Group Paper Course: Energy Systems and Climate policy
India Energy Assessment Carbon Emissions, Energy Efficiency and its analysis of the targets for the next two second decades up to 2030.
Team: • Heng Hwee Hwee • Muhammad Arshad Manzoor • Tim Hilger • Vineeta Hariharan
LKY School of Public Policy, Singapore. 11th November, 2010
Table of Contents: Chapter-1. Review and Background 1.1.Introduction- Elements of India’s Growth 1.2.Energy Policy 1.3.Energy Sources-Production, Consumption and Reserves 1.4.Import and Export of Energy fuels 1.5.Electric Generation –Installed and Planned 1.6.Regulatory Framework
Chapter-2. Scenario Analysis 2.1.
Assumptions
2.2.
Analysis
Chapter-3. Recommendations 3.1.
Regulatory Guideline of energy policy.
3.2.
Reduction in Energy Needs at least by 20%.
3.3.
Maximum use of Renewable Energy Methods.
3.4.
Increase in Production of Nuclear Energy.
3.5.
Better Strategy for transport sector.
3.6.
Use of Emerging Technologies for Energy Efficiency
References and Bibliography
Chapter-1. Review and Background 1.1
Introduction- Elements in India’s Growth
India has been showing remarkable economic growth post liberalisation with the GDP growth rate touching 10% in 2006-07 and a current growth rate of 8.8%. However, this growth has predominantly been rather skewed, driven predominantly by the services sector which took over the agrarian based economy during the mid 80s coinciding with the liberalisation of the economy.( refer table 1- India a Snapshot) Hence it is important to look at at the trends in sectoral shares of GDP: the share of agriculture dipped from 60% of the GDP to 20% while the services sector rose to the current level of 55%. However, ironically 58% of India’s population still depend on agriculture for their employment, while the service sector contributes to only 24% of the employment in the country. (Chakrabarty 2009) This trend also reflects that a large share of the population has not actually benefitted from the economic growth.
By 2030 the share of agriculture is not expected to contribute more than 10% of the GDP with the rate of urbanisation is expected to be around 40%. (ratio of population in urban areas/population in rural areas). (UNFPA 2007) As a consequence of the service sector driven economy, India now grapples with skewed development focussed on urban centres which face tremendous migratory pressures from the rural areas. Pie graph showing employment share India is today the second largest demography and has been growing at an annual population growth rate of . However there is a declining trend in the growth rates and a decrease in birth rates as well which is leading to a slowing in the annual population growth rate from
1.7% at the beginning of the century to almost zero by 2030. This demographic transition will also affect the consumption and investments patterns in the economy .
India’s growth is today challenged by several factors ranging from the economic challenges of equitable distribution of growth and optimal allocation of resources across sectors to other constraints of inadequate infrastructure to back the economic growth. Rapid urbanisation has also led to resources like water being threatened due to climate change consequences. India is today threatened by a rising energy deficit and an increasing energy consumption trend. (IFRI 2007) 1.2 Energy Policy The following table gives an overview about the most relevant Indian energy policies from the last decade: Table : Summary of energy related laws and policy decrees (USAID 2007, 6) Year Title Main Thrust 2006 Rural Electrification Establishes a national goal for universal access, Policy assigns responsibilities for implementation, and creates new financing arrangements 2006 National Urban Transport Encourages integrated land use and transportation Policy planning in cities 2006 National Tariff Policy Provides guidance on establishing power purchase tariffs by State Electricity Regulatory Commissions 2005 National Electricity Policy Provides guidelines for accelerated development of the power sector 2003 Electricity Act Legislates a comprehensive reform and liberalization process for the power sector 2001 Energy Conservation Act Provides the legal framework and institutional arrangements for embarking on a national energy efficiency drive 2001 Accelerated Power Establishes intervention strategies for distribution Development and Reforms reforms in the power sector Program The Planning Commission of the Government of India has approved an Integrated Energy Policy that recognizes the need for increasing energy efficiency in order to harmonize India’s economic growth with concerns and challenges of energy security. The tangible goal is a reduction of 25% from the current level of energy intensity, which shall be achieved mainly in the fields of mining, electricity generation, water pumping, industrial production, construction, heating, and household appliances (USAID 2007, 7). Renewable energies are seen as to provide a variety of socio-economic benefits albeit they will only have a small share of the Indian energy mix. Those include the diversification of energy sources and the reduction of the dependency on oil, the exploitation of all domestically available supply option as well as environmental benefits and employment in research and implementation.
In detail, the politics envisioned by the Planning Commission are:
Merge the Petroleum Conservation Research Association and the Bureau of Energy Efficiency (BEE) into an autonomous statutory body under the Energy Conservation Act Make the expanded BEE responsible for accelerating efficiency improvements in energyusing appliances, equipment and vehicles Implement EE standards and labelling of energy-using equipment as well as financial penalties for violations Establish benchmarks for energy consumption in energy intensive sectors Increase gross efficiency in power generation, and Promote urban mass transport, energy efficient vehicles, and freight movement by railways (USAID 2007, 7)
Further to the policies described in table 1, the Renewable Energy Plan 2012 targets to reach a share of 10% for renewable energy in incremental power capacity, which will mean additional 10,000 MW. Additional goals are the endowment of 1 million households with solar water heating systems; the construction of renewable mini-grids for 24,000 villages without electricity; the utilization of 5 million solar lanterns and 2 million solar home lighting systems; and the construction another 3 million small biogas plants (USAID 2007, 8). 1.3 Energy Sources-Production, Consumption and Reserves Energy Consumption India now ranks fifth in the world in terms of primary energy consumption. (USAID June 2007) However contrary to the fact that it constitutes one sixth of the world population it constitutes only 5% of the global consumption. India has one of the lowest per capita consumption India’s per capita consumption is one of the lowest in the world which is around 455 kgoe( kilogram of oil equivalent ) per person of primary energy as on 2004 compared to the world average of 1750 kgoe whereas China and Brazil during the same year had per capital consumption levels of 1147kgoe and 1232 kgoe respectively. India’s total primary energy demand stands at 530 Mtoe as on 2010 of which coal/peat still accounts for nearly 40% of the consumption basket followed by 27 percent for combustible renewables and waste. Oil accounts for nearly 24 percent of total energy consumption, natural gas six percent, hydroelectric power almost 2 percent, nuclear 1 percent, and other renewables less than 0.5 percent. (Planning Commission of India 2007-12)
India’s Energy Intensity ( amount of energy needed to produce one unit of GDP) is 0.69 which is less than China at 0.78 and higher than European Union ( 0.13). The low energy intensity is a result of low energy efficiency, highly subsidised energy prices, the highly energy intensive industries (like Steel) and the high use of non commercial fuel in the residential sector in India. The elasticity of energy consumption to the GDP growth rate was high in the 70s is now 0.58 measured during 1990-2005. This is on account of the rise in services sector which is less energy intensive as well as due to gains in the energy efficiency. (IFRI 2007) Analysing the trends of the primary energy share sector wise, the industrial and residential sector accounts for the largest share but use different fuel types.
the
Consumption across sectors The Residential sector is largest identified consumer of the total energy supplied, followed by Industry (20%) and 8% by the Transport sector. 37% is non specified.
Source : International Energy Agency, 2008
Energy Supply ( refer annexure – energy balance table) India is also a significant energy producer accounting for 2.5% of the world’s total annual energy production. (Planning Commission of India 2007-12) The total primary energy supplied including the non commercial energy is 620 Mtoe as of 2008 (International Energy Agency 2008) ( Refer annexe for energy balance statement, 2008) Coal forms the main source of supply forming 42% of the supply, Crude oil forming 27% and Combustibles and Renewables forming 26% of the supply. (refer figure) 1.4 Import and Export of Energy fuels
Source : International Energy Agency, 2008 Imports in PES The following table illustrates the Import and Export Pattern of Primary Energy as on 2008 Primary Energy Fuel
Total Imports Production
Exports
Coal and Peat
225.09
38.28
1.66
Crude Oil Oil Products Gas Electricity Total*
383.39 0 262.99 0.76
130.98 18.61 9.30 0.80 197.97
0 38.38 0 -0.033 40.07
% Imports In Mtoe 17% 34% 3.53%
Source: International Energy Agency
Imports constitute 34% of the crude oil supplied, 17% of coal and peat, and 3% of the natural gas supplied. Energy Reserves
Table: India’s Hydro carbon Reserves Resources
Unit
Proved
Inferred
Indicated
Coal Mtoe 38114 48007 15497 Extractable Coal 13489 9600-15650 Lignite 1220 3652 5772 Extractable Lignite 1220 Oil Mt 786 Gas Mtoe 1101 Coal Bed Methane Mtoe 765 1260-2340 Source : Planning Commission of India ( from respective line ministries)
Net Imports 16
87 3 (LNG)
1.5 Electric Generation –Installed and Planned Coal and Lignite: The planning commission estimates that the combined inferred reserves of coal and lignite would last for 140 years at the current levels of extraction, but if the domestic coal production continues to grow at 5% per year the total extractable coal reserves will run out in 45 years. However, only about 45% of the potential coal bearing area has currently been tapped by the regional surveys.
Crude Oil: India has only 786 Mt of crude oil reserves which is would not last for more than 7 years at the current levels of consumption. Crude oil reserves have not significantly increased in spite of large investments in explorations, imports are significant and will not reduce unless explorations are made. (Planning Commission of India 2007-12) Natural Gas: The discovery of the Krishna Godavari basin by Reliance and the natural gas discovery by Gujarat State Petroleum Corporation has added to the gas reserves substantially. (Planning Commission of India 2007-12) Coal bed Methane: With the recent investments in additional CBM blocks the planning commission estimates that at this low rate of production the proven gas and CBM reserves can last for almost 50 years. (Planning Commission of India 2007-12) Nuclear Power: The scarcity of uranium and the prescence of low grade ores make Indian nuclear fuel 2-3 times costlier than international supplies. Breeding of plutonium and conversion of Thorium to fissile material further retards the pace of development. Hence currently only importing the fuel would accelerate the process. (Planning Commission of India 2007-12) Table : Approximate Potential Available From Nuclear Energy Details Amount Electricity ( MWe) 61,000-t Uranium-Metal In PHWR 10000 In FBR 5,00,000 2,25,000-t Thorium Metal In Breeders Very Large Source : Planning Commission of India ( Department of Atomic Energy)
Renewable Energy Reserves: The reserve potential of renewable energies is summarised in the table below: Table : Renewable Energy Resources and Potential Resources
Unit
Present
Potential
Basis of accessing potential
Hydro-power
MW
32,326
1,50,000
Total potential assessed is 84,000 MW** at 60% load factor or 1,50,000 MW at lower load factors
Bio Mass Wood
Mtoe/year
140
620*
Biogas
Mtoe/year
0.1
15
Using 60 million Ha wasteland yielding (20) MT/Ha/year In community based plants if most of the dung is put through them.
Bio Fuels Bio-diesel
Mtoe/year
-
20
Ethanol
Mtoe/year
<1
10
Through plantation of 20* million hectares of wasteland or 7* million hectares of intensive cultivation From 1.2 million hectares of intensive cultivation with required
inputs Solar Photovoltaic
Mtoe/year
1200
Thermal
Mtoe/year
1200
Wind Energy
Mtoe/year
<1
10
Expected by utilising 5 million hectares wasteland at an efficiency level of 15 percent for Solar Photovoltaic Cells MWe scale power plants using 5 million Hectares Onshore potential of 65,000 MWe at 20 percent load factor
Mtoe/year <1 5 Small Hydropower The availability of land and inputs for getting projected yields is a critical constraint Source : Planning Commission of India ( from respective line ministries)
Electric Generation As on 2010 India had a total installed capacity of 164 GW, 64% of which the predominant source was Thermal and Hydro Power. (Central Electricity Authority 2010)
Source: International Energy Agency
The Ministry of Power ( MoP) has projected the requirement of Installed capacity to be 206 GW in 2011-12 , 303 GW in 2016-17 and 962 GW in 2031-32. To meet the proposed targets (MoP) in the eleventh plan proposes to add 78577 MW which include 16553 MW of hydro capacity and 3380 MW from nuclear reactors. Taking into account this capacity addition, projected energy generation from both hydro and nuclear plants will be 165 Trillion Watt hour (TWh) and 44.6 TWh, respectively. 1.6
Regulatory and institutional framework
The following table shows the key government institutions and their responsibilities: Table : Key Government Institutions (USAID 2007, 9) Institutions Responsibilities
Ministry of Power Bureau of Energy Efficiency
Ministry of Coal Ministry of Petroleum and Natural Gas Ministry of New and Renewable Energy Indian Renewable Energy Development Agency Bureau of Indian Standards
Overall responsibility for power sector planning and investment Statutory body established to reduce energy intensity in the Indian economy by spearheading the improvement of energy efficiency through various regulatory and promotional instruments. Overall responsibility for development and production of coal and lignite in India Responsible for upstream and downstream development and production of oil and gas. Operates the Petroleum Conservation Research Association (PCRA) Responsible for development, demonstration and investment in renewable energy-based technologies Promotion, development and extension of financial assistance for renewable energy, EE and conservation projects Operates a product certification program
Chapter-2 SCENARIO ANALYSIS
2.1Assumptions:
20% increase in primary energy use 40% increase in GDP 20% increase in energy efficieny Doubling of Non Fossil Eenrgy Use
2.2 Analysis: The primary energy use in India is depicted in the official statistics available from different resources. Current 2006-07
Coal Oil Gas Nuclear Hydro Non Commercial New Energies Total
2006-07 208.74 132.75 34.6 4.86 9.75 147.56 0.83 539.09
Future Scenario 2030 Case Scenario Planning Commission ( Nuclear + IEA Renewables) 620 632 328 350 93 150 33 98 22 35 194 9 1299
185 87 1537
647
As per planning commission estimates the total primary energy demand grew at 3.67% between 1990-91 and 2006-07 and the actual consumption of primary commercial energy registered a growth rate of 5.51% over the 2001-02 level while the economy grew at 7.8% during the 10th plan period which gave a low elasticity of 0.71%. Based on these conservative estimates of elasticity of demand w.r.t GDP the planning commission has estimated the total primary energy requirement in the year 2030 to be around 1537 Mtoe in a scenario where there would be a thrust on nuclear power and renewables catering to 36% of the total requirement. The energy efiiciency is increasing by 70% in this scenario assuming low elasticity of 0.67 for the TPCES to the GDP and with an assumption that the GDP will grow at 8% per annum. (Planning Commission of India 2007-12) India being a service led economy is slowly showing a decoupling of Energy consumption growth w.r.t GDP growth with elasciticities arounf 0.67. Population growth is also expected to show a declining rate. Hence with realistic assumptions of GDP growth at 6% and an elascticity of 0.6 of energy consumption growth to GDP Internaional experts have projected the total enrgy requirement to be arounf 1000 Mtoe bu 2030 assuming the scenario adopted by the planning commission of nuclear
and renewable fuel mix. (IFRI 2007) This means a 85% increase in total energy demanded in 20 years. Hence the scenario of a 20% increase in energy demand is modest, benchmarking with the most conservative estimates. Inferring from the projections above India would cross this mark by 2016. The GDP is assumed to grow at 6% giving rise to a 45% increase in GDP and a 30% increase in efficiency. Hence we can assume that the above scenario would be achieved by 2016.
Chapter-3. Recommendations: Now, we look at some practicable recommendations to achieve the suggested targets for carbon emissions, energy use and 40 % increase in the production for Indian Economy. These recommendations are discussed in the preceding paragraphs. 3.1. Regulatory Guideline of energy policy: Following may be the considerations to regulate and implement the energy policies in India: a) Consider the sustainability of current supply rfeserves and consumption trends, thus to avoid relying on imported resources b) For socio-economic reasons, priority is to provide accessible, affordable and reliable energy supply for both urban and rural dwellers c) Clean technology to minimizes environmental impacts and sound infrastructure for effective energy distribution d) Provision of a conducive and viable R&D and commercial environment in order to attract private sector participation
3.2. Reduction in Energy Needs at least by 20%: For sustainable development over the next two decades, India require a high growth rate for its economy. Various studies indicate that a growth rate of 8 to 10 % will be required to achieve the targets for 2030. As the country will require more energy resources, there is a need to ensure certain measures to reduce the energy needs at least by 20 %. The possible strategies for reduction in energy use are described as follows: -
I.
II.
III.
Promotion of energy savings for domestic use. It is estimated that a unit saved by a domestic consumers will save at least 1.25 units of generation. This may save the use of carbon emitting fuels. Efficiency of coal-burning electricity power plants can be increased by various technological alterations. For example, in India the coal-based power plant has the room for 38 to 40% efficient generation, if super critical boilers are used in power plants. The maximum use of Railways for commercial and Industrial transportation in India, may decrease the use of road vehicles thus reducing the use of Petroleum products.
3.3. Maximum use of Renewable Energy Methods: The domestic needs in India require a lot of energy resource for household use. The renewable energy resources can considerably satisfy the domestic energy needs of large Indian population with low per capita income. Due to the climatic and biomass potential of producing energy, additional resources can be developed with less carbon emissions. â&#x20AC;&#x153;Solar is critical for our long-term energy security.
Presently commercially available solar photovoltaic cells of 15 per cent efficiency covering 10 million hectares can more than meet all energy needs projected for 2030.”1 3.4. Increase in Production of Nuclear Energy: Nuclear energy the most cost effective and clean source of energy after hydel power in terms of carbon emission. The construction of more power reactor will definitely help reducing the carbon emission levels. At the same time, India will be able to meet its growing energy needs in comparatively shorter period of time. Over the next two decades, India should have an increase of 15 % in generation of nuclear energy. The present projections show that by 2030, in generation of Nuclear energy India will be able to have an increase of 2% to 8% ( EIA, IEO 2007 ). 3.5. Better Strategy for transport sector: Transport sector is using a lot of fossil fuels thereby
increasing carbon emissions. Following steps may be helpful to get lower emissions through less use of fossil fuels. I. II. III. IV. V. VI.
VII.
In big cities, India should develop urban mass transport system. The transportation of commercial good should be shifted from freight service to Railways. Maximum use IT services to reduce traveling between regional economies. Promotion for the use of public transport instead of personal vehicles. Integration of different modes of transport. Restrictions on the use of polluting vehicles and fuels as well as tightening vehicle emissions standards and inspection and maintenance programs. Raising public awareness about carbon emissions and energy efficiency.
3.6. Use of Emerging Technologies for Energy Efficiency: Energy efficiency can be increased through the development and use of a number of emerging technologies. They include: 2
1
2
Advanced lighting technology Self-correcting building heating, ventilation and cooling (HVAC) controls technology High-efficiency low-lift vapor compression system Automatic diagnostic for package HVAC Low-temperature heat pump Mini-split heat pump. Grocery store gasket, door closure and strip curtains Packaged rooftop units.
www.business.rediff.com/.../column-how-india-can-cut-its-energy-needs-by-20-percent.htm www.bpa.gov/energy/n/emerging_technology/index.cfm
References and Bibliography