Energising Indian manufacturing

Energy security is a crucial issue for every country today, even more so for India at its current stage of development. At present, there is a growing concern about the future of energy to fuel the growing global economy, with an increasing population ratio and higher incomes. These concerns stem from the growing scarcity of conventional fossil fuels, which has a direct impact on oil prices, which has escalated to around $100 per barrel. Also, higher level of air pollution, resulting from diverse use of energy, has dramatically increased the awareness on the global threat of climate change. These concerns are leading to fierce competition to procure fossil fuel resources in different locations, with various countries attempting to assert control over these resources through market measures and political or military means. Given this backgrounder coupled with the uneven distribution of fossil fuels in different parts of the world, the next few years are likely to see a frenetic race, not only to gain access to conventional sources of supply in hitherto unexplored areas of the world, but also to develop and tap unconventional sources of energy through a global programme of massive research and development (R&D). which India too must mount quickly. This, however, would need to be preceded by radical restructuring and reform of India's scientific and industrial research, which has reached a level of stagnation undeserving of further increases in guaranteed funding from the public exchequer. The future of energy would be defined by analysing the results of close collaboration between industry and academia and flexible and goal-oriented research institutions. The university system, with its resources of bright doctoral students must playa very important part in this approach. Globally, of course, radical changes can be foreseen both on the supply as well as the consumption side of the energy chain. On the supply side, a shift is envisaged towards a greater share for renewable sources of energy, such as solar photovoltaic, direct conversion of solar energy for thermal applications and power generation, and greater use of wind energy and modern biomass. There is a worldwide growth in activity involving production of biofuels as a substitute for liquid petroleum products, essentially for the transport sector. But such programmes mostly represent measures that are clearly unsustainable, with net environmental benefits that are questionable not only because of collection and movement to centralised processing facilities, but also due to large usage of chemical fertilisers and chemicals. There is a much higher promise in the production of biofuels from species such as jatropha grown on land generally unsuitable for viable cultivation of food crops, and even more so from conversion of cellulosic material to ethanol. This, however, would require substantial R&D, which India must undertake urgently, given the large quantity of agricultural residue projected to be available at around a billion tonne annually within a decade or so. Another major shift that is long overdue in India and in various other parts of the developing world is in respect of the neglected problem towards the energy needs of the poor. There are approximately two billion people on this planet who have no access to electricity or modern fuels. On a worldwide basis, the growing scarcity of biomass fuels has only served to increase the hardship and privation of affected communities, particularly women, with no available solutions in sight. The answer lies in strengthening or creating institutional mechanisms at local level with technical, financial and organisational strengths for devising and managing supply at the local level based on overwhelming use of renewable resources available on site. It is becoming increasingly clear that the model put into action in the developed world using centralised sources of supply would neither be feasible in the near future on account of several limitations, nor would it be environmentally acceptable. The Indian society has to address this challenge urgently through sustainable exploitation of renewable resources. For supply in the organised sectors of the economy, nuclear energy is likely to assume a growing share in many countries. On the end-use side, the transport sector is likely to see a major transformation. Talking about the short and medium-term, the share of biofuels is set to increase, and, in the longer term, vehicles will use hybrid technology to a much greater extent, with an ultimate shift to electricity as the sole source of energy. Meanwhile, a major expansion of public transport systems can be envisaged, with a substantial increase in the efficiency of railways. France and Japan are working with railway technology, which will increase speed close to 600 km per hour, providing strong competition to domestic air travel. Overall, energy supply and use in the global economy is set to change radically. The question is whether the fragmentation of institutions dealing with various aspects of energy in this country will develop the cohesion and imagination to visualise and define the future in pace with the developed countries. In a world, characterised by both rapid change and uncertainty, India has to make the best use of available resources and opportunities to promote the well-being of its people. India's interests demand a stable and quiet environment in which it can concentrate on economic and social modernisation and technological development. A country's desire for peace and rapid development, however, cannot by itself be a guarantee of its security and prosperity. To ensure that the energy security conditions are properly met with, there is an urgent need for the implementation of energy policy in India. Market and regulate failures result in extensive levels of pollution causing damage to human health as well as to natural and productive assets. The prevention and mitigation of these effects at local, regional and global levels calls for the proper set of institutional arrangement and policy implementation instruments for pollution control. The last three decades witnessed a spate of governmental legislation creating environmental laws to protect common property resources and the interest of the common people. A successful long-term energy strategy for India must emphasise next-generation ways to use energy efficiently and increase energy independence. India is too big a too late in the game to develop an oil-based energy economy, and it must leapfrog industrial development model of the west. Lifting the huge Indian economy to higher economic standards will require creativity vision, diplomacy and innovation. As India competes for conventional sources of energy, it must also prioritise developing energy-efficient vehicles and buildings, along with directing its final technological prowess towards developing alternative energy - photovoltaics, solar thermal power, bio-diesel, wind-power green dams. All of these incremental sources of energy will help reduce India's independence on oil imports. The need for energy policy The need for an integrated energy policy has been highlighted and acknowledged by successive governments. My colleagues at TERl have made detailed presentations to previous prime ministers and other members of the Union cabinet on what Should be done and while their responses clearly accepted the need for integrating various elements of energy policy, the decision making structure related to this sector has remained fragmented. In 1982, Indira Gandhi established the advisory board on energy to report directly to her. This body continued till 1986, and was able to do substantial work in developing a common and coherent framework for the energy sector, but the implementation of measures recommended remained incomplete. It is heartening that the prime minister has now established an energy co-ordination committee, including several ministers in the government and the deputy chairman and members responsible for energy in the planning commission. It is hoped that the minister of coal will also be added to this group, because India's dependence on coal would remain paramount, as indeed the prime minister emphasised in his address to the US Congress. The coal industry is one area where major reforms and technological innovations are critical for the future energy security of the country. Despite the importance of achieving energy efficiency in the Indian economy, this issue has remained largely ignored in energy decisions both at the centre and the states. The new co-ordination committee would need to draw in, from time to time, other ministries including the railways, surface transport and urban development. This is required because additions to supply in many areas cost much more than would equivalent measures to manage the demand for energy. In the transport sector, the inability of the railways to meet growing demand for both freight and passenger is leading to an increased share of road transport. Similarly, in urban areas, lack of adequate public transport systems is resulting in extensive use of private vehicles. The International Energy Agency projects India's oil consumption going up from 2.5 million barrels a day in 2002 to 5.6 million barrels a day in 2030. Such large consumption of oil would make us particularly vulnerable to sudden price increases in the global oil market, and would prove detrimental to the country's economy. By virtue of the fact that investments, both on the supply side and certainly on equipment as well as infrastructure on the demand side have long-term implications. Also, energy policy needs to be forward looking and proactive. This requires not merely the setting up of periodic committees to evaluate the challenge, but also continuous assessment of changes taking place globally and within the country to ensure that we target desired outcomes at least 25 years into the future. This is particularly true in the case of technological innovations that must drive energy strategy in the years ahead. The previous government developed a Hydrocarbon Vision exercise extending up to 2025, but like all such one-time efforts, this one too fell by the wayside. To provide energy policy, the continuous attention it deserves and to ensure that decisions are based on appropriate analysis, the government should rely on two or three institutions working continuously with appropriate quantitative models for developing specific strategies and decision-making pathways. In line with this, the prime minister has made a good beginning by establishing the energy co-ordination committee, but much remains to be done to ensure that energy decision-making is properly integrated on both the demand and supply sides and that it covers an adequate time frame in the future, for which intellectual inputs of a high order would be required to ensure the right decisions and directions. It would be vitally important for a forward looking energy policy to draw on the best talent available in India, defining technological and policy initiatives to create a secure and stable energy future. Otherwise, economic growth could falter and India's ambitions to grow at a healthy rate in excess of eight per cent would have to be left behind. Towards an energy independent India ... To produce so much more energy, to collect and distribute so much water, India's challenges are daunting but achievable. The key is to balance large-scale projects that are often costly and difficult to manage ecologically, with smaller projects that can be adopted at the scale of individual homes or communities. And, at both scales, the solutions will be easier if there is a faith and reliance on India’s world-class intellectual and scientific community to provide assistance through high technology.