbon dioxide emission. As the value of AIC is lower in ARIMA (p=1,d=0,q=1) compared to ARIMA (p=1,d=0,q=0) in our model of World Carbon dioxide emission, we accept the ARIMA (p=1,d=0,q=1) to predict the future of World Carbon dioxide emission. Similarly, as the value of AIC is lower in ARIMA (p=1,d=0,q=0) compared to ARIMA (p=1,d=0,q=1) in our model of Indias Carbon dioxide emission, we accept the ARIMA (p=1,d=0,q=0) to predict the future of Indias Carbon dioxide emission.

In our model we accept the alternative hypothesis for each parameters on the basis of t-statistics where the test statistics is described as follows: * t- statistic are significant at 1% level of significance i.e, t-values are more than 2.51 at 22 degree of freedom and t-values are more than 2.50 at 23 degree of freedom. ** t- statistic are significant at 5% level of significance i.e, t-values are more than 1.72 at 22 degree of freedom and t-values are more than 1.71 at 23 degree of freedom.

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Table :4 ARIMA Estimation for Indian Thermal Power Generation

ARIMA Estimation For Indian Thermal Power Generation: Panel A: ARIMA (p=1,d=0,q=0) Log likelihood (Ljung-Box Q Statistics) Akaiki Information Criteria Analysis of Variance: Degree Of Freedom 10 Residu als Estimated parameters Estimated value t*Statistics 0.97 22.98 Estimated parameters Estimated t*-statistics p-values value 0.96 15.65 0.000 -0.53 1.56 74169.26 2.45 6.71 0.052 0.000 1.86 74636.85 -1.98 2.36 6.62 0.085 0.099 0.000 Adj. Sum of Squares 93056074 Residual Variance 7273622 -112.22 228.45 Panel B: ARIMA (p=1,d=0,q=1) Log likelihood (Ljung-Box Q Statistics) Akaiki Information Criteria Analysis of Variance: Degree Of Freedom 9 Adj. Sum of Squares 64334568.3 -109.99 225. 99 Residual Variance 5244705.0

Parameters AR1 MA1 YEARS CONSTANT

p-values 0.000

From Table 4 we can consider the values of different parameters of ARIMA model for Indias thermal power generation. As the value of AIC is lower in ARIMA (p=1,d=0,q=1) compared to ARIMA (p=1,d=0,q=0) in our model of Indias thermal power generation, we accept the ARIMA (p=1,d=0,q=1) to predict the future of Indias thermal power generation. In our model we accept the alternative hypothesis for each parameters on the basis of t-statistics where the test statistics is described as follows: * t- statistic are significant at 1% level of significance i.e, t-values are more than 2.51 at 22 degree of freedom and t-values are more than 2.50 at 23 degree of freedom. ** t- statistic are significant at 5% level of significance i.e, t-values are more than 1.72 at 22 degree of freedom and t-values are more than 1.71 at 23 degree of freedom.

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Figure 2 : Partial Autocorrelation Function1 of the Differentiated Time Series of World Carbon Dioxide Emission
Carbon di Oxide-World
1.0

.5

0.0

Pr l A F atia C

-.5 Conf idence Limits

-1.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Coef f icient

Lag Number

The analysis of partial auto-correlation function (PACF) depicted in figure 1 demonstrate that the ARIMA model for World Carbon dioxide emission to be evaluated by (p=1, d=0, q=1) as PACF exhibits a peak much different than zero. Figure 3 : Partial Autocorrelation Function of the Differentiated Time Series of Indias Carbon dioxide Emission:
Carbon di Oxide- India
1.0

.5

0.0

PriaA F at l C

-.5 Conf idence Limits

-1.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Coef f icient

Lag Number

The analysis of partial auto-correlation function (PACF) depicted in figure 2 demonstrate that the ARIMA model for India Carbon dioxide emission to be evaluated by (p=1, d=0, q=0) as PACF exhibits a peak much different than zero.
Figure 4: Partial Autocorrelation Function of The Differentiated Time Series Of India Thermal Power Generation
Thermal Power Generation in India
1.0

.5

0.0

PriaAF a l C t

-.5 Conf idence Lim its

-1.0 1 2 3 4 5 6 7 8 9 10

Coef f icient

Lag Number

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The analysis of partial auto-correlation function (PACF) depicted in figure 4 demonstrate that the ARIMA model for Indian thermal power generation to be evaluated by (p=1,d=0, q=1) as PACF exhibits a peak much different than zero.
Figure 5: Future Projection of CO2 Emissions Both for World & India
25,000.00

M i 20,000.00 l l i 15,000.00 o n m 10,000.00 e t r 5,000.00 i c t o n e s

0.00

World

India
85 94 18 27 36 45 54 63 72 81 90 20 20 20 20 20 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 99 03 12 21 30 39 48 57 66 82 88 91 97 00 06 09 15 24 33 42 51 60 69 75 78 84 87 93 96

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Future prjection of Carbon di Oxide Emission in World

Future prjection of Carbon di Oxide Emission in India

Note: Entire world has crossed its safe range of co2 emission, 350 particulates per million (ppm) and which is presently 390ppm. Figure 6: Analysis and Interpretations of the Empirical Findings

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Line A represents actual co2 emissions including thermal power plant in India Line B indicates actual co2 emissions only from thermal power plants in India

Line C represents targeted level of co2 emission after reducing its actual level by 20%-25% over the level of 2005 by the year 2020 as has been agreed by Indian govt. in the Copenhagen Climate Summit, December, 2009. Line B / represents projected change of co2 emission from thermal power plants in India incase coal based power generation is replaced by alternative sources of energy at cumulative rate of 10% in every ten years base year being 2010. Line A / shows corresponding shift of line A provided line B is shifted to line B / .

Line A and line B depict total amount of CO2 emission in India and CO2 emission from thermal power plants in the country respectively. Line C is the level of CO2 emission for future target after reducing its actual level by 20%-25% over the level of 2005 by the year 2020 as has been agreed by Indian govt. in the Copenhagen Climate Summit, December, 2009. Keeping the situation in mind therefore, the aim of the researchers is to find out some possible solution which will not only be sustainable in nature but also economically feasible from Indias point of view to control the further growth of CO2 emission.

Different types of heavy industries like cement, iron & steel, washery etc., uses coal in their production process and contribute to addition of substantial quantity of CO2 in the environment. However, addition of CO2 by such industries is quite lower than the rate of CO2 emission from coal based thermal power plants. Therefore, incase India desires to achieve its targeted reduction of CO2 emission, it should concentrate on thermal power sector instead of disturbing other industries which are using coal as one of the ingredients in their production process. Otherwise these industries like cement, iron & steel, washery etc will not be able to sustain in near future. On the other hand, we know that the stock of coal is depleting very fast. Therefore, coal based thermal power plants which require huge quantity of coal as a raw material, have to think for gradual switchover from coal to other sources of renewable. In order to protect the environment from further addition of CO2, the researchers have projected a cumulative reduction of generation of electricity from thermal power at the rate of 10% in every 10 years(base year being 2005)[Line B / ]. If India can achieve this then there will be remarkable reduction in CO2 emission which has been represented in Line A/ . Surprisingly this reduction is quite below the targeted level of CO2 emission (Line C) by India.

6. CONCLUSION The entire world is passing through an alarming environmental crisis in terms of Green House Gas (HGS) emissions and global warming. Though developed nations are main culprits for this situation but we cant ignore the role of developing countries including India. It may be true that when developed countries have reached to its equilibrium of energy generation and thus polluted the environment, India has started her journey. Therefore, India is not at all in an unsafe zone of pollution as long as its geographical boundaries are concerned. But entire world has crossed its safe range of CO2 emission, 350 particulates per million (ppm) and which is presently 390ppm. Needless to say that the development of developed nations is at the cost of developing nations. But this is not the time to fight and pinpoint fingers to each other. Instead it should be advisable to find out some amicable solution keeping the concept of sustainability in mind.

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Sustainability and sustainable development generally mean that todays needs are met without impacting tomorrows world i.e. manage present and create future. India needs to generate huge amount of electricity for its further industrialization in future. Thus it has to select those sources of energy which are relatively less harmful compared to present and will sustain in future. In the midway of 11th plan, India is generating 1,52,360 MW of electricity out of which 98,044.48 MW ie 64% (approx) are coming from thermal sources and more specifically 53% of total thermal power is based on coal. Therefore if India needs to generate the future energy based on coal fired thermal plant, it will further add CO2 & other GHG s in the air which will hamper the ozone (O3) layer of environment that protects the countries from the ultra violate ray of sun contributing to further warming of the earth . This global warming will damage every countrys environment and India will not be an exception to that. Therefore, coal based thermal power generation may help the nation for its current industrial development but it will ultimately damage the prospect of future development. Thje present development at the cost of future will contradict the concept of sustainability which will not an acceptable solution. India needs to find out a path of development to grow without damaging world and maintaining sustainability.

Besides, the total stock of coal (i.e. the main source of energy generation) of India is depleting and economists have estimated that it may last for further 40-50 yrs. The share of poor quality of coal is also remarkable. The ash content of this type of coal is much higher than normal coal. If thermal plant in its energy generation process uses this poor quality coal then it will generate more fly ash with larger carbon intensity than normal coal. In the international summit on climate change held in Copenhagen in Dec 2009, India had agreed to cut its carbon emission rate by 2025% by 2020. It is true that Indias carbon intensity came down at a compound rate of 1 % per annum during 19902005(Actual is 17% reduction). It is also true that the country is left with 550 million population without electricity and 700 million population are using some form of biomass as their only or primary fuel for meeting up to 80 % of their house hold energy requirement. Indias sustainable development and low carbon growth has been at the cost of this bottom two-thirds populations. The projected 25 % lowering of carbon intensity by 2020 would require 1.5 % compound rate of reduction which is 50 % higher than what India has achieved during 1990-2005. Therefore, urgency arises for the country to search for alternative sources of energy other than coal and a gradual switch over to such sources.

India is enriched with natural resources like water, solar and wind but due to global warming the underground level of water is slowly decreasing and thus heavy dependence on hydropower will not be a gainful solution to the problem in the long run. Producing clean and sustainable energy sources need to be renewable in nature. Thus plant matter, solar, wind, tidal, geothermal and controversially nuclear can be alternative sources of clean & sustainable energy and India has to give a special emphasis on that. Sooner the government of India undertakes actions to mitigate climate change, the better it will be for the country.

ACKNOWLEDGEMENT The authors are thankful to all the managing and academic editors & reviewers of ICM for contributing their valuable time & giving the opportunity of writing in their esteemed conference/journal. The authors would also like to put on record the inspirations and immense support they received from Mr. T.K.Ghosh, Director Techno India Group & Mr. Samir Chandra Basu, Faculty of Management Science of Meghnad Saha Institute of Technology, India.

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REFERENCES Akaike, H. (1970), Statistical Predictor Identification, Ann. Inst. Statistics, pp. 203-217. Annual Report 20082009, Presidents Cancer Panel, U.S. Department of Health and Human Services Areepong, Y. (1999), Forecasting of Strategy Agriculture Products: Vegetables and Fruits, Master Thesis in Statistics, Chulalongkorn University. Beeson, and R.J. Burchett. (1995b). Long-term Ambient Concentrations of Particulates and Oxidants and Development of Chronic Disease in a Cohort of Nonsmoking California Residents. Inhalation Toxicology 7:pp. 1934. Brandon, P.S. and P. Lombardi (2005), Evaluating Sustainable Development in The Built Environment, Oxford, Blackwell Science. Central Electricity Authority, Monthly review of Power Sector, January 2010 Central Electricity Authority, Monthly review of Power Sector, September 2009 Damodor N Gujrati (2004), Basic Econometrics Tata Mc Graw Hill,New Delhi. Desai, Meghnad (1971), Applied Econometrics, North-Holland, Amsterdam. Dresner, S (2002), The Principles of Sustainability London: Earth scan. Economics and Finance, vol. 42, 373 389. Enders,W., John Wiley& Sons (1995), Applied Econometric Time Series, New York. EUR 20198 External Costs, Research results on socio-environmental damages due to electricity and transport, 2003, p.24 ExternE (1998). European Commission. ExternE: Externalities of Energy Vols. 1-6 (EC, Brussels, 1998) (Retrieved from http://externe.jrc.es/index.html Assessed on 10.02.1010) G. Edward, P. Box and G.M. Jenkins (1994), Time Series analysis: Forecasting and Control Prentice Hall PTR. (Retrieved from http://www.icfi.com/Markets/Energy/doc_files/indian-coal-sector.pdf Assessed on 01.02.1010). Hendriks, C A (1994) Carbon Dioxide Removal from Coal-Fired Power Plants PhD thesis, Utrecht University, the Netherlands Hendriks, C A, Turkenburg, W C and Blok, K (1993) 'Promising options to remove carbon dioxide from large power plants' in Proceedings of the International Symposium on CO2 Fixation and Efficient Utilization of Energy Tokyo Institute of Technology, Tokyo. Huntigton, H. G (1994), Oil price forecasting in the 1980s: what went wrong?, The Energy Journal, 5(2),pp. 1-22. Indian Renewable Energy Development Agency Limited (IREDA) Integrated Energy Policy, Report of Expert Committee, August 2006

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International Energy Annual 2006 International Energy Outlook (2009), BP World Energy Report John E. Hanke and Dean W. Wichern (2005), Business Forecasting 8th ed. Pearson Education Inc., USA. Koomey, J., Craig, P., Gadgil, A., and D. Lorenzetti (2003), Improving long-range energy modeling: a plea for historical perspectives, The Energy Journal, 24(4), pp. 75 92. Lynch, M. C. (2002), Forecasting Oil Supply: Theory and Practice, The Quarterly Review of Ministry of Non-Conventional Energy Sources (MNES) National Cancer Research Institute Calcutta University Research Pindyck, Robert S. (1987), The optimal Exploration and Production of Nonrenewable Resources Journal of Political Economy, October, 86, pp. 841-61. Weiss.E, (2000), Forecasting Commodity Prices Using ARIMA, Technical Analysis of Stocks &Commodities, Working Group on Power for Eleventh Plan (2007-12), Planning Commission, February 2007 Websites Accessed: http://en.wikipedia.org/wiki/Coal_power_plan_Environmental_impacts http://www.cec.org/programs_projects/pollutants_health/smoc/pdfs/Hgnarap.pdf http://en.wikipedia.org/wiki/Coal_power_plant#Environmental_impacts http://www.ucsusa.org/clean_energy/technology_and_impacts http://www.pewclimate.org/international/country-policies/india-climate-plan-summary/06-2008

BIOGRAPHY

Author: Sukanya Ghosh is an Assistant Professor of Economics and Head of Management Science Department of Meghnad Saha Institute of Technology, she can be contacted at: Meghnad Saha Institute of Technology, Techno Complex, Madurdaha, Beside NRI Complex, Uchhepota Kolkata 700 150, West Bengal, India. Email: gh_sukanya@yahoo.co.in

Co- author: Prof. (Dr). Partha Pratim Sengupta is a Professor of Economics in National Institute of Technology, Durgapur. He can be contacted at National Institute of Technology, 9 M.G.Road, Durgapur, Bardhaman- 713209. Email: pps42003@yahoo.com

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