Inability to improve energy efficiency a major drag on India’s efforts to improve competitiveness

Improving energy efficiency has increasingly moved to centre stage of energy and climate policies and people better understand that it is an important means to meet important social and economic ends. Pyaralal Raghavan laments in a blog on the Times of India website about India’s poor track record so far. He concludes that it is important for the country to increase its efforts if it is to catch up with advanced economies like Japan and Germany. While we have seen India make important strides forward to deploy renewable energy technologies, let’s hope the same efforts will be made to improve efficiency.

 

Despite gains, India still fails to catch up with the competition in improving efficiency in energy use

Inability to improve efficiency in energy use to global benchmarks has long been a major drag on India’s efforts to improve the competitiveness of its economy. This is despite the substantial efforts to improve efficiency of energy use over the decades and the considerable gains made. One reason for this is that other economies have been able to match and improve on the global trends leaving India stuck at a disadvantaged position even while many developing and developed countries continue to make substantial inroads in saving energy.

This is brought out in the latest Global Tracking Framework report published by the World Bank and the International Energy Agency. Data in this report show that though India has been able to match and even surpass the gains made in improvements in energy use in the early years its performance has slowed down closer to global trends leaving it equally if not more vulnerable to swings in energy prices.

At the start of the nineties India fared rather badly in efficiency of energy use. The primary energy intensity, which measures energy consumed per dollar of output, was 8.29 megajoules which was marginally higher than the global average of 7.83. Countries which had higher energy intensity than India included United States (8.67 megajoules), Canada (10.17), South Africa (10.44), Russia (12.03) and China (21.18).

The higher energy intensity in this group of countries would be mostly accounted by the colder climate which calls for large amounts of energy for indoor heating and also by the large share of manufacturing sector, which consumes the maximum amount of electricity. This is especially true of countries like China.

However many other countries, including those in colder climes and both developing or developed, had lower energy intensity then India even in the nineties? These would include Switzerland (3.26 megajoules), Sri Lanka (3.69), Singapore (4.62), Japan (5.08), Pakistan (5.46), United Kingdom (5.66), Germany (5.88) and South Korea (7.51).

But despite the higher intensity of energy use in the nineties India did comparatively well in increasing efficiencies in the next two decades. Numbers show that between 1990 and 2014 the intensity of energy use in India declined by more than one third to 5.35 megajoules which was a little faster than the global numbers which fell only by a quarter. Thus by 2014 intensity of energy use in India had dropped to 4.94 megajoules which was lower than the global average of 5.49.

Other countries however fared much better. For instance Singapore reduced energy intensity by more than half to just 2.7 megajoules. Though China halved its energy intensity by 2014 the 7.43 megajoulses consumed was still marginally higher than India. But given that the share of manufacturing sector in Chinese economy is almost double that its share in India it is still a commendable achievement.

Numbers collated in the report show that increase in energy efficiency has saved the Indian economy as much as 558 petagoules in 2013-14 which is about 7.5% of the energy saved at the global level. In contrast the improved energy intensity in China allowed it to save as much as 2906 petagoules of energy which is about 40% of the global savings.

India would now have to accelerate programs to improve the energy use if it is to catch up with advanced economies like Japan and Germany where the improvements has allowed them to lower the energy intensity to 4.09 and 3.63 megajoules even in their much colder climatic conditions. This calls for concerted efforts to reduce energy use in transportation by building infrastructure and mass transportation facilities in urban centers and increasing use of renewable energy to the maximum possible.

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