The state-owned Indian natural gas sector has been slowly moving towards deregulation for close to a decade. However, rather than wholly introducing free market forces into the existing state-managed sector, India has developed a separate, almost entirely decontrolled gas market alongside the existing sector.

The major challenge to complete gas sector reform that remains is how to transition gas users from the state-managed sector to the free market. This paper explains the origins of this hybrid market and its likely evolution.

The fertilizer and electricity sectors, which account for most gas consumption in India, are reviewed in detail. In both, while interlocking political forces have prevented full transition of the sector to the free gas market, some users have already made the transition. In electricity, parts of the sector, such as private power plants, are already shifting private gas supplies on their own because private gas, while more costly, is much more reliable. The ultimate viability of private gas in electricity and fertilizer production will depend on reforms within the offtaking industries.

The South African government is introducing a poverty-reduction policy that will supply households with a monthly 50kWh "Free Basic Electricity (FBE)" subsidy. We show that FBE distorts the energy choices of poor households by encouraging them to cook with electricity, whereas alternatives such as liquefied petroleum gas (LPG) can deliver a similar cooking service at a much lower cost to society. An alternative energy scheme, such as providing households with clean energy credits equivalent in value to the FBE's cost, could deliver additional energy services worth at least 6% of total household welfare (and probably much more) at no additional public cost; those benefits are so large that they would cover the entire cost of LPG fuel needed to implement the scheme.

The analysis is extremely sensitive to the coincidence of electric cooking with peak power demand on the South African grid and to assumptions regarding how South Africa will meet its looming shortfall in peak power capacity. One danger of FBE is that actual peak coincidence and the costs of supplying peak power could be much less favorable than we assume, and such uncertainties expose the South African power system to potentially very high costs of service.

Uncertainty can hamper the stringency of commitments under cap and trade schemes. We assess how well intensity targets, where countries' permit allocations are indexed to future realised GDP, can cope with uncertainties in a post-Kyoto international greenhouse emissions trading scheme. We present some empirical foundations for intensity targets and derive a simple rule for the optimal degree of indexation to GDP. Using an 18-region simulation model of a 2020 global capand-trade treaty under multiple uncertainties and endogenous commitments, we estimate that optimal intensity targets could achieve global abatement as much as 20 per cent higher than under absolute targets, and even greater increases in welfare measures.

The optimal degree of indexation to GDP would vary greatly between countries, including super-indexation in some advanced countries, and partial indexation for most developing countries. Standard intensity targets (with one-to-one indexation) would also improve the overall outcome, but to a lesser degree and not in all cases. Although target indexation is no magic wand for a future global climate treaty, gains from reduced cost uncertainty might justify increased complexity, framing issues and other potential downsides of intensity targets.

The Industrial Revolution accompanied a dramatic change in energy systems, away from locally gathered, traditional fuels such as biomass to commercially traded fossil fuels. For nearly 2 billion people in the world today, this commercial energy transition is yet to occur. We review the literature on the causes and consequences of this transition and the effectiveness of policy instruments aimed at accelerating or directing the transition. Income is the main driving force, but other factors-such as population density and the availability of rival fuels-affect energy choices. Although correlations between the energy transition and economic growth are high, cause and effect relationships have proved difficult to establish.

This paper presents interim findings of "The Experience with Independent Power Producers in Developing Countries," a research project being conducted by the Program on Energy and Sustainable Development at Stanford University ("PESD").

Most energy forecasts envision a shift to gas in the world energy system over the coming decades. To realize that vision will require tapping increasingly remote gas resources and shipping them to distant gas markets in other countries. Few analysts have explored the robustness of such projections in the real world where political and institutional factors exert strong influences on whether governments and private investors will be able to muster the capital for long-distance pipelines and other infrastructure projects that are essential to a gas vision. Although gas has strong economic, technological and environmental advantages over alternative energy sources, will the difficulty of securing contracts where legal institutions are weak-an attribute of nearly all the nations that are richest in gas resources-impede the outlook for global gas? Which gas resources and transportation infrastructures are likely to be developed? As gas infrastructures interconnect the world, what political consequences may follow? To help answer these questions, this study on the geopolitics of gas combines two tracks of research-one that employs seven historical case studies and another that rests on a quantitative model for projecting alternative futures for gas to 2030.