To meet its poverty eradication, human and economic development targets, India will require much greater availability of energy. Poverty eradication is critical for building resilience to potential climate impacts. India is energy poor: more than 300 million people lack absolute access to modern energy; the per capita consumption is as low as 500 KWh; and the country records 12.5% deficit in annual production of power. Key challenges of the energy sector are: securing availability of energy resources; strengthening support infrastructure for power transmission and distribution; affordability and energy efficiency.
In order to understand how India will meet these challenges sustainably, Observer Research Foundation, in collaboration with the Embassy of France, conducted a seminar on “Energy for All: How can India pursue its goal of providing Energy to all sustainably?” in New-Delhi, on March 23, 2015. The session was inaugurated by Ambassador of France to India François Richier, and moderated by J.M. Mauskar, Advisor, ORF. The discussion was enriched by panelists Ajay Mathur, Director, Bureau of Energy Efficiency, Sunjoy Joshi, Director, Observer Research Foundation, Ashok Sreenivas, Senior Research Fellow, Prayaas Energy Group and NitinZamre, Managing Director, ICF International. Broad objective of the panel was tracing the link between India’s energy needs and its global climate position.
The Ambassador of France recalled that France, as future chair of COP21, will remain impartial and transparent during the process of negotiations and will aim at reaching out at all countries to gather their concerns, ideas and initiatives.
Summary of Deliberations
The Indian Constitution prescribes ensuring basic minimum needs of all sections of the society, including clean drinking water, healthy environment and energy. Democratic political culture in India acts as an additional pressure point in ensuring energy for all.
For India, meeting its energy targets is inextricably linked to economic growth. The most inexpensive way of immediately meeting these targets is by utilizing huge domestic coal reserves. So far, India has managed a low carbon intensive growth at a reasonable rate. However, India has been increasingly depending on coal imports to meet the demands of high quality coal for thermal power plants and steel industry. Projections for the coming few decades highlight the continuance of coal dependency. In order to improve energy supplies vis-a-vis climate development, India will need to modernize its power generating capacities. Therefore, it may be worthwhile to invest in research and development in technologies such as clean coal technologies, super critical reactors and improved thermal power generation processes.
Improvement in energy production may not be sufficient unless the entire supply chain management is effective. Achieving supply side energy efficiency is closely related to issues of affordability and access.In the past, pricing reforms in the Indian energy sector have been targeted to improve the financial status of the Distribution Companies (Discoms), which incur losses in the order of 2500-3000 billion per year on an average. High subsidy regime and under-pricing of electricity has led to huge energy expenditure.
Effectiveness of these reforms is contingent on consumer’s ability and willingness to pay. The affordability criteria play a significant role in setting domestic prices for electricity, especially given huge income disparities and poverty ratio. Affordability also influences choice of fuel which in turn directly impacts the environment. For instance, rural India’s preference for biogas and firewood is due to easy availability and affordability. Now, while biogas is more eco-friendly, the energy efficiency is as low as 45% as compared to electric stove at 70% and LPG stove at 60%, confirmed one of the studies by Center for Energy Studies, Institute of Engineering. This is not to say that biogas or firewood is a healthier environmental option but to point to the complex link between access, affordability and environment protection.
At the macro level, public and private oil and power companies importing fuels continue to be under risk due to fluctuating global energy markets, especially oil prices. Moreover, while the Indian companies have been competing moderately well to acquire oil fields abroad, UN campaign on disinvestment to curb fossil fuel growth will threaten India’s energy security to a certain extent. National decisions on energy, therefore, will be dependent on multiple factors to accommodate both the domestic development imperatives and global energy market systems. For instance, policy makers are faced with challenges to deal with the cascading impact of marginal changes in the global energy market (especially in terms of pricing, fuel shifts and technologies).
Diversifying the “energy mix” by increasing the share of renewable and nuclear energy is ideal but this will be a slow and long drawn process. Indian government has set highly ambitious targets for renewable energy in the order of approximately 170 GW from solar, wind, biomass and small hydropower. As per Central Electricity Authority of India, the share of renewables in the total energy mix of the country increased from 7.8% in 2008-09 to 12.3% in 2013-14. However, in terms of the generation capacity, renewables amount of less than 2% of the total. Although, renewables will be an ideal solution for transitioning to low carbon growth, major political, social and economic restructuring will be required to shift away from fossil fuels. For instance, technically, 100 GW renewable capacity additions replaces only 30 GW of coal based energy. The economics and feasibility of such installed capacities require further calculations and assessments. Business models for renewables have to make economic sense for both consumers and producers, for renewable energy to become a mainstay in the power sector. For example, private sector is usually concerned with the credibility and quality of the demand for renewable energy and uncertainty of demand. Obligations such as Renewable Purchase Obligations (RPO) and pricing control by the utilities create transactional issues and high decision stakes for the private companies to enter the renewable power sector market.
Increasing the share of renewables is certainly important from the perspective of climate action. However, this will require significant amounts of financial and technological support from the global community. Strategic partnerships for development and transfer of clean technologies and the mobilization of private sector investments will be required to make the transition towards low carbon growth.
While most of the strategies associated with energy security are focused on supply side management, demand (consumption) management approaches have usually been limited. Targeted mostly at the urban users, demand management of energy includes promoting energy efficient appliances, which constitute almost 70% of the electrical consumption. Government of India policies and strategies for energy efficiency has been acknowledged as important steps towards tacking climate change and energy security issues. However, for energy efficiency to reduce GHG intensity, more confidence needs to be built towards innovation, entrepreneurship and investments in research and development of suitable technologies.
Regarding climate negotiations, ‘mutual reassurance’ is vital for fostering collective action in climate negotiations. Developing a common understanding and respect for each other’s red lines, is therefore critical. India’s climate-energy red lines are focused on three interlinked factors. One, access to modern energy, concerned with the physical availability, production of modern energy, and infrastructure for distribution and allocation. Two, affordability, dealing with rational energy prices, poverty and income disparities at the micro level; and securing energy fields abroad at the macro level. Third, overarching the first two is climate change, demarcating environmental and health implications of having ‘no energy at all’ and dependence on non-conventional sources of energy.
The discussion concluded with the French Ambassador to India, François Richier appreciating the content and depth of the discussion and thanked the distinguished panellists for their insightful views on the subject. He envisaged continuance of such interactions to understand India’s effort towards climate change through a series of COP21 dialogues in the upcoming months.
Courtesy : ORF
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