India's Energy Outlook - Balancing Sustainable Development and Managing Carbon Footprint

Sonali Sharma - Panjab University, Chandigarh

Energy Outlook India - 2021

“India’s energy security rests on four columns of ‘Availability’, ‘Accessibility’, ‘Affordability’, and ‘Acceptability'. All these 4A’s are entwined to provide usable energy to divergent sections of society in a more socially and economically carbon-constrained environment.”

With an annual population growth rate of 1.23%, India currently has a population of 1.4 billion people. India’s mixed economy is one of the fastest developing economies in the world. Since the beginning of the 21st century, the yearly average GDP growth rate has been 6%-7%. For 2021-2022, India’s GDP growth rate has been predicted to be in the range of 7.5-12.5%.

In particular, energy security maintains the dimensions of both economic and human development. The country’s burgeoning population and economic growth have unfolded the veil of its energy demands. India is the 5th largest end-user of energy in the world. While the world consumes around 12,000 mtoe of energy resources, India consumes 524.4 mtoe.

For its energy production, India relies on both renewable and non-renewable energy sources. As on 28/02/2021, total installed capacity is 53.0% coal, 6.6% gas, 0.1% diesel, and 1.8% nuclear energy. In the year 2017, the country occupied positions 2nd, 3rd, and 4th in matters of LPG, oil and natural gas, and coal consumption. In 2018, primary energy consumption from coal, crude oil, and natural gas was 56% (highest), 30%, and 6% respectively, while that from renewable power was 4%.

As per the estimates of the National Electric Grid, India as of 31 March 2021 has an installed capacity of 382.15 GW, making it the 3rd considerable electricity generator in the world. The

share of renewable energy sources for power production remains solar power (36,910.53 MW), wind power (38,433.55 MW), biomass (10,145.92 MW), small hydropower (4,740.47 MW), and waste to energy (168.64 MW). Carbon-neutral fuel called biomass is renewable and supports around 70% of India’s energy needs.

Rising Energy Demand

Developing nations like India know very well that if they dream of self-reliance in the future, then energy demands of the present need to be conserved. In a statement made by the International Energy Agency (IEA), it is delineated that India will overhaul European Union

(EU) in its energy demands by 2030.

In 2019-2020, the total usage of energy resources has increased in comparison to the previous period of 2018-2019. It is 5.51% for natural gas and 6.41% for electricity production from hydro, nuclear, and other renewable sources. Looking at the sectoral demand for energy in India one can analyze that it mainly arises from the household, agricultural, transport, and industrial sectors. According to the Energy Statistics 2020, the most energy-intensive sector was the industrial domain (56%), followed by transport (10%), and residential (9.14%).

Commercial energy use comprises energy consumed during such processes as electrical, heating, cooling of buildings, traffic lights, water, and sewer systems. The energy demand is predicted to increase from 1500 Mtoe in 2032 to more than 2500 Mtoe in 2050. This rise is also attributed to the fact that people have now built an inclination towards better lifestyle choices and equipment in buildings. With this, residential energy consumption is projected to rise by 8 times during 2050. Agriculture is the spinal cord of our country for it strengthens around 68% of the population and 17%-18% of the GDP. An estimated quarter of India’s electricity consumption goes to this sector for a high-priority task like groundwater extraction mainly for irrigation of crops.

India’s rising imports are also an indication of its ascending energy graph. After China, India is the second-largest importer of oil in the world. By 2030, the country will import 90% of oil from overseas which could increase to 92% in 2040. On the other hand, LNG imports will increase to 124 billion cubic metres (61% of all in all gas demand) by 2040. Before the pandemic, India’s energy demands were supposed to increase by 50% between 2019-2030 but now remains close to 35%.

Carbon Emissions Scenario in India

Fossil fuels are extensively used (around 80%) for electricity generation in the country. Due to the rapid utilization of fossil fuels in India, it has also become the third-largest emitter of CO2. The annual CO2 emissions were 1.9 tons per capita in 2018 for India. The emissions have increased from 1.1 metric tons per capita in 2001 to 1.9 metric tons in 2019. In 2015, coal contributed to 67% of total CO2 emissions taking place from fossil fuels.

In India, carbon emissions have tripled since 1990 and originate mainly from industries and power generation. In 2017, the CO2 emissions from different sectors were electricity and heat (47%), industries (32%), transport (13%), and services (9%). As per economic models, India’s emissions in the upcoming two decades will pass 3.5 billion tonnes per year in 2030.

Recently, the issue of climate change and air pollution has also picked up speed in the case of India. Emitting 7% of the global emissions, India has become susceptible to many climate

change events. Between 1901-2018 temperature in India has risen by 0.7°C. Retreatment of Himalayan glaciers, increase in sea level, coral bleaching, air pollution, and health problems are some major issues being faced due to excessive carbon emissions. Since 2004, 11 out of 15 warmest years have occurred in India. 1.24 million deaths have taken place due to poor air quality in 2017. 5.80% working hours to be lost in India due to heat stress by 2030.

The Indian economy wishes to achieve its $5 trillion goals by 2025. It is growing

energy-intensive day by day which means more emissions in the days to follow. CO2e emissions will rise from 1.1 to 4.5 billion tonnes in 2031. Moreover, these emissions will be mainly coming from grid electricity (51%), industry (20%), road transport (16%), and captive power generation (4%). Energy is also important for basic social needs like cooking, heating, and health care. Thus, ensuring negative carbon emissions along with strong energy security is vital for the socio-economic and environmental prosperity of the country.

Policy Proposal

The call is for a sound energy policy that can drive investments towards low carbon technologies that generate negative carbon emissions and promote sustainable development. Economic signals (find lowest cost solution in market - US Acid Rain Program decreased 50% SO2 and NOx emissions with a cost of only a quarter), Performance Standards (100% market saturation for technology innovation for vehicle fuels and buildings), and support to Research and Development (explore cost-effective wind turbines as options for clean energy) should set the stage for a decent emission reduction policy.

1. Pay attention to clean energy supply

Present Steps: India has set a target to increase its reserve of renewable energy by 450GW by 2030. It wishes to harness other forms of energy like solar (both from plant and rooftop - 60GW and 40GW), 60 GW from wind and remaining from hydro and geothermal energy. The Government has also planned to issue solar tenders for 100GW till June 2021. Access to clean cooking energy is being given by encouraging the use of biogas, LPG, improved cookstoves (ICS). To meet the demand for cooking energy of urban India, solutions like electricity and piped natural gas (PNG) have also been implemented. through various policies and programmes. More than 77 million LPG connections have been given under Pradhan Mantri Ujjwala Yojana.

Suggestions: Firstly, the increased dependence of India on imported fossil fuels should be curbed. Next, the cost of renewable energy production can be lowered by nurturing grid parity for solar and wind energy. In 2020, solar tariffs cost as low as Rs 2.36 per unit of power which is good news for solar grid parity. Germany has a concept of energy entrepreneurship which means local citizens have turned into electricity entrepreneurs installing solar panels on rooftops. This needs implementation in India on a larger scale for producing indigenous power. Furthermore, Feed-in-Tariffs (FITs), Renewable Portfolio Standards (RPS), and Renewable Energy Tenders can be used to support renewable energy. Germany has used FITs for onshore wind power which are cost-effective. Government should keep up bigger biogas plants in local industries and avert the biomass used in houses to slow down pollution.

2. Regulate vehicle standards and exercise taxes

Present Steps: To maintain the controlled emissions from vehicles, Bharat Stage VI emission norms came into effect on 1 April 2020. To cut down emissions in the transportation sector, Faster Adoption Manufacturing of Electric Vehicles in India (2019) provides monetary assistance to buy electric vehicles and ensure proper charging infrastructure. The investment in EV startups raised by 170% to touch US$397 million in 2019. In 2010, India introduced a carbon tax which is now Rs 400/tonne to lower its carbon emissions.

Suggestions: More fiscal incentives for regulation should be provided for two and three-wheelers in the case of India as they contribute maximum to vehicular pollution. In 2005, China’s weight-based fuel economy standards for light trucks and autos caused a 10%

improvement in its new vehicle fuel economy. The Japanese, US, and EU standards resulted in the elimination of 99% of vehicular pollutants.

Also, the Government should keep in mind frequent revision of the carbon tax and keep it high enough to be more effective. Canada fits best in this respect since in 2019 it kept the carbon tax at $20 per tonne of CO2 emissions and revised it to $50 later. Carbon tax affects the psychology of people for a positive action like switching over to renewables rather than fossil fuels to avoid the tax. Successful innovation knocks on the door of India as in 2019 Gujarat launched the world’s first PM pollution regulation system with a market-based approach (emissions trading). Under this, economic incentives will be given to industries for apt control of PM emissions. Such massive projects should be the top priority of the government.

3. Enhancing energy efficiency with quality programs

Present Steps: Perform, Achieve, and Trade (PAT) under National Mission For Enhanced Energy Efficiency (NMEEE) has been in place since 2012 and focuses on intensity related energy targets for increasing energy efficiency in industries. The coal industry of India is the mainstay of its power generation and also the biggest CO2 emitter. It emits 1.1 gigatonnes of CO2 per year, about 50% of India’s fuel emissions. In the latest set of rules issued by the Union Environment Ministry in the 31 March notification, the coal-power plants have been given an extension of 1-3 years to comply with emission norms. This is a major setback that contradicts India’s commitments towards CO2 emission reductions and needs better policy measures.

Suggestions: To regulate GHG emissions from industrial sector regulation is a must for energy efficiency of compressors, pumps, and electric motors. China’s Top 1000 Energy-Consuming Enterprises Program is a legacy for quality programs that countries like India should take up. From 2006-2010, emissions of 400 Mt of CO2e were saved and 10%-25% energy savings were also made. Moreover, energy audits, deployment of energy management teams, controlling machinery usage, and switching to LEDs can be done to restore the spark in energy efficiency efforts for industries.

4. Stringent building codes

Present Steps: Leaky homes and poorly designed offices lock within them high energy demand for a longer time. In the context of India, its first Energy Conservation Building Code (ECBC) was introduced in 2007 and later on revised in 2017 for commercial buildings. Eco-Niwas Samhita, an energy code for residential buildings, was launched in 2018. But their

implementation has been poor and needs to be stressed upon.

Suggestions: Minimum energy performance should be directed for decarbonizing the building sector. Sustainable building design interventions should be made to reduce energy consumption for heating and cooling processes in buildings. Selecting a good construction material for walls and optimizing layout are important interventions that can limit heat entry. An energy-efficient cooling system for buildings can also prove to be beneficial in this regard. Colombia has designed a building energy code for transport and public spaces as well.

5. Improved economic incentives

Present Steps: National Clean Energy Fund (2010-2011), State Funds like Urja Ankur Fund in Maharashtra (established in 2006), Gujarat Green Energy Fund (established in 2011), Clean

Development Mechanism (CDM) are some of the funds that support renewable energy and carbon reduction initiatives in India.

Suggestions: Adding carbon caps or closing perverse economic incentives/ inducements can help in the achievement of emission reduction. In India, the value of subsidies for coal, oil, and gas is 7 times more than those for electric vehicles and renewables. This needs to be looked upon and new oil and gas subsidies should be avoided. The money that is used for fossil fuel subsidies can be used for the promotion of clean energy development and for other societal advantages.

6. Innovation in urban design

Present Steps: As per a new report, the setting up of parking systems and efficient traffic management in smart cities can reduce carbon emissions by 164 MMT over the next 5 years.

Bengaluru’s urban green spaces (UGS) are one of India’s motivations for innovation in urban design. These spaces are on an average 2.23℃ cooler than the immediate surroundings thereby dropping down carbon emissions.

Suggestions: For creating low carbon cities steps that can be taken are: supporting high-quality transit, regulating parking and road use for better mobility, building a dense network of paths, shortening commutes, and designing compact regions. Johannesburg’s bus rapid transit (BRT) prevented around 4,00,000 tonnes of CO2e emissions between 2009-2010.

7. Stimulus to Research and Development (R&D)

Present Steps: At the Mission Innovation Event, 2015 PM Narendra Modi said that innovation

is important for combating climate change and ensuring climate justice. Currently, there are 4 Carbon Capture, Utilization, and Storage (CCUS) facilities in the country. To achieve its Paris Agreement by 2030, India needs larger investments and research to establish more CCUS.

Suggestions: R&D investments will make up to the minute technologies reasonably priced. Policy support in this field will lead to innovative developments in energy technology and energy businesses get a capital investment that goes beyond the risk threshold of private investors. Scientific research, engineering, and commercialization are three factors for success here. Higher advancements are needed in electrochemistry for making grid-scale energy cheaper for renewable power usefulness. A firm market signal will ensure better performance of technologies at a lesser cost.

Summing Up

Now is the right time to see the real challenges of mounting carbon emissions and wide-reaching climate change. Getting the most effective policies made and triggering their adoption and enforcement can provide us with top of the line progress. Accelerating smarter policies for negative carbon emissions will assuredly save the planet ‘Earth’.

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