The Indian energy transformation

How India is carrying out its energy and climate ambitions in the framework of its complicated governance

Energy lies at the heart of India’s transformation, since it is linked to the country’s economic development, to its population and to its urbanization trends, which are all expected to expand considerably in the next decades. India displays a complex energy framework: in strong contrast to the other top global emitters, while its emissions continue to grow, its per capita footprint remains among the lowest globally. Secondly, its vast climate-sensitive territory has heterogeneous needs and there are diverse challenges across its twenty-nine states, making the energy transition a complex (but essential) way forward. The country is also striving to provide cleaner energy for cooking.

According to the report “Assessing the Costs of Climate Change and Adaptation in South Asia”, by the Asian Development Bank, environmental degradation and climate change will have a negative effect on India’s GDP (estimated to be -1.8% annually up to 2050). Renewables might represent a huge opportunity to respond to the several challenges of the country and, looking at the impressive growth trends within the energy sector, efficiency will play a crucial role, since it is potentially able to reduce demand by 17% by 2040. However, decarbonisation proceeds slowly.

The country currently ranks third in terms of energy demand at the global level, behind China and the United States.

Today around 60% of households rely on biomass for cooking and 168 million Indian citizens still don’t have access to power. Nevertheless, things are changing fast with the country progressively guaranteeing a wider power access and trying to solve the problems affecting its many distribution companies partly responsible for power shortages. Coal represents the key source of supply, as the country both produces and imports it in huge quantities in order to generate over 65% of its power, provoking massive environmental impacts, CO2 emissions and record air pollution levels. These unsustainable trends are set to increase in importance since total population is growing and urbanization in particular is on the rise. This will cause an increment in the use of urban-related amenities and electricity demand which will more than triple from 2016 to 2040. According to the India’s INDC the demand will grow from 1,102 terawatt/hour (TWh) in 2016 to 2,499 in 2030.

In this sense renewables are a huge opportunity. Encouragingly, investments in clean energy and technology are growing speedily with solar and wind prices falling considerably in recent times. As stated by the Wood Mackenzie fund in the research “Battle for Future: Asia Pacific renewable power competitiveness 2019”, renewable energy facilities are in many cases cheaper than managing most of the existing coal-fired power plants.

The energy transition is a powerful tool that the government can use to improve its country’s sustainability and efficiency. The exposure to the shortfalls of the energy system has been addressed by a long list of public initiatives, even though coal remains the number one source in the long term. In the electricity sector, at the core of India’s reform effort there are the National Electricity Plan, Power for All 24x7, the Saubhagya and the UDAY Scheme programme. Among its climate priorities, included in India’s NDC presented ahead of the COP 21, the country aims at reducing its GDP carbon intensity by 33 to 35% by 2030 compared to 2005, achieving around 40% of its installed capacity from non-fossil fuel energy sources and, through additional forestation, creating an additional carbon sink of around 3 billion tonnes of CO2 equivalent. Energy efficiency is intended as a response to the rapid urbanization trends and growth in industrial activity, and is promoted through several initiatives such as the “Perform, Achieve and Trade” (PAT) Scheme for industries, the spread of LED lighting and the promotion of efficient water pumps in the agriculture sector.

The country’s transition is carried forward by a multi-layered energy governance system, made up of one central government, twenty-nine state administrations and seven union territories. At the federal level, five key ministries are in charge of the energy domain, with at least other five handling related policies such as transport or shipping and the plethora of national agencies, companies and organisations involved. Coal, oil, gas and nuclear policies are developed and implemented at the federal government level, with the sole exception of the electricity sector, which is a concurrent prerogative between Delhi and each single state. Climate policy is mainly defined at the central level but the subnational state level enjoys design and implementation powers. The complex structure of the Indian energy governance has a mixed record of success, sometimes resulting into difficult coordination, policy and funding inconsistencies that ultimately may affect the effectiveness of policy-making. One main problem is that state-level implementation of national laws is not always straightforward: sometimes it displays vague processes and unclear funding mechanisms. However, encouraging trends are observable, in particular on energy efficiency policies, in the electrification of several rural villages and in single states.

Photo: satellite picture of Kolkata. Credits Google Earth

More about this topic:

India’s Institutional Governance and the Energy Transition, Nicolò Sartori, Margherita Bianchi