The Cobra Effect of Fly Ash from Coal Power Plants in India

Have you heard about the cobra effect? During the colonial era, Delhi had a major cobra issue. The then-British government announced a bounty for dead cobras to reduce the number of snakes on the streets. Entrepreneurial spirits rose as people started breeding cobras and offered a dead one on the bounty. Money given on bounty increased day by day, but cobras never left the city. This is a major policy lesson—some government policies can have unintended consequences.

Like cobras, India’s policy on reducing fly ash (or coal ash) pollution from coal-based power plants has idiosyncratic consequences. The impact attempts to reduce solid pollution but inadvertently promotes greater use of coal and more gaseous pollution. Archana Ghodeswar and Matthew Oliver have explored the phenomenon in their paper titled “Trading one waste for another? Unintended consequences of fly ash reuse in the Indian electric power sector” published in the journal Energy Policy.

Understanding the Issue

Coal combustion results in solid waste as well as gaseous emissions (specifically carbon emissions). The solid one is called fly ash, which contains hazardous elements such as lead, mercury, and cadmium, and poses significant health risks. The government imposed a rule to reuse at least 20% of the fly ash in other industries for secondary use. This would avoid the hazards caused by disposal while making its productive use in another industry by replacing some of the other industries’ input materials (for example fly ash used in the cement industry, brick manufacturing, etc.).

So, if the manager wants to lower the disposal costs, she is encouraged to supply more fly ash to other industries. The manager’s concern about expanding disposal land, disposal cost, and potential hazards has diminished. And so, she is inclined to use lower-quality coal. However, to produce the same units of electricity, more quantity of lower-quality coal becomes apparent. Unexpectedly, the use of more coal per unit generation of electricity leads to more carbon emissions and greater wear and tear on machinery. Part of the fly ash gets reused, but the increased carbon emissions go unnoticed, negating any benefit to the environment from reusing.

Data Analysis and Policy Implications

The authors analysed 196 coal-based power plants from 18 states and 94 utility service districts in India for the period 2011–2017. The results show that for a 1% increase in fly ash utilization, carbon dioxide emissions increase by 972 metric tons per plant per year at a social cost of more than $80,000 annually. The significance and robustness of the results can be studied further in the Energy Policy article.

In any case, the findings suggest an increase in plant-level emissions results in a trade-off of one type of waste (that is, fly ash) for another (carbon). Unfortunately, while addressing one environmental challenge, policymakers inadvertently exacerbated another. This case highlights the innate complexities in sustainability initiatives. It teaches us that the cobra effect in the case of similar sustainability measures can be contended with supplementary regulations such as carbon caps or carbon taxes.

Swapnil Karkare is an India-based freelance economist and a chartered accountant who is interested in producing quality content in different formats, be it blog, research, or podcast.