India has received much applause from the global community for the projected rise in the nation’s GDP growth rate from 6.7 % to 7.3% in the fiscal year 2018-19. This has mainly been attributed to the recent improvements in the long due goods and services tax (GST) reforms. The effect of the current tax reforms would sustain India in the medium term but as the policy boost wanes out, India would need other impetus to support its growth and employment by further strengthening its physical and social infrastructure. The country’s commitment to contribute in the conservation of the environment at the Paris Summit, 2016, has put the onus of striking a balance between its economic and environmental objectives on its shoulders. With huge government debts and risk of running high fiscal deficits, India needs the most cost effective way to realise its targets.
Energy efficiency essentially means using lesser amount of energy while producing a given amount of output. This not only means less cost incurred to produce a commodity, but also implies lower emissions of greenhouse gases. India had realised the importance of energy rationing long back, evident from the launch of the Environmental Conservation Act in 2001. It had further directed its policies to focus specifically on energy efficiency by setting up the Bureau of Energy Efficiency (BEE) and then initiating National Mission for Enhanced Energy Efficiency (NMEEE) in 2008. With national efforts to lower the energy intensity and carbon dioxide emissions running for more than a decade now, what needs to be determined is where exactly India stands in its planned trajectory.
In the residential and commercial sector, standards and labelling has been a genius measure as it targets the household appliances which consume a large amount of electricity. The measure has been able to generate awareness among consumers and thus successful in reducing electricity bills nationwide. This programme is being readied to take another stride through BEE’s Super-Efficient Equipment Programme so that appliances with efficiency surpassing even the 5-star label can be identified and promoted. The striving policies like Housing 2020, Deendayal Upadhyaya Gram Jyoti Yojana for rural electrification, which are crucial in promoting national and social infrastructure, unambiguously increase the energy demand. To offset the rise in demand, measures like installing LED lights in public buildings and spaces have been implemented. Although, ambitious household electrification schemes like Pradhan Mantri Sahaj Bijli Har Ghar Yojana “Saubhagya” has been cast with apprehensions in terms of implementation deficiencies, the Pradhan Mantri Ujwal Yojana aims to upgrade cooking techniques used by the rural households. The basic idea adopted by the latter policy is of creating a shift from use of basic mass fuel to efficient LPG connections and solar cookers. According to many recent reports this policy has a huge potential in reducing solid fuel use to minimum levels and has managed to attain a decent result as almost half of the targeted recipients have been provided LPG connections while lakhs of solar cookers have also been distributed.
With the current government’s plan to build 100 smart cities in India, buildings sector in India has a huge potential to achieve enhanced efficiency in energy consumption. The most successful of all the policies targeting enhancement of energy efficiency has been Perform, Achieve and Trade which has been applauded in almost all recent global reports. The idea of using a market based mechanism created a robust incentive system among energy intensive industries to reduce their energy consumption as well as raise their efficiency levels. Private participation is also playing the role of a catalyst in further supporting the Government’s agenda in this regard. Alliance for Energy Efficiency has been formed by the private enterprises to facilitate research and development so as to create a competent market for energy efficient products.
The current power distribution and transmission system is highly obsolete in technology and wasteful in resources. To mitigate such issues, the concept of smart grid has been introduced by the Government and is now at a nascent stage. Schemes like Green Corridor I and II aims to use grid system for renewable technology. The quality of coal used to generate power has also been questionable as it has been found that the high ash content of the coal reduces its generation capacity and instead raises the level of emissions. Policies directed to tackle such setbacks have been Ujwal DISCOM Assurance Yojana launched in 2015 and has been successful in mitigating losses of the distribution companies by a large amount.
The agricultural sector in India is characterised by high subsidization in almost all stages of production which has compromised the potential efficiency that could have been gained from the sector. Lack of metering together with heavy subsidies has led to wasteful use of resources like water and energy. Utility companies find it non profitable to bear the cost of installation of super-efficient pumps owing to the low paying capacity of the farmers in India. But what has been found in Maharashtra, according to a Lawrence Berkeley National Laboratory Report in 2009, is that the cost which will be incurred from such installation is much less than what is currently being spent in providing subsidised electricity by the Maharashtra State Electricity Board. Hence such policies should be looked at with a more pragmatic and robust approach.
With rising population and per capita income level, India is witnessing rise in private vehicular ownership. Electric vehicles (EVs) have received huge limelight in this issue as it is perceived to reduce carbon dioxide emissions and make India energy import independent. For the purpose of promoting these vehicles, National Electric Plan has also been introduced. But what remains is to be critically looked into is that EVs are highly dependent on lithium batteries and since India is not lithium abundant, it is again bound to import lithium from the rest of the world. Also if lithium cell production infrastructure is set up in India, it just effectively shifts the emissions source from vehicles to factories, possibly by a larger amount. Phasing out of older vehicles and other measures to improve existing technology will provide more certain results than treading into a new area with contingent outcomes. Limited innovative policy experiments like Delhi’s odd even rule can provide newer insights and help in creating a customised policy for different Indian cities.
Thus India has both the cause and potential to adopt energy efficient techniques. The major shortfall in the whole scenario is lack of funds and expertise in utilising it. The recent 220 million USD loan pact along with 80 million USD worth guarantee from the International Bank of Reconstruction and Development to India is expected to cover half of the targets set by NMEEE, also creating high potential markets for energy efficient products in India. Hence, the Indian scenario indicates a positive future with regard to energy efficiency and if execution of existing policies is done correctly, the rest of the path will cease to have major roadblocks.
Soumya Bhowmick is a Research Assistant and Pooja Agrawal a Research Intern at Observer Research Foundation, Kolkata
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.