Author : Soumya Bhowmick

Expert Speak Raisina Debates
Published on Apr 20, 2020
Where China and India indicate conspicuous commonalities, aim for similar objectives and reflect identical challenges — exploring Sino-Indian partnerships deserve attention.
Sino-Indian transitions in the energy sector

Growth and energy

Despite the gloomy global economic scenario painted by the International Monetary Fund, India retained its position as one of the world’s major economy with the fastest economic growth rate until mid-2019, tying with China. There is no doubt that despite short run fluctuations, India and China will continue to make a mark on the world economy, competing to dictate the patterns of globalisation, urbanisation and trade — all of which will lead to higher demand for energy resources.

The UN Sustainable Development Goal 7 (SDG 7): Affordable and clean energy emphasises on the access to ‘affordable, reliable, sustainable and modern energy’ for all. India and China will turn out to be particularly important countries while assessing the progress towards this goal as the two nations are included in the world’s top primary energy consuming club and the top global importers of energy resources. The UN Sustainable Development Solution Network SDG Report 2019 scores India at 61.1 and China at 73.2 out of 100 in terms of the achievement of SDG 7. In the domain of energy, while India’s performance is more or less stagnated in the last few years, China’s is moderately increasing, but not at a feasible rate.

Urbanisation induced energy demand

Estimates show that by 2030, while the percentage of people living in the urban areas in China is expected to reach 70.6 %, for India it is projected to reach 40.1 %. Extrapolating on these urbanisation trends, by 2050, China and India are projected to add 255 million and 416 million urban dwellers respectively. Consequent to rising urbanisation, energy demand will increase due to:

1. Urban spatial growth, where the urban sprawl raises energy consumption in new buildings and other associated sectors;

2. Urban motorisation, which causes energy-intensive transportation; and

3. Increasing energy intensive lifestyles.

The huge clustering of infrastructure and energy needs in these big cities will also cause energy losses due to wastage of electricity — owing to populous ignorance, traffic congestions, etc., which are regarded as the energy-specific diseconomies.

Although the two Asian giants are fast growing and rapidly urbanising, they are energy-starved. A report by the International Energy Agency (IEA) states that the global primary energy demand is expected to increase by 30% by 2040 — while accounting for 22%, China would be the world’s largest energy consumer, and India would account for 11% of the global energy consumption. Whereas China’s energy mix reflects declining share of coal from 60% in 2017 to 35% in 2040, 42% of India’s energy demand is estimated to be still met by coal in 2040.

Energy efficiency

Apart from urbanisation, the energy mixes of both the nations are dominated by coal and oil. More specifically, both China and India are the world’s largest and third-largest energy consumers respectively, where the consumption of coal is the highest. Additionally, both China and India are the world’s largest and third-largest net importers of oil respectively and are also expected to lead the growth in the global oil demand over the next 20 years. Both the nations are vigorously pursuing energy efficiency measures as well as undertaking renewable energy projects to alter their energy mix in order to ensure energy security, under the overarching efforts towards SDG 7.

An apparent feature of the two economic giants is their energy-intensity, i.e., the quantity of energy needed to produce one unit of GDP — where lower levels of energy intensity denote higher energy efficiency. While the energy intensities of China and India have declined during the years 2000 to 2015, it still remains high in comparison to the OECD countries and other developed nations, indicating the critical need for both the countries to continue their energy efficiency efforts. The following figure shows the energy intensity of various countries and groups.

Figure: Energy Intensity of Economies

Source: Our World in Data — Energy

The thrust towards renewables is also visible in both the countries. The public sector energy efficiency efforts in China are mostly driven by National Development and Reforms Commission (NDRC), Five Year Plans and programmes such as Energy Supply and Consumption Revolution Strategy (2016-2030). In India, the contemporary policies include the Energy Conservation Act 2001, Electricity Act 2003, Integrated Energy Policy 2006, National Mission for Enhanced Energy Efficiency (NMEEE), National Sustainable Habitat Mission, National Mission on Sustainable Agriculture, National Solar Mission, Unnat Jyoti by Affordable LEDs for All (UJALA), Street Lighting National Programme (SLNP); as well as the pertinent government organisations such as the Bureau of Energy Efficiency (BEE) and Energy Efficiency Services Limited (EESL). For energy-hungry countries like India and China, significant investments and efforts are still pending to delink energy intensity and growth to attain the targets under SDG 7.

Sino-Indian cooperation

Against this background, where China and India indicate conspicuous commonalities, aim for similar objectives and reflect identical challenges — exploring Sino-Indian partnerships deserve attention. In fact, there has been substantial focus on the energy sector for more than a decade now through the India-China strategic economic dialogues. As energy supply stands pivotal to these giant Asian economies, the governments of these nations are embracing entrepreneurship and technological innovation in the non-traditional energy sectors. The respective governments are offering incentives for rapid installation of solar energy, wind energy and bio-energy units, and also encouraging joint ventures, technology transfers, as well as promoting research and development.

The Sino-Indian partnerships should be guided by the establishment of energy research, forums for dialogue between concerned stakeholders, expertise, establishing information networks, and providing a scope for regular progress reviews. Collaboration in the renewable energy sector should help both the nations to address the energy security issues and achieve the carbon emission targets alongside the achievement of various development goals associated with SDG 7. In fact, the availability of cheaper and competitive technology from China alongside the existence of huge input and product markets in India would act as perfect complementarities that would enable both the countries to cooperate on these lines — where India’s renewable energy sector is projected to offer $30 billion every year, and China has an opportunity to become a major investor in this sector.

However, common grounds have not necessarily translated to cooperation always. Competition between India and China dictates energy issues as well — this was reflected when due to failure in negotiations, India called off the Shwe gas pipeline arrangement with Myanmar, while China was quick to successfully seize the deal in 2009. The existence of these characteristics has created suspicions in extending the cooperation to a full-fledged arrangement, thereby depicting major impediments to cooperation in energy sector too.

In the current scenario, complex questions emerge on the grounds of how the COVID-19 disaster will dampen the energy diplomacy too between India and China? Whether meaningful cooperation is possible on crucial issues like energy, when the nature of relationship is hindered by traditional rivalry and competition on other matters?

For this piece, the authors thank the Chinese Academy of Social Sciences for the knowledge dissemination programmes during the International Seminar for Young Scholars on Economic Development Issues, Beijing, 2018 and the Energy Economy and Energy Security International Forum, Beijing, 2019.

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Soumya Bhowmick

Soumya Bhowmick

Soumya Bhowmick is an Associate Fellow at the Centre for New Economic Diplomacy at the Observer Research Foundation. His research focuses on sustainable development and ...

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