Keeping energy affordable and financing the growth of the energy sector are two critical challenges for India

Rangan Banerjee, is Head, Department of Energy Science and Engineering at IIT Bombay, provides a good article in the EnergyWorld section of India’s Economic Times to first look at what America is now doing under the new administration and then comparing it to the challenges in meeting India’s long-term energy security.

 

India shouldn’t replace its dependence on imported oil with reliance on imported solar cells

Minutes after Donald Trump’s inauguration as the 45th US president, the White House website outlined his vision of an ‘America-First Energy Plan’ (www.whitehouse.gov/america-first-energy). Its focus is on policies to lower costs for Americans and eliminating ‘burdensome regulations’ in the US energy industry. The plan is that the shale oil and gas revolution in the US will spur employment and growth.

Towards this, the US government will now permit tapping deposits on federal lands. Trump plans to eliminate Barack Obama’s policies like the Climate Action Plan and the ‘Waters of the US’ rule. The plan talks of reviving the US coal industry and a commitment to clean coal technology and targets energy independence.

The priority is for using energy for the development of the US, with the emphasis on fossil fuel and reducing local emissions. There is no mention of climate change, a commitment to a sustainable planet, of renewables, or energy efficiency. Stimulating the economy through cheap domestic energy is the main target. So what does this mean for the global agreement for climate signed in Paris?

The US, in its Intended Nationally Determined Contribution (INDC), committed to reduce its overall carbon dioxide equivalent emissions by 26-28 per cent of its 2005 levels by 2025. The Climate Action plan, which is being eliminated, was one step in this direction. If the Trump Plan results in spurring growth in US coal, oil and gas production to provide cheap energy (unburdened by harmful regulations), it is unlikely that the US would meet its Paris commitments.

The US has 4 per cent of the world’s population and accounts for about 16 per cent of the world’s energy consumption and carbon dioxide emissions. India has about 18 per cent of the world’s population and accounts for 6 per cent of global consumption and emissions. The average American’s carbon footprint is 16.2 tonnes a year in 2014, about 3.6 times the world average and 10.4 times the Indian average of 1.6 tonnes a year.

In his seminal 1968 essay, ‘The Tragedy of the Commons’ (Science, goo.gl/XrlngG), ecologist Garett Hardin suggestes that for commons like grazing pastures, it is optimal for each member to over-exploit (eg. raise more cattle), since they reap the short-term benefit but take only a portion of the loss. Overgrazing occurs till finally the pasture is destroyed. The only solutions are regulation or property rights.

In the global climate problem, it would be impossible to come up with agreed upon regulations or property rights if a major emitter decides unilaterally to maximise its short term (perceived) benefits and ignores the sustainability of the commons. The US played a key role in holding countries like China, India, Mexico and the European Union accountable to meeting emission commitments. It will be difficult to hold other countries to emission targets if the US reneges on its commitment.

India’s INDC commits to having 40 per cent of power generation capacity from non-fossil sources in 2030 (with low-cost international finance) and reduce the emissions intensity of GDP by 33-35 per cent over the 2005 values. Given the current growth in renewable-installed capacity in India, this seems achievable, irrespective of the US policy. The availability of low-cost international finance could be affected depending on the policy regimes for renewables in the US.

The US policy incentives for investments in renewables and energy efficiency research and deployment has been a major catalyst for their growth. If there is a change in policy support in the US, it may impact the momentum of growth and innovation in these areas. We may benefit in the short-run from lower fossil fuel costs if the US plan meets its goal of scaling output.

Also, if there is really a major investment in making clean coal technologies viable (most R&D funding had been reduced), this may help India make our coal plants more acceptable. As good global citizens with a stake in a sustainable planet, we should not deviate from our commitment to clean energy and our INDC. However, we need to re-examine the metrics of success for our energy policy.

Keeping energy affordable and financing the growth of the energy sector are two critical challenges. India must be concerned with long-term energy security. Our solar mission has resulted in a significant deployment of solar power plants. However, our efforts to stimulate solar manufacturing have not been successful. We have built up production capacity of 1,400 MW of solar cells and 5,600 MW of solar modules. All these facilities are struggling to be globally competitive.

The capacity utilisation of these facilities is 21 per cent for cells and 47 per cent for modules. The hallmark of our energy policy should be where we are able to utilise our energy growth to stimulate jobs and the economy. We should not replace a dependence on imported oil with a reliance on imported solar photovoltaic (PV) modules.

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