The Integrated Energy Policy (IEP), approved by the Government of India in 2008, estimates that the country's energy needs will grow 5-7 per cent per annum. This will sustain an inclusive economic growth of 9 per cent over the next 20 years to eradicate poverty and meet India's human development goals.

This will require an increase in India's primary energy supply by 4 to 5 times and electricity generation capacity by 6 to 7 times of 2003-04 levels through 2031-32.

The IEP also indicates that dependence on imported oil will be over 90 per cent (by 2030-31) while reliance on imported coal is likely to increase significantly — from about 10 per cent now to about 30 per cent in 2030.

Two major challenges

The energy mix in 2030 is likely to remain unchanged, with fossil fuel staying as the main source of energy. This presents two major challenges related to the external environment.

The first one relates to an increasingly climate-constrained world where economic growth cannot continue to be an independent variable without regard for attendant environmental and social imperatives and objectives.

The incremental costs associated with these objectives now need to be factored in to the economic growth, increasing the cost and affecting affordability of energy and thereby its access.

The second challenge relates to global access to fossil fuel sources, given that India's share in the global fossil fuel market is a little over 5 per cent of global consumption, according to the International Energy Agency (IEA).

In order to realise the economic growth objectives that IEP highlights, India's global share of fossil fuel must increase significantly to at least 15-20 per cent, taking into consideration the recent trend of growth in fossil fuels in the world.

For this to happen, it would be necessary that there are new discoveries of fossil fuels (which has not been seen for some time); or the developed nations, having high share in the global fossil fuel market, vacate their share; or alternate sources of energy or energy processes evolve; or a combination of the three happens expeditiously.

Going by recent experiences, the first two do not seem plausible. Global oil production has not seen a surge in the past few years. The ongoing impasse on a global climate change regime is shifting the timelines for developed countries to vacate the global carbon space for equitable development of the rest of the world. For India, heavily dependent on imported oil and increasingly becoming reliant on imported coal, a strategic shift is necessary in the quest for energy security.

Brightest prospect

The third option — find new sources of energy — is, however, looking a bright prospect. The two main candidates that could hold the key to sustainable development are nuclear energy and solar, given that other forms of renewables, such as hydro, wind and biomass, abound with several negative externalities that increase costs in order to make them commercially viable.

While environment and human dislocation has been inhibiting development of hydro resources, in addition to the high costs of mitigating them, estimated at about 50,000 MW, the low reliability of wind and biomass prevent them from becoming base power sources.

Nuclear energy, in the backdrop of the recent reverses in Japan, is being looked at with scepticism by a host of stakeholders, in particular, the civil society. The recent opposition in Tamil Nadu is a case in point.

Solar energy, which has vast potential in India, has of late become a viable option. The Jawaharlal Nehru National Solar Mission, launched as a part of the National Action Plan on Climate Change (NAPCC), has initiated market transformation in this sector with impressive outcomes.

The reverse auction undertaken by the Ministry of Power (MOP) and Ministry of New and Renewable Energy (MNRE), has led to market competition and price discovery, leading to reduced subsidy under the Solar Mission by almost 50 per cent.

The setting up of the Solar Energy Corporation of India Ltd (SECL), a public sector company under the MNRE, will further develop the market and help solar energy attain tariff parity with fossil fuels in next few years.

This augurs well for the country, specially if solar energy could transform into a base load candidate — the emerging solar thermal technology being at the forefront of this objective.

Energy growth, as it seems at the moment, has to account for various externalities — social, environmental as well as economic.

Policy options

The graphs accompanying the article highlight the fact that energy cost, proportionate to the per capita income, is almost 20 times more than that of the US and order of magnitude higher than most developed countries.

Both the Central and State governments will have to evolve policy responses to ensure that affordability does not exacerbate the already strained commercial viability of the sector and thereby its economic interest and investments. Innovative polices and measures need to be unveiled as energy subsidies cannot sustain the business model for long. The Government, mindful of the challenges, has initiated measures to ensure that the country treads a low carbon growth strategy, which not only reduces the vulnerability to climate change but also ensures a stable, affordable and equitable energy access for all.

Although India has not created the problem of climate change, which is largely due to the historical emissions of the developed countries, it has to be a part of the solution. India has already announced that it will reduce the emissions intensity of its GDP by 20-25 per cent over the 2005 levels by the year 2020, through pursuit of proactive policies.

The Twelfth Five Year Plan will have as one of its key pillars, a low carbon inclusive growth based on the interim report prepared by an expert committee chaired by Dr Kirit Parikh, former Member of the Planning Commission.

The report recommends a slew of measures covering demand and supply side in the power sector, which will be the hardest hit by the emerging climate change regime.

Reducing electricity demand by use of more efficient appliances, introduction of more fuel efficient power plants and changes in the mix of power plants have been recommended. In the transport sector, promoting goods transport by railways, mass transport for passenger movement, facilitating non-motorised transport and increasing fuel efficiency of vehicles have been suggested by the expert committee. In the industrial sector, reducing energy intensity and emissions by technology interventions, and reducing energy needs of commercial buildings have been recommended.

The energy strategy in the 12th Plan will need to usher in transformational changes in development of the sector. The combination of supply and demand side interventions will need to balance competing demands of environmental concerns, fuel shift, and affordability in sustaining high economic growth in the next two decades.

(The author is Programme Officer, OzonAction Programme, United Nations Environment Programme, Bangkok. The views are personal.)

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