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Ashwini K Swain & Olivier Charnoz: India's clean energy paradox

Last Updated: Fri, Dec 07, 2012 13:11 hrs

pIndia claims to be undertaking a thorough transition to low-carbon electricity as a response to a range of competing agendas and constraints It seems the country has made a smart choice for energy policy by focusing on a two-way approach &mdash stepping up renewable energy and energy efficiency initiatives Enhanced energy efficiency is expected to partly avoid demand for additional generation capacity while much of the remaining demand is expected to be met through renewable energy Both approaches have equal potential to take Indian electricity on a low-carbon development pathway as well as ensure much needed energy security Considering their equal potential and complementarity both the approaches merit equal and simultaneous attentionppBut has it happened We do not believe so we find two paradoxes that weigh upon India&rsquos clean energy development First although energy efficiency initiatives offer high collective returns at least as high as renewable energy at a much lower investment it has received a lot less attention and priority Second within the energy efficiency domain implementation is lower and slower in sectors where the energy savings potential is higher &mdash especially agriculture and domestic sectorsppFor renewable energy India has set an ambitious target of raising its capacity to 74000 MW by 2022 including 22000 MW solar energy At the same time the country also aims to generate 15 per cent of its consumable electricity from renewable sources by 2020ppConsidering past experiences in Indian electricity and its failed attempts at reforms and big initiatives there is every reason to doubt its capability to achieve this target Renewable energy development in India has already been plagued by several governance issues &mdash such as tariff setting lack of transparency and civil society participation inadequate monitoring social reasons and lack of coordination and consequent scepticism about future development Yet considering India&rsquos vast renewable potential aspiration of private sector and bundling of renewables with other developmental agendas there seems to be a ray of hopeppIndia has set an equally ambitious target for energy efficiency &ndash to save 10000 MW by 2014-15 &ndash which will avoid installation of 19000-MW generation capacity In practice however energy efficiency promotion is far from being on a par with the efforts devoted to renewable energy While there are mandatory policy provisions regarding the latter like renewable purchase obligations issued to utilities energy efficiency lacks such policy endorsements The electricity regulatory commissions have been very proactive in promoting new incentives in favour of renewable energy whereas energy efficiency is treated as a &ldquostep child&rdquoppWhat drives this paradox First India&rsquos renewable energy strategy following a top-down approach of grid-connected generation is much easier to implement than the energy efficiency strategy that requires action on part of consumersppSecond presence of concentrated interests including few manufacturers project developers and generators facilitates expedited implementation in renewable sector as opposed to energy efficiency where the interests are diffused across utilities and large number of consumers Entry of big business conglomerates such as Tatas and Reliance into manufacturing has further strengthened the lobby for renewable energy Third institutional architecture for renewable energy including an independent ministry at the Centre and dedicated agencies at the state level is much stronger than the institutional architecture for energy efficiency that includes a &ldquobureau&rdquo at the Centre and state-level &ldquodesignated&rdquo agencies with other primary and often competing policy prioritiesppFourth India seems to perceive larger developmental benefit from renewable energy including employment opportunities regional economic growth and energy access for poor Consequently the political will to promote renewable energy is stronger than energy efficiency promotion Finally while there seems to be an emerging global governance framework for renewable energy with several recent initiatives including the International Renewable Energy Agency energy efficiency lacks a global governance framework that could put political weight on the issueppWhile political will has been neither always strong nor always present India has gained significant experience in designing and implementing energy efficiency policies Since its formation the Bureau of Energy Efficiency BEE has prepared an action plan giving a thrust on almost all fronts of energy efficiency and taken several initiatives keeping with the Energy Conservation Act 2001 However not all initiatives were implemented with equal vigour and outcomes vary across consumer sectors Standards and labelling scheme has arguably had the greatest success resulting in 2100 million units of electricity saved in the year 2008-09 which is equivalent to an avoided generation capacity of 600 MW Schemes aimed at energy-intensive industries and commercial buildings are being implemented rather adequately bearing positive result However other schemes such as Bachat Lamp Yojana municipal and agricultural demand-side management are still at pilot stage and yet to be implemented at a large scaleppAlthough the initiatives taken by BEE are commendable implementation is slower in sectors where energy saving potential is higher Based on conservative estimates agriculture has a potential to save 30 per cent of sectoral consumption and contribute to 36 per cent to national potential while domestic sector has a potential of 20 per cent savings on sectoral consumption amounting to 32 per cent of national potential Combining both the dimensions agriculture and domestic sector s offer higher collective return in terms of energy savings and thus need to be prioritised Yet BEE actions represent a different trend prioritising industrial sector and agricultural sector is almost ignoredppWhat drives this trend A credible explanation may be related to the relatively low incentives faced by individual consumers despite the fact that overall collective return and incentive are high in these sectors We find that implementation is higher when individual incentives are higher Second in the absence of an effective incentive structure upfront investment for energy efficiency is often unaffordable for most agricultural and domestic consumers Third low level of public awareness about the benefits of energy efficiency has contributed to low willingness and acceptance Fourth while limited numbers of industrial and large commercial consumers are easy to target BEE finds it difficult to reach out to geographically disperse large number of agricultural and domestic consumers Finally technocratic orientation of Indian electricity has led to overemphasis on technology based solutions Yet promotion of energy efficiency particularly in agricultural and domestic sectors requires governance innovations and behavioural changes along with technologyppStriking a new balance between energy efficiency and renewable energy as complementary approaches is of crucial importance if India is to achieve its energy security and climate mitigation goalsphr p pp alignrightstrongAshwini K Swainstrongem is independent energy and climate policy analystem strongOlivier Charnozstrong emis research officer at Agence Française de Développement where he leads a multi-country research programme entitled &ldquoLocal Politics Global Impacts Climate Change Biodiversity and Health&rdquoemp

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