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Securing India’s Energy Future

The Iran-India pipeline has been in the news. As one of the two co-authors of this project way back in 1989, I feel gratified by the movemen...

Written by R K Pachauri |
August 4, 2005

The Iran-India pipeline has been in the news. As one of the two co-authors of this project way back in 1989, I feel gratified by the movement forward, even though impediments continue to dog its prospects. The risks attached to the project have been highlighted in these columns, but the fact is that our energy future is itself fraught with risks that need careful evaluation.

India’s policy has rightly been to increase dependence on coal, given our abundant resources of this fuel. But several other realities must define India’s plans for ensuring energy security. The concept of security is not confined merely to ensuring adequate supply of energy physically, but also securing it at steady and reasonable costs. Our mounting dependence on oil imports exposes us to major price fluctuations in the global market. Additionally, we have even today serious constraints in the supply of coal, as a result of which power stations are having to shut down, even as the country faces dire shortages of electricity.

India’s coal industry is beset with several problems including generally low productivity levels, inherently high ash content and inadequate transport infrastructure. These problems could be bypassed partly with commercially viable technologies for coal gasification or conversion into liquid fuels as South Africa has succeeded in doing for over half a century. But the lack of a technological dimension in India’s energy decision-making has stalled development or acquisition of such technologies.

Much of the problem facing India in the energy sector is the result of a slow, almost paralytic, pace of reform. The coal industry will not attract large-scale investments, because its main customer is the power sector, an industry largely characterised by bankruptcy. If energy security is to be attained for ensuring healthy economic growth, then the building blocks of the energy sector, namely the enterprises producing electricity, petroleum products or other forms of energy have to be upgraded to healthy and vibrant business entities.

India’s oil companies have performed well over past decades, as a result of which petroleum products become a swing fuel whenever the supply of other forms of energy fails. If power cuts occur, oil products are used for captive generation in industry, households and commercial establishments, just as diesel pumpsets are used for costly irrigation in agriculture. But with unusually high international oil prices and an artificial lid on product prices, oil companies are hemorrhaging, adversely affecting their ability to expand distribution or upgrade technology.

Previous governments had a unique opportunity to bury this problem by faithfully implementing an earlier decision for dismantling the Administered Pricing Mechanism in 2002 but avoided the political hot potato of deciding on future price increases, which the current government has difficulty in handling now. Higher oil prices are now inevitable, and the sooner we adjust our economic structure to a more efficient and less import dependent pattern of energy consumption the more secure our economic future would be. By regulation, every home in Cyprus is fitted with a solar water heater, as is the case in Israel. Yet every home in Delhi uses electricity for water heating, such that barely 5 percent of the heat in every tonne of coal used for power generation actually reaches in the form of hot water in the shower.

Our new shopping malls with which Indians are engaged in a passionate affair are huge guzzlers of energy. As reported, 300 of these malls are currently under construction countrywide, implying several thousand megawatts of consumption. With enlightened architecture and construction techniques, as established by TERI’s training complex called RETREAT on the outskirts of Delhi, consumption can be curbed drastically. Another area for intervention is the transport sector where the lack of efficient public transport intra-city and the decline of the railways in inter-city traffic is leading to increased use of petroleum products for private transport.

In the ultimate analysis, India has to move towards greater use of renewable forms of energy, of which we have abundant resources. Globally, the renewable energy industry is no longer in a state of infancy, with global investments in 2004 totaling $28 billion as compared to $6 billion in 1995. Total installed capacity based on renewable energy was 155,000 MW in 2004, of which wind power itself totaled 48,000 MW. A focused, goal oriented programme of R&D would bring down costs of renewable energy devices and meet the needs of a diverse range of applications and customers.

The Prime Minister has recently established an Energy Coordination Committee, which is a step in the right direction, but it would be vitally important for a forward-looking energy policy to draw on the best talent available in India defining technological and policy initiatives to create a secure and stable energy future. Otherwise, economic growth could falter and India’s ambitions to grow at a healthy rate in excess of 8 per cent would have to be left behind.

The writer is Director General, TERI (The Energy and Resources Institute)

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