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BETTER ENVIRONMENT
THROUGH
ENERGY EFFICIENCY
PROJECT ASSIGNMENT
SUBJECT: ENVIRONMENTAL LAW
POST GRADUATE DIPLOMA IN ENVIRONMENTAL LAW (PGDEL)
SUBMITTED BY
R.L. BHUTIANI
I.D. NO.EL/702/07-08
C/O ENGINEERS INDIA LIMITED
BANGALORE 21
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DECLARATION
BETTER ENVIRONMENT THROUGH ENERGY EFFICIENCY
Certified that this Project Work is my original work and that I have
not taken or borrowed any material from others work nor have I
presented this partly or fully to any other institution / College /
University. I have complied with all the formalities prescribed inthis regard.
RAMESH LAL BHUTIANI
I.D. NO.EL/702/07-08
Date : 28 April 2008
Place: Bangalore
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CONTENT
Chapter 1 Introduction
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Chapter 1
Introduction
1.1 ENERGY SCENARIO
The global primary energy consumption at the end of 2002 was equivalent to 9405
million tonnes of oil equivalent (Mtoe). The Figure 1.3 shows in what proportions the
sources mentioned above contributed to this global figure.
Figure 1.3 Global Primary Energy Consumption
The primary energy consumption for few of the developed and developing countries is
shown in Table 1.1. It may be seen that Indias absolute
primary energy consumption is only 1/29th of the world, 1/7th of USA, 1/1.6th time of Japan
but 1.1, 2.9, 1.3, 1.5 times of Canada, Australia, France and U.K respectively.
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Table 1.1 Primary Energy Consumption by fuel (2002) in Million
Tonnes Oil Equivalent (Mtoe)
Oil NaturalGas Coal Nuclear Hydro Total Share ofTotalUSA 894.3 600.7 553
.8185.8 58.2 2293.0 24.4%
Canada 89.7 72.6 30.7
17.0 78.6 288.7 3.1%
France 92.8 38.5 12.7
98.9 15.0 258.0 2.7%
RussianFederation
122.9 349.6 98.5
32.0 37.2 640.2 6.8%
United
Kingdom
77.2 85.1 36.
5
19.9 1.7 220.3 2.3%
China 245.7 27.0 663.4
5.9 55.8 997.8 10.6%
India 97.7 25.4 180.8
4.4 16.9 325.1 3.5%
Japan 242.6 69.7 105.3
71.3 20.5 509.4 5.4%
Malaysia 22.5 24.3 3.3 - 1.7 51.8 0.6%
Pakistan 17.9 18.8 2.1 0.4 4.6 43.8 0.5%
Singapore 35.5 1.6 - - - 37.1 0.4%
TOTAL
WORLD
3522.5 2282.0 2397.9 610.6 592.1 9405.0
Energy Distribution Between Developed And Developing Countries
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Figure 1.4: Energy Distribution Between Developed and Developing
Countries
Although 80 percent of the worlds population lies in the developing countries (a fourfold
population increase in the past 25 years, their energy consumption amounts to only 40
percent of the world total energy consumption. The high standards of living in the
developed countries are attributable to high-energy consumption levels. Also, the rapid
population growth in the developing countries has kept the per capita energy consumption
low compared with that of highly industrialized developed countries.
The world average energy consumption per person is equivalent to 2.2 tonnes of coal. In
industrialized countries, people use four to five times more than the world average, and
nine times more than the average for the developing countries. An American uses 32
times more commercial energy than an Indian.
1.6 Indian Energy Scenario
Coal dominates the energy mix in India, contributing to 55% of the total primary energy
production. Over the years, there has been a marked increase in the share of natural gas in
primary energy production from 10% in 1994 to 13% in 1999. There has been a decline in
the share of oil in primary energy production from 20% to 17% during the same period.
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Energy Supply
Coal Supply
India has huge coal reserves, at least 84,396 Million tonnes of proven recoverable
reserves (at the end of 2002). This amounts to almost 8.6% of the world reserves and it
may last for about 235 years at the current Reserve to Production (R/P) ratio. In contrast,
the worlds proven coal reserves are expected to last only for 204 years at the current R/P
ratio. India is the fourth largest producer of coal and lignite in the world. Coal production
is concentrated in these states (Andhra Pradesh, Bihar, Madhya Pradesh, Maharashtra,
Orissa, Jharkhand, West Bengal).
Oil Supply
Oil accounts for about 33 % of India's total energy consumption. While India has invested
considerable resources in this sector, the crude oil production has stagnated at around 32-
33 million metric tonnes per year over the past decade. The majority of India's roughly
5.4 billion barrels in oil reserves are located in the Bombay High, upper Assam, Cambay,
Krishna-Godavari, and Cauvery basins. India's average oil production level for 2002 was
793,000 barrels per day. The consumption continues to outstrip production and. about
70% of the total petroleum product demand is met by imports imposing a heavy burden
on foreign exchange. India had net oil imports of over 1.2 million barrels per day in 2002.
Indias annual current oil import bill is around Rs.80,000 crores. In terms of sector wise
petroleum product consumption, transport accounts for 53% followed by domestic and
industry with 18% and 17% respectively.
Natural Gas Supply
Natural gas accounts for about 8 per cent of energy consumption in the country. The
current demand for natural gas is about 96 million cubic metres per day (mcmd) as
against availability of 67 mcmd. By 2007, the demand is expected to be around 200
mcmd. Natural gas reserves are estimated at 660 billion cubic meters.
Electrical Energy Supply
The all India installed capacity of electric power generating stations under utilities was
1,07,973 MW as on 31st March 2003, consisting of 26,910 MW- hydro, 76,607 MW -
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thermal and 2,720 MW- nuclear and 1,736 MW- wind (Ministry of Power). The gross
generation of power in the year 2002-2003 stood at 531 billion units (kWh).
Nuclear Power Supply
Nuclear Power contributes to about 2.5 per cent of electricity generated in India. India has
ten nuclear power reactors at five nuclear power stations producing electricity. More
nuclear reactors have also been approved for construction.
Hydro Power Supply
India is endowed with a vast and viable hydro potential for power generation of which
only 15% has been harnessed so far. The share of hydropower in the countrys total
generated units has steadily decreased and it presently stands at 25% as on 31 st March
2003. It is assessed that exploitable potential at 60% load factor is 84,000 MW.
Final Energy Consumption
Final energy consumption is the actual energy demand at the user end. This is the
difference between primary energy consumption and the losses that takes place in
transport, transmission & distribution and refinement. The actual final energy
consumption (past and projected) is given in Table 1.2.
Table 1.2 Demand for Commercial Energy for Final Consumption (BAU
Scenario)Source Units 1994-95 2001-02 2006-07 2011-12
Electricity BillionUnits
289.36 480.08 712.67 1067.88
Coal MillionTonnes
76.67 109.01 134.99 173.47
Lignite Million
Tonnes
4.85 11.69 16.02 19.70
Natural Gas MillionCubicMeters
9880 15730 18291 20853
Oil Products MillionTonnes
63.55 99.89 139.95 196.47
Source: Planning Commission BAU:_Business As Usual
Sector wise Energy Consumption in India
The major commercial energy consuming sectors in the country are classified as shown in
the Figure 1.5. As seen from the figure, industry remains the biggest consumer of
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commercial energy and its share in the overall consumption is 49%. (Reference year:
1999/2000)
Figure 1.5 Sector Wise Energy Consumption (1999-2000)
Indias Energy Needs
Economic growth is desirable for developing countries, and energy is essential for
economic growth. However, the relationship between economic growth and increased
energy demand is not always a straightforward linear one. For example, under present
conditions, a 6% increase in India's Gross Domestic Product (GDP) would impose an
increased demand of 9 % on its energy sector.
In this context, the ratio of energy demand to GDP is a useful indicator. A high ratio
reflects energy dependence and a strong influence of energy on GDP growth. It is
worthwhile to note that developed countries by focusing on energy efficiency and lower
energy-intensive routes maintain their energy to GDP ratios at values of less than 1.The ratios for developing countries tend to be much higher.
Long Term Energy Scenario-India
Coal
Coal is the primary energy source for power production in India, generating
approximately 70% of total domestic electricity. Energy demand in India is expected to
increase over the next 10-15 years; although new oil and gas plants are planned, coal is
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India's natural gas production is likely to rise from 86.56 million cmpd in 2002-03 to
103.08 million cmpd in 2006-07. It is mainly based on the strength of a more than
doubling of production by private operators to 38.25 mm cmpd.
Electricity
India currently has a peak demand shortage of around 14% and an energy deficit of 8.4%.
Keeping this in view and to maintain a GDP (gross domestic product) growth of 8% to
10%, the Government of India has very prudently set a target of 215,804 MW power
generation capacity by March 2012 from the level of 100,010 MW as on March 2001,
that is a capacity addition of 115,794 MW in the next 11 years (Table 1.3).
In the area of nuclear power the objective is to achieve 20,000 MW of nuclear generation
capacity by the year 2020.
Table 1.3 Indias Perspective Plan For Power For Zero Deficit Power By 2011/12(Source Tenth And Eleventh Five-Year Plan Projections)
Thermal(Coal) (MW)
Gas / LNG /Diesel (MW)
Nuclear(MW)
Hydro (MW) Total(MW)
Installedcapacity ason March
2001
61,157Gas:
10,153
Diesel: 864
2720 25,116 100,010
Additionalcapacity(2001-2012)
53,333 20,408 9380 32,673 115,794
Totalcapacity ason March2012
114,490(53.0%)
31,425(14.6%)
12,100(5.6%)
57,789(26.8%)
215,804
1.12 Energy Security
The basic aim of energy security for a nation is to reduce its dependency on the imported
energy sources for its economic growth.
India will continue to experience an energy supply shortfall throughout the forecast
period. This gap has been exacerbated since 1985, when the country became a net
importer of coal. India has been unable to raise its oil production substantially in the
1990s. Rising oil demand of close to 10 percent per year has led to sizable oil import
bills. In addition, the government subsidises refined oil product prices, thus compounding
the overall monetary loss to the government.
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Imports of oil and coal have been increasing at rates of 7% and 16% per annum
respectively during the period 199199. This dependence on energy imports is projected
to increase in the future. Estimates indicate that oil imports will meet 75% of total oil
consumption requirements and coal imports will meet 22% of total coal consumption
requirements in 2006. At present, India does not import any natural gas, but demand is
supply constrained and imports of gas and LNG (liquefied natural gas) are likely to arise
in the coming years. This energy import dependence implies vulnerability to external
price shocks and supply fluctuations, which threaten the energy security of the country.
Increasing dependence on oil imports means reliance on imports from the Middle East, a
region susceptible to disturbances and consequent disruptions of oil supplies. This calls
for diversification of sources of oil imports. The need to deal with oil price fluctuations
also necessitates measures to be taken to reduce the oil dependence of the economy,
possibly through fiscal measures to reduce demand, and by developing alternatives to oil,
such as natural gas and renewable energy.
Some of the strategies that can be used to meet future challenges to their energy security
are
Building stockpiles
Diversification of energy supply sources
Increased capacity of fuel switching
Demand restraint,
Development of renewable energy sources.
Energy efficiency
Sustainable development
Although all these options are feasible, their implementation will take time. Also, for
countries like India, reliance on stockpiles would tend to be slow because of resource
constraints. Besides, the market is not sophisticated enough or the monitoring agencies
experienced enough to predict the supply situation in time to take necessary action.
Insufficient storage capacity is another cause for worry and needs to be augmented, if
India has to increase its energy stockpile.
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However, out of all these options, the simplest and the most easily attainable is reducing
demand through persistent energy conservation efforts.
1.13 Energy Efficiency and its Importance
Coal and other fossil fuels, which have taken three million years to form and these are
likely to deplete soon. In the last two hundred years, we have consumed 60% of all
resources. For sustainable development, we need to adopt energy efficiency measures.
Today, 85% of primary energy comes from non-renewable, and fossil sources (coal, oil,
etc.). These reserves are continually diminishing with increasing consumption and will
not exist for future generations (see Figure 1.15).
Figure 1.15
Energy Conservation Vs Energy Efficiency?
Energy Conservation and Energy Efficiency are separate, but related concepts. Energy
conservation is achieved when growth of energy consumption is reduced, measured in
physical terms. Energy Conservation can, therefore, be the result of several processes or
developments, such as productivity increase or technological progress. On the other hand
Energy efficiency is achieved when energy intensity in a specific product, process or area
of production or consumption is reduced without affecting output, consumption or
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comfort levels. Promotion of energy efficiency will contribute to energy conservation and
is therefore an integral part of energy conservation promotional policies.
Energy efficiency is often viewed as a resource option like coal, oil or natural gas. It
provides additional economic value by preserving the resource base and reducing
pollution. For example, replacing traditional light bulbs with Compact Fluorescent Lamps
(CFLs) means you will use only 1/4th of the energy to light a room. Pollution levels also
reduce by the same amount. Nature sets some basic limits on how efficiently energy can
be used, but in most cases our products and manufacturing processes are still a long way
from operating at this theoretical limit. Very simply, energy efficiency means using less
energy to perform the same function.
Although, energy efficiency has been in practice ever since the first oil crisis in 1973, it
has today assumed even more importance because of being the most cost-effective and
reliable means of mitigating the global climatic change. Recognition of that potential has
led to high expectations for the control of future CO2 emissions through even more energy
efficiency improvements than have occurred in the past. The industrial sector accounts for
some 41 per cent of global primary energy demand and approximately the same share of
CO2 emissions.
In this paper terms Energy Conservation & Energy Efficiency are used
interchangeably.
The benefits of Energy conservation for various players are given below
Industry - Reduced energy bills, Increased Competitiveness, Increased
productivity, Improved quality, Increased profits!
Nation - Reduced energy imports, Avoided costs can be used for poverty
reduction, Conservation of limited resources, Improved energy security
Globe - Reduced GHG and other emissions, Maintains a sustainable environment
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1.2 Energy and Environment
Air Pollution
The usage of energy resources in industry leads to environmental damages by polluting
the atmosphere. Few of examples of air pollution are sulphur dioxide (SO2), nitrous oxide
(NOX) and carbon monoxide (CO) emissions from boilers and furnaces, chloro-fluro
carbons (CFC) emissions from refrigerants use, etc. In chemical and fertilizers industries,
toxic gases are released. Cement plants and power plants spew out particulate matter.
Sources of major pollutants in air and average composition of pollutants are given in
Table 1.4 and Table 1.5 respectively.
Table 1.4 Major Pollutants in Air SourcesS.No. Source %
1 Fuelcombustionintransport
42
2 Industry 353 Forest
fire8
4 Solildwastedisposal
5
5 Miscellaneous
10
Table 1.5 Composition of Major Pollutants in AirS. No. Pollutant %
1 CarbonMonoxide
47
2 HydroCarbons
15
3 SulphurOxides
15
4 NitrogenOxides
10
5 Particulat
es
13
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9.3 Global Warming
Over the last 100 years, it was found out that the earth is getting warmer and warmer,
unlike previous 8000 years when temperatures have been relatively constant. The present
temperature is 0.3 - 0.6 oC warmer than it was 100 years ago.
Global Warming and Climate Change
Climate change, also called global warming, refers to the long-term fluctuations in
temperature, precipitation, wind and other elements of the earths climate system. The
energy use has attracted huge attention in present times due to its associated global
climatic impacts.
Figure 1.11 The Greenhouse Effect
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which made GHG reductions mandatory for 38 developed nations with average reduction
of 5.2% below 1990 levels by 2012. The emergence of the Clean Development
Mechanism (CDM) as a framework for the involvement of industrialized countries in the
developing world may lead to financing opportunities for energy efficiency projects.
Table 1.6 Climate has Changed and Will Continue to Change Global mean temperature isincreasing- 0.3 to 0.6 o C Global sea level has risen: 10 to 25cm
Projected temperature increase of2 o C by year 2100 Projected sea level rise of 50 cm byyear 2100
Acid Rain
Acid rain is caused by release of SOX and NOX from combustion of fossil fuels, which
then mix with water vapour in atmosphere to form sulphuric and nitric acids respectively.
The effects of acid rain are as follows:
Acidification of lakes, streams, and soils
Direct and indirect effects (release of metals, For example: Aluminum which
washes away plant nutrients)
Killing of wildlife (trees, crops, aquatic plants, and animals)
Decay of building materials and paints, statues, and sculptures
Health problems (respiratory, burning- skin and eyes)
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Figure 1.14
Global Warming (Climate Change) Implications
Human activities are releasing greenhouse gases into the atmosphere
Carbon dioxide is produced when fossil fuels are used to generate energy and when
forests are cut down and burned. Methane and nitrous oxide are emitted from agricultural
activities, changes in land use, and other sources. Man-made chemicals called
halocarbons (CFCs, HFCs, PFCs) and other long-lived gases such as sulphur hexafluoride
(SF6 ) are released by industrial processes. Ozone, at ground level, is released indirectly
by automobile exhaust fumes and other sources.
Rising levels of greenhouse gases are already changing the climate
Observations show that global temperatures have risen by about 0.6 C over the 20th
century. There is new and stronger evidence that most of the observed warming over the
last 50 years is attributable to human activities. Climate models predict that the global
temperature will rise by about 6 C by the year 2100.
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Climate change is likely to have a significant impact on the global environment.
In general, the faster the climate changes, the greater will be the risk of damage. The
mean sea level is expected to rise 9 - 88 cm by the year 2100, causing flooding of low
lying areas and other damage.
Human society will face new risks and pressures
Food security is unlikely to be threatened at the global level, but some regions are likely
to experience food shortages and hunger. Water resources will be affected as precipitation
and evaporation patterns change around the world.
India could be more at risks than many other countries
Models predict an average increase in temperature in India of 2.3 to 4.8oC for the
benchmark doubling of Carbon-dioxide scenario. Temperature would rise more in
Northern India than in Southern India, without protection approximately 7 million people
would be displaced, 5700 km2 of land and 4200 km. of road would be lost, and wheat
yields could decrease between 2.8 to 6.8%.
Many options for limiting emissions are available in the short- and medium-term
Policymakers can encourage energy efficiency and other climate-friendly trends in both
the supply and consumption of energy. Key consumers of energy include industries,
homes, offices, vehicles, and agriculture. Efficiency can be improved in large part by
providing an appropriate economic and regulatory framework for consumers and
investors. This framework should promote cost-effective actions, the best current and
future technologies, and innovative solutions that make economic and environmental
sense irrespective of climate change. Taxes, regulatory standards, tradable emissions
permits, information programmes, voluntary programmes, and the phase-out of
counterproductive subsidies can all play a role. Changes in practices and lifestyles, from
better urban transport planning to personal habits such as turning out the lights, are also
important.
9.4 Climatic Change Problem - United Nations Framework Convention on Climate
Change (UNFCCC)
Climate change is considered to be among the most serious threats to the sustainability of
the world's environment, the health and well-being of its people and the global economy.
Mainstream scientists agree that the Earth's climate is being affected by the build-up of
greenhouse gases, such as carbon dioxide, caused by human activities, including
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electricity generation, agriculture and transportation. In spite of some lingering
uncertainties, a majority of scientists believe preventive and prompt action is necessary.
The international response to climate change took shape with the development of the
United Nations Framework Convention on Climate Change (UNFCCC). Agreed to in
1992, the UNFCCC set out a framework for action to control or cut greenhouse gas
emissions. The UNFCC was signed by most nations, including a voluntary pledge that the
developed countries would reduce their emissions to 1990 levels by the year 2000. With
scientific evidence pointing towards increasing destructive contribution of human
activity, It became clear that most countries would be unable to uphold their promises. All
the nations, who initially ratified the UNFCC, reconvened in form ofConference of
Parties (COP) at Berlin in 1995 with a goal of entering into negotiations on a protocol to
establish legally binding limitations or reductions in emissions. The event was called
COP-1 and was the first session of what became an annual meeting to analyse the
efficacy of climatic change program, review scientific data and monitor the emission
commitments declared by certain countries.
Since the UNFCCC entered into force in 1994, five meetings of the Conference of the
Parties have taken place, as well as numerous workshops and meetings of the UNFCCC's
subsidiary bodies. A Protocol to the Convention was adopted in 1997 at the Third
Conference of the Parties, held in Kyoto. Although it has yet to enter into force, the
UNFCCC's Kyoto Protocol commits industrialized countries to achieve quantified targets
for decreasing their emissions of greenhouse gases.
9.5 Global Climate Change Treaty: The Kyoto Protocol
As scientific consensus grew that human activities are having a discernible impact on
global climate systems, possibly causing a warming of the Earth that could result in
significant impacts such as sea level rise, changes in weather patterns and health effects--
and as it became apparent that major nations such as the United States and Japan would
not meet the voluntary stabilization target by 2000--Parties to the treaty decided in 1995
to enter into negotiations on a protocol to establish legally binding limitations or
reductions in greenhouse gas emissions. It was decided by the Parties that this round of
negotiations would establish limitations only for the developed countries, including the
former Communist countries (called annex A countries).
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Negotiations on the Kyoto Protocol to the United Nations Framework Convention on
Climate Change (UNFCCC) were completed December 11, 1997, committing the
industrialized nations to specify, legally binding reductions in emissions of six
greenhouse gases. The 6 major greenhouse gases covered by the protocol are carbon
dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
Following completion of the Protocol in December of 1997, details of a number of the
more difficult issues remained to be negotiated and resolved in spite of periodic
conferences.
Major Provisions of the Kyoto Protocol
As of February 2000, 84 countries had signed the treaty, including the European Union
and most of its members, Canada, Japan, China, and a range of developing countries.
Some 22 countries were reported by the UNFCCC Secretariat to have ratified the treaty.
Nations are not subject to its commitments unless they have ratified it and it enters into
force.
The major commitments in the treaty are as follows:
Emissions Reductions
The United States would be obligated under the Protocol to a cumulative reduction in its
greenhouse gas emissions of 7% below 1990 levels for three greenhouse gases (including
carbon dioxide), and below 1995 levels for the three man-made gases, averaged over the
commitment period 2008 to 2012.
The Protocol states that developed countries are committed, individually or jointly, to
ensuring that their aggregate anthropogenic carbon dioxide equivalent emissions of
greenhouse gases do not exceed amounts assigned to each country in Annex A to the
Protocol, "with a view to reducing their overall emissions of such gases by at least 5%
below 1990 levels in the commitment period 2008 to 2012.
39 nations have signed the protocol, including the United States, the European Union plus
the individual EU nations, Japan, and many of the former Communist nations. The
amounts for each country are listed as percentages of the base year, 1990 and range from
92% (a reduction of 8%) for most European countries--to 110% (an increase of 10%) for
Iceland.
Developing Country Responsibilities
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Another problematic area is that the treaty is ambiguous regarding the extent to which
developing nations will participate in the effort to limit global emissions. The original
1992 climate treaty made it clear that, while the developed nations most responsible for
the current buildup of greenhouse gases in the atmosphere should take the lead in
combating climate change, developing nations also have a role to play in protecting the
global climate. Per Capita CO2 emissions are small in developing countries and developed
nations have altered the atmosphere the most as shown in the figures 9.2 & 9.3.
The Kyoto Protocol does call on all Parties--developed and developing--to take a number
of steps to formulate national and regional programs to improve "local emission factors,"
activity data, models, and national inventories of greenhouse gas emissions and sinks that
remove these gases from the atmosphere. All Parties are also committed to formulate,
publish, and update climate change mitigation and adaptation measures, and to cooperate
in promotion and transfer of environmentally sound technologies and in scientific and
technical research on the climate system.
India has ratified the contentious Kyoto Protocol in August 2002. However, the Kyoto
Protocol does not set any binding limits on developing nation emissions, nor does it
establish a mechanism or timetable for these countries to take on such limits voluntarily.
On the other hand, the Protocol does establish a so-called Clean Development
Mechanism, which allows developed countries to invest in projects in developing
countries that reduce greenhouse gas emissions and receive credit for the reductions. The
intent is to help developing nations minimize their emissions even as they develop their
energy sectors and expand their economies.
Indias Greenhouse Gas Emissions
India has experienced a dramatic growth in fossil fuel CO2 emissions, and the data
compiled by various agencies shows an increase of nearly 5.9 % since 1950. At
present India is rated as the 6th largest contributor of CO2 emissions behind China,
the 2nd largest contributor. However, our per capita CO2 of 0.93t per annum is well
below the world average of 3.87t per annum. Fossil fuel emissions in India continue
to result largely from coal burning. India is highly vulnerable to climate change as
its economy is heavily reliant on climate sensitive sectors like agriculture and
forestry. The vast low-lying and densely populated coastline is susceptible to rise in
sea level.
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The energy sector is the largest contributor of carbon dioxide emissions in India. The
national inventory of greenhouse gases under ALGAS (Asia-Least Cost Greenhouse Gas
Abatement Strategy) project (funded by the Asian Development Bank, Global
Environment Facility and United Nations Development Program) indicates that 55% of
the total national emissions come from energy sector. These include emissions from road
transport, burning of traditional bio-mass fuels, coal mining, and fugitive emissions from
oil and natural gas. Agriculture sector constitutes the next major contributor, accounting
for nearly 34%. The emissions under this sector include those from enteric fermentation
in domestic animals, manure management, rice cultivation, and burning of agriculture
residues. Emissions from Industrial sector mainly came from cement production. India is
the fourth largest producer of cement after China, Japan and the United States. The
ALGAS study presents the latest set of projections of greenhouse gas emissions from
India.
Indian Response to Climatic Change
India signed the UNFCCC on 10 June 1992 and ratified it on 1 November 1993. Under
the UNFCCC, developing countries such as India do not have binding GHG mitigation
commitments in recognition of their small contribution to the greenhouse problem as well
as low financial and technical capacities. The Ministry of Environment and Forests is the
nodal agency for climate change issues in India. It has constituted Working Groups on the
UNFCCC and Kyoto Protocol. Work is currently in progress on India's initial National
Communication (NATCOM) to the UNFCCC.
Current initiatives in India to improve understanding of climate change, and comply with
the requirements of the UNFCCC.
9.7 Clean Development Mechanism (CDM)
The Clean Development Mechanism (CDM), provided for under Article 12 of the Kyoto
Protocol, enables developing countries to participate in joint greenhouse gas (GHG)
mitigation projects. Under this Protocol, countries (developed countries and economies in
transition) are required to reduce GHG emissions to below their 1990 levels.
The CDM enables these countries to meet their reduction commitments in a flexible and
cost-effective manner. It allows public or private sector entities to invest in GHG
mitigation projects in developing countries. In return the investing parties receive credits
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or Certified Emission Reductions (CERs), which they can use to meet their targets under
the Kyoto Protocol.
While investors profit from CDM projects by obtaining reductions at costs lower than in
their own countries, the gains to the developing country host parties are in the form of
finance, technology, and sustainable development benefits.
The basic rules for the functioning of the CDM were agreed on at the seventh Conference
of Parties (COP-7) to the UNFCCC held in Marrakesh, Morocco in October-November
2001. Projects starting in the year 2000 are eligible to earn CERs if they lead to "real,
measurable, and long-term" GHG reductions, which are additional to any that would
occur in the absence of the CDM project. This includes afforestation and reforestation
projects, which lead to the sequestration of carbon dioxide.
At COP-7, it was decided that the following types of projects would qualify for fast-track
approval procedures:
Renewable energy projects with output capacity up to 15 MW
Energy efficiency improvement projects which reduce energy consumption on the
supply and/or demand side by up to 15 GWh annually
Other project activities that both reduce emissions by sources and directly emit less
than 15 kilotons CO2 equivalent annually.
The CDM will be supervised by an executive board, and a share of the proceeds from
project activities will be used to assist developing countries in meeting the costs of
adaptation to climate change.
Indian Initiatives on CDM
Government of India has been willing to fulfill its responsibility under the CDM. It has
developed an interim criterion for approval of CDM project activities, which is now
available to stakeholders. It has undertaken various capacity building activities like
holding of workshops, initiation of various studies, and briefing meeting with the
stakeholders. India has been actively participating in the CDM regime and has already
approved projects for further development.
Under CDM, projects such as energy efficient hydrocarbon refrigerators, modernization
of small scale foundry units and renovation, modernization of thermal power stations etc.
are being taken up.
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Case Example
In a power plant rehabilitation and modernization programme by replacing plant
equipment which are prone to wear and tear over a period of time, such as boilers and
auxiliaries, turbine blades, HP governor valves and station auxiliaries which include
material handling equipment, water treatment, pulverisers, ash handling plant, ESP etc
resulted in CO2 emission reduction from 1.20 kg/kWh to 1.11 kg/kWh. The details are
shown in the Table 9.2:
Table 9.2 Efficiency Improvement and Emission Reductionin a Power Plant Modernisation Programme.
Parameters Before theprogramme
After the programme
Gross heat rate(kcal/KWh)
2700 2500
Net efficiency (%) 28 30
Specific coalconsumption
0.77 0.71
Total CO2 emissions(tones/year)
1435336 1329015
CO2 emissions (kg/kWh)
1.20 1.11
9.8 Prototype Carbon Fund (PCF)Recognizing that global warming will have the most impact on its borrowing client
countries, on July 20th, 1999 the Executive Directors of the World Bank approved the
establishment of the Prototype Carbon Fund (PCF). The PCF is intended to invest in
projects that will produce high quality greenhouse gas emission reductions that could be
registered with the United Nations Framework Convention on Climate Change
(UNFCCC) for the purposes of the Kyoto Protocol. To increase the likelihood that the
reductions will be recognized by the Parties to the UNFCCC, independent experts will
follow validation, verification and certification procedures that respond to UNFCCC rules
as they develop.
The PCF will pilot production of emission reductions within the framework of Joint
Implementation (JI) and the Clean Development Mechanism (CDM). The PCF will invest
contributions made by companies and governments in projects designed to produce
emission reductions fully consistent with the Kyoto Protocol and the emerging framework
for JI and the CDM. Contributors, or "Participants" in the PCF, will receive a pro rata
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share of the emission reductions, verified and certified in accordance with agreements
reached with the respective countries "hosting" the projects.
Size of Market for Emissions Reductions
All estimates of market volume are speculative at this early stage in the markets
development.
One way of looking at the potential size of the market is to assume that about one
billion tonnes of carbon emissions must be reduced per year during the
commitment period of 2008-2012 in order for the industrialized countries to meet
their obligations of a 5% reduction in their 1990 levels of emissions.
Under Prototype carbon fund programme of the World Bank. Government of India has
approved a municipal solid waste energy project 'SWERF' in 2001 for implementation by
EDL India Limited in Chennai, which proposes to use the state of art technology for
extracting energy from any solid waste irrespective of the energy content.
9.9 Sustainable Development
The World Commission on Environment and Development (the Brundtland Commission)
defined sustainable development as "development that meets the needs of the present
without compromising the ability of future generations to meet their own needs." In other
words, development is essential to satisfy human needs and improve the quality of human
life. At the same time, development must be based on the efficient and environmentally
responsible use of all of society's scarce resources - natural, human, and economic.
Sustainable development has multiple objectives. In planning for development, there must
be deliberate consideration of how to maintain the quality of the environment, human
well-being, and economic security. The Brundtland Commission, in Our Common Future,
and subsequently Agenda 21 set out recommendations for developed and developingnations regarding sustainable development strategies concerning clean air and water,
water supply, energy, land use, housing, waste treatment, transportation, and health care.
The same advice applies locally. Just as the economic development of a country is linked
to its environment and citizens, a community takes into account this interconnectedness in
planning for the future.
Mainstreaming Climate Change in Sustainable Development
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Addressing climate change mitigation and adaptation involves many stakeholders, cuts
across short and long timeframes, and requires that all development projects be assessed
for their sensitivity to climate concerns. This integration of climate concerns in the
development process
has been mainstreamed in India through high-level multi stake holder committees.
The National Committee to Assess the Impacts of Climate Change is chaired by the
Principal Scientific Advisor to the Prime Minister, and includes meteorologists, climate
modelers, hydrologists, energy economists, as well as representatives of key Ministries.
The Committee is evaluating the impact of climate change on key development activities,
and assessing options to mitigate climate risks.
Climate change is integrated into the national development planning process, and
overseen by the Prime Ministers Council on Climate change, which includes
representation of key Ministries, as well as experts, and representatives of industry and of
media. The Council provides overall strategic guidance on mainstreaming climate change
in development, identifies key intervention priorities, and monitors the implementation of
these interventions.
Chapter 2
Energy Security & Environment
Enabling Access to Clean Energy
Poverty reduction and economic growth are the prime objectives of national policy.
Energy is the sine qua non of development. India, with over a billion people, today only
produces 660 billion KWh of electricity and over 600 million Indians, a population equal
to the combined population of USA and EU, have no access to electricity, and limited
access to other clean, modern fuels such as LPG and kerosene. Per capita consumption of
Energy in India is less than 500 kgoe, compared to global average of over 1800 kgoe.
This constrained energy access is reflected, as shown in Figure 1, in the relatively low
Human Development Index of India. Enhancing energy supply and access is therefore a
key component of the national development strategy.
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Fig.1: Energy consumption is a prime driver of the Human Development Index
India faces formidable challenges in meeting its energy needs and providing adequate
energy of desired quality in various forms to users in a sustainable manner and at
reasonable costs. India needs to sustain a 8% to 10% economic growth to eradicate
poverty and meet its economic & human development goals. Such economic growth
would call for increased demand for energy and ensuring access to clean, convenient and
reliable energy for all to address human evelopment. To deliver a sustained growth of 8%
through 2031, India would, in the very least, need to grow its primary energy supply by 3
to 4 times and electricity supply by 5 to 7 times of today's consumption. Along with
quantity the quality of energy supply has to also improve. The energy challenge is of
fundamental importance to India's economic growth imperatives.
1.14 Energy Strategy for the Future
The energy strategy for the future could be classified into immediate, medium- and long-
term strategy. The various components of these strategies are listed below:
Immediate-term strategy:
Rationalizing the tariff structure of various energy products.
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Optimum utilization of existing assets
Efficiency in production systems and reduction in distribution losses, includingthose in traditional energy sources.
Promoting R&D, transfer and use of technologies and practices for environmentallysound energy systems, including new and renewable energy sources.
Medium-term strategy:
Demand management through greater conservation of energy, optimum fuel mix,structural changes in the economy, an appropriate modal mix in the transportsector, i.e. greater dependence on rail than on road for the movement of goods and
passengers and a shift away from private modes to public modes for passengertransport; changes in design of different products to reduce the material intensity
of those products, recycling, etc.
There is need to shift to less energy-intensive modes of transport. This wouldinclude measures to improve the transport infrastructure viz. roads, better designof vehicles, use of compressed natural gas (CNG) and synthetic fuel, etc.Similarly, better urban planning would also reduce the demand for energy use inthe transport sector.
There is need to move away from non-renewable to renewable energy sources viz.solar, wind, biomass energy, etc.
Long-term strategy:
Efficient generation of energy resources
Efficient production of coal, oil and natural gas
Reduction of natural gas flaring
Improving energy infrastructure
Building new refineries
Creation of urban gas transmission and distribution network
Maximizing efficiency of rail transport of coal production.
Building new coal and gas fired power stations.
Enhancing energy efficiency
Improving energy efficiency in accordance with national, socio-economic, and environmental priorities
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Promoting of energy efficiency and emission standards
Labeling programmes for products and adoption of energy efficienttechnologies in large industries
Deregulation and privatization of energy sector
Reducing cross subsidies on oil products and electricity tariffs
Decontrolling coal prices and making natural gas pricescompetitive
Privatization of oil, coal and power sectors for improvedefficiency.
Investment legislation to attract foreign investments.
Streamlining approval process for attracting private sector participation inpower generation, transmission and distribution .
1.3 APPROACH TO SELECTION OF PROJECTS FOR 11TH PLAN
Keeping in view the lessons learnt from 10th plan while planning for capacity addition
during 11th Plan, cautious approach have been adopted while choosing
projects for commissioning in the 11th plan. It has been the endeavour to include
only such projects as have high degree of certainty of implementation during 11th
Plan.
The approach adopted for selection of Hydro, Thermal and Nuclear projects have
been as follows:
1.3.1 Hydro
India is duly concerned about climate change and efforts are on to promote
benign sources of energy. Hydro Power is one such source and is to be accorded priority
also from the consideration of energy security. Irrespective of size and nature of hydro
projects, whether ROR or Storage projects, these are all renewable technologies.
However, execution of hydro projects requires thorough Survey and Investigation,
preparation of DPR, development of infrastructure, EIA and other preparatory works,
which are time consuming and require two to three years for their preparation. It would
take about 5 years to execute a hydro project after the work is awarded for construction.Thus in order to achieve completion of a hydro project during 11th plan, the project
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should either be already under construction or execution should start at the beginning of
the plan. The broad criteria adopted for selection of hydro projects for 11th plan are as
under:
Those hydro projects whose concurrence has been issued by CEA and
order for main civil works is likely to be placed by March 2007.
Apart from the above, a few hydro projects of smaller capacity which are
ROR type having surface power houses and where gestation period is
expected to be less than 5 years have also been included. These projects
would need to be rigorously followed up for completion during the 11th
Plan.
Keeping in view the preparedness of various hydro projects, a capacity addition
of 15, 585 MW is envisaged for 11th Plan.
1.3.2 Nuclear
Nuclear is environmentally benign source of energy and over a period of time, its
proportion in total capacity should increase. Keeping in view the availability of fuel, a
moderate capacity addition of 3,160 MW nuclear plants has been programmed during the
11th Plan by the Nuclear Power Corporation. All projects are presently under
construction. However, in view of the recent developments in the Nuclear Sector,
capacity addition in nuclear plants during 12th Plan is expected to be much higher.
1.3.3 Thermal
Gas
Although gas is relatively a clean fuel, at present there is uncertainty about
the availability, period of availability and price of gas. Only 2,114 MW gas
based capacity has been planned for 11th Plan where gas supply has already
been tied up. This does not include NTPCs gas based projects at Kawas and
Gandhar, totalling to 2,600 MW, for which NTPC says that it has the gas
supply contract but the matter is sub-judice. However more gas based
projects could be taken up for construction as and when there is more clarity
about availability and price of gas.
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Coal & Lignite based Thermal plants
Coal is expected to be main stay of power generation in the years to come.
The following criteria have been adopted for identifying the coal and lignite
based projects for inclusion in the 11th plan.
Such projects as have already been taken up for execution in the 10th Plan period itself
and are due for commissioning in the 11th Plan period.
Those thermal projects whose LOA has already been placed by the State and Central
Public Sector Corporations, other inputs also being in place.
Those thermal projects whose LOA has already been placed and the financial closure
achieved by private developers. Those thermal projects whose LOA is expected to be placed by 30th Sept, 2008 and
commissioning is expected during the 11th Plan keeping in view the normal gestation
period, the size of the plant & the type(green field/expansion).
After discussion with the various State Government and Central Generating
Companies, thermal projects with total capacity of 46,635 MW of coal based and
1375 MW lignite based capacity have been identified for capacity addition during
11th plan.
1.4 CAPACITY ADDITION DURING 11TH PLAN (2007-12)
Based on the preparedness of the projects, it was envisaged that a capacity of
about 68,869 MW is feasible for addition during 11th plan period. The sector wise
break-up of feasible capacity addition during 11th plan is given in Table below:
SECTOR HYDRO TOTALTHERMAL THERMAL BREAK UP NUCLEAR TOTALPERCENTAGECOAL LIGNITE GAS/LNG
CENTRAL 9685 23810 22060 1000 750 3160 36655 (53.2%)
STATE 2637 20352 19365 375 612 - 22989 (33.4 %)
PRIVATE 3263 5962 5210 0 752 - 9225 (13.4%)
ALL-INDIA
15585 50124 46635 1375 2114 3160 68869 (100%)
Further, a capacity of 13,500 MW has been planned under renewable as per
information given by MNRE.
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As can be seen from the above profile of capacity addition plan, central sector
will play a lead role with capacity addition of more than half of the capacity
addition target. There has been a good response from states on the need for
1.5 FUEL REQUIREMENT
The requirement of various fuels for the thermal plants during the terminal year of
the 11th Plan (2011-12) at normative generation parameters (PLFs and specific
fuel consumption is summarised in the table below. This is based on a thermal
capacity addition of 20,387MW and 50,124MW during the 10th and 11th Plan
respectively.
Fuel Requirement (Tentative) during 2011-12
FUEL F
* From domestic sources, total coal availability is expected to be 482 MT per
annum by 2011-12. Accordingly, imported coal of the order of 40MT,
equivalent to 63 MT of Indian coal, may have to be organised. This quantity
may reduce provided production of domestic coal is increased.
** 89 MMSCMD of gas requirement at 90% PLF has been projected in 2011-
12. At present, the availability of gas is of the order of 40 MMSCMD and
therefore not sufficient to meet the requirement of even existing plants
1.6 INITIATIVES DURING 11TH PLAN
1.6.1 High Hydro Development
50,000 MW Hydro Initiative was launched in 2003 and Preliminary Feasibility
Report (PFRS) of 162 projects totalling to 48,000 MW were prepared. Out of this
77 projects with total capacity of about 37000 MW for which first year tariff is
expected to be less than Rs.2.50/unit were selected for execution. Hydro projects have
longer gestation period and therefore there is a need to formulate a 10 year plan for hydroprojects. In 11th plan a capacity addition of over 15,500 MW has been targeted keeping
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in view the present preparedness of these projects. Projects totalling to a capacity of
30,000 MW have been identified for 12th Plan on which necessary preparations have to
be made from now onwards to ensure their commissioning during 12th Plan. Thus the
effect of 50,000 MW initiative would be visible in 12th Plan period. Preparation of DPR
and various clearances and approval etc for these projects are to be obtained during the
first two years of 11th Plan. It is recommended that CEA should closely monitor the
progress of preparedness of DPR of these projects and their further execution.
1.6.2 Initiatives in Thermal Power Development:
Efforts were made to bring in highly efficient super critical technology in the country for
thermal power plants and execution of six super critical units of 660 MW capacity each
was taken up during the 10th Plan period. The first unit of 660 MW based on super
critical technology is likely to be commissioned during the first year of 11th Plan i.e.
2007-08. The 11th Plan feasible capacity addition of
coal based plants includes 12 units based on super critical technology with a
capacity of 8060 MW which is about 18% of total coal capacity planned for 11th
Plan. More and more power projects based on super critical technology are
under planning stage and they would yield benefit during the 12th Plan period.
It is envisaged that more than 50-60% of capacity addition of thermal plants
during 12th plan period would be based on super critical units. This would also
help in reducing the Carbon dioxide emission from new coal fired capacity.
1.6.3 Ultra Mega Power Projects (UMPP):
Ministry of Power in the year 2006 has launched an initiative of development of
coal based ultra mega projects with a capacity of 4,000 MW each on tariff based
competitive bidding. Ultra Mega Power projects are either pit head based projects having
captive mine block or coastal projects based on imported coal.
Sasan UMPP, a pithead plant in Chattisgarh based on domestic fuel and Mundra
UMPP in Gujrat based on imported coal have already been awarded for execution to the
respective developers. According to the bids submitted by these developers only one unit
of 660 MW is expected to be commissioned during the
11th Plan and the remaining unit during 12th Plan. Other projects where considerable
progress has been made are coastal projects in Andhra Pradesh and Tamil Nadu and a pit
head based project in Jharkhand. Further the projects under consideration include pit head
projects in Orissa and Chatisgarh and coastal projects in Maharashtra and Karnataka.
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1.6.4 Nuclear Power Development:
11th Plan power programme includes 3160 MW of nuclear power plants all of which are
under construction. Recently, agreement has been signed with USA in respect of nuclear
co-operation which is expected to improve the supply of nuclear fuel for nuclear power
plants. It is also expected that execution of
nuclear projects will also be opened up to enable participation by other PSUs and
private sector. The effect of this is likely to be visible in 12th Plan period. Nuclear
Power Corporation of India has indicated a capacity addition of about 11,000 MW
during 12th plan. In addition, NTPC have also expressed their intention to enter
into the nuclear power arena and have proposed an addition of 2,000 MW during
12th plan period.
1.6.5 Merchant Power Plants:
A merchant power plant does not have long term PPA for sale of its power and is
generally developed on the balance sheet of developers. Government of India has
reserved coal block with reserves of 3.2 Billion Tons of coal for allotment by Screening
Committee of Ministry of coal for merchant and captive plants. About
10,000 MW capacity is expected to be developed through this initiative. This capacity has
not been taken into account while working out the capacity required in the 9.5% growth
in generation scenario. Capacity addition through this route would further contribute to
better economic growth, better reliability of power, more spinning reserve and above all
would promote creation of competition in the electricity market.
1.10 NEW AND RENEWABLE ENERGY SOURCES
The Ministry of New and Renewable Energy Sources (MNRE) have chalked out plan of
adding 13,500 MW of renewable power in the country during 11th Plan period. This
would make total installed capacity of these plants at 23,500 MW by the year 2011-12
which is detailed as below:
Wind - 17000 MW
Bio Mass - 3200 MW
Small Hydro- 3300 MW
Although installed capacity of the plants is high but on an average plant load factor of
wind turbine plants is only of the order of 15-20% and as such this capacity can generate
about 41 billion units at the maximum.
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2.1 INTEGRATED ENERGY POLICY
There are no projections world-wide that show a lowering of dependence on fossil fuels
by 2031-32. Oil and gas are forecast to remain in a tight demand-supply balance and the
likelihood is that most new oil and gas will come from a politically uncertain middle-east.
Such a global backdrop as resulted in high price volatility for oil & gas. Further, energy
security concerns are driving key consumers such as the US, China and Japan (that
together account for some 40% of the world's primary energy consumption) to seek coal -
the world's most abundant fossil fuel. This has also led to a push world-wide for clean
coal technologies, carbon sequestration coal to liquids and the zero emission initiative.
Coal shall remain India's most important energy source till 2031-32 and possibly beyond.
India will need to take a lead in seeking clean coal technologies and, given its growing
demand, new coal extraction technologies such as in-situ gasification to tap its vast coal
reserves that are difficult to extract economically using conventional technologies.
The broad vision behind the energy policy is to reliably meet the demand for energy
services of all sectors including the lifeline energy needs of vulnerable households, in all
parts of the country, with safe and convenient energy at the least cost in a technically
efficient, economically viable and sustainable manner.
Meeting this vision would require that India pursues all available fuel options and forms
of energy, both conventional and non-conventional, as well as new and emerging
technologies and energy sources.
Some key recommendations by the Committee on Draft Integrated Energy Policy are
summarised below:
(i) Coal Shall Remain India's Primary Energy Source till 2031-32, Current shortages are a
oncern. Coal accounts for over 50% of India's commercial energy consumption and some
78% of domestic coal production is dedicated to power generation.
(ii) Natural Gas needs significant investments in pipelines or, alternatively, in
liquification, cryogenic shipping & regasification. Should a scenario wherein gas
becomes 15%-20% of India's energy mix materialise by 2031-32; some 60% to 80% of
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the gas supply would be used for power generation. This would mean that beyond the
level of gas consumption in the fertiliser, petrochemical, automotive and domestic sectors
gas must compete with coal, the key alternative for power generation.
(iii) Power Sector Reforms must focus on control over Aggregate Technical and
Commercial (AT&C) losses of state power utilities. To control AT&C losses the
Committee recommends that the existing Accelerated Power Development and Reform
Programme (APDRP) be restructured to ensure energy flow auditing at the distribution
transformer level through automated meter reading, geographical information system
(GIS) mapping of the network and consumers and separation of feeders for agricultural
pumps. This will fix accountability and provide a baseline which is an essential
prerequisite to privatisation.
The Committee feels that it is essential to separate the cost of the pure wires business
(carriage) from the energy business (content) in both transmission & distribution.
Electricity Act 2003 recognises such separation for the transmission
(iv) Reduce Cost of Power: In terms of purchasing power parity, power tariffs in India for
industry, commerce & large households are among the highest in the world.
(v) Rationalise Fuel Prices: Relative prices play the most important role in choice of fuel
and energy form. They are thus the most vital aspect of Integrated Energy Policy that
promotes efficient fuel choices and facilitates appropriate substitution. In a competitive
set up, the marginal use value of different fuels, which are substitutes, is equal at a given
place and time and the prices of different fuels at different places do not differ by more
than the cost of transporting the fuels. Then the resulting inter-fuel choices would be
economically efficient.
(vi) Central and State taxes on commercial energy supplies need to be rationalized to
yield optimal fuel choices and investment decisions. Relative prices of fuels can be
distorted if taxes and subsidies are not equivalent across fuels. The equivalence should be
in term of effective calorie. In other words they should be such that producer and
consumer choices as to which fuel and which technology to use are not affected by the
taxes and subsidies.
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Environmental taxes and subsidies, however, are levied to affect choices. Differential
taxes can be justified here if they appropriately reflect environmental externalities. A
consistent application of polluter pays principle or consumer pays principle should be
made to attain environmental objectives at least cost.
(vii) Energy Efficiency and Demand Side Management: Lowering energy intensity of
GDP growth through higher energy efficiency is key to meeting India's energy challenge
& ensuring its energy security.
Over the past decade, gains in both poverty reduction and economic growth have been
significant, and supported by energy growth, which has been significantly lower than the
economic growth. This reduced energy intensity of the economy, in the period since
2004, has been marked by an economic growth rate of over 9% per annum, which has
been achieved with an energy growth of less than 4% per annum.
These policies have been driven by the imperatives of sustainable development, and have,
as a co-benefit, led to a decline in the intensity of energy use and carbon dioxideemissions as well.
Figure 2(a) illustrates the declining trend in energy use and CO2 emissions intensities,
and Figure 2 (b) highlights that the energy intensity of the Indian economy compares
favourably with those of other major economies.
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Fig. 2(a): Emissions and Energy Intensity Trends in India
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Fig. 2(b): Total Primary Energy Intensities of the Major Economies
Thus, clearly there is room to improve and energy intensity can be brought down
significantly in India with current commercially available technologies. India would need
to and must succeed in achieving much lower energy intensity compared to its current
level. Lowering energy intensity through higher efficiency is like creating a virtual source
of untapped domestic energy. It may be noted that a unit of energy saved by a user is
greater than a unit produced, as it saves on production losses, as well as transport,
transmission and distribution losses. Thus a "Megawatt", produced by reducing energy
need saves more than a Megawatt generated. The Committee feels that upto 25 percent
reduction in India's energy intensity is possible overn current levels.
Efficiency can be increased in energy extraction, energy conversion, energy
transportation, as well as in energy consumption. Further, the same level of service can be
provided by alternate means requiring less energy. The major areas where efficiency in
energy use can make a substantial impact are mining, electricity generation, electricity
transmission, electricity istribution, pumping water, industrial production processes,
haulage, mass transport, building design, construction, heating ventilation & air
conditioning, lighting and household appliances.
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Enhancing Sustainable Development and Mitigating Climate Change
This reduced energy intensity, at the relatively low level of Indias per-capita GDP, has
been made possible by a range of factors, including Indias historically sustainable
patterns of consumption, enhanced competitiveness, proactive policies to promote energy
efficiency, and more recently, the use of the Clean Development Mechanism to accelerate
the adoption of clean energy technologies.
(a) Patterns of Consumption
Food habits and recycling processes have mitigated growth in energy demand and GHG
emissions. The specific GHG emissions from food production and processing are much
lower in India than in developed countries, as seen in Figure 3.
Fig. 3: CO2 Emissions from the Food Sector from field (Production) toTable (processed food), excluding cooking
The high ratio of recycling in India, compared to that of other major economies in Figure
4, has also limited the growth in energy use, and GHG emissions, because of the lower
demand for virgin material such as steel, aluminum and copper.
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Fig. 4: Recycling Ratios in Major Economies
(b) Increased Industrial Energy Efficiency
Over the past decade, energy efficiency in Indian industry has increased steadily. In the
major energy-consuming industrial sectors, such as cement, steel, aluminum, fertilizers,
etc., average specific energy consumption has been declining because of energy
conservation in
existing units, and (much more) due to new capacity addition with state-of-the-art
technology. For example, as shown in Figures 5(a) and (b), the specific energy
consumption of Indian cement plants and of Indian iron & steel plants has been declining
rapidly. In the cement
sector, the specific energy consumption of the mostefficient plants is now comparable to
that of the most efficient plants in the world.
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Figure 5(a): Trends in thermal specific energy consumption in the Indiancement sector
Figure 5(b): Trends in specific energy consumption in the Indian iron &steel sector
(c) Policies to Promote Energy Efficiency and Renewable Energy
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(i) Electricity from Renewables:
The Electricity Act, 2003, requires State Electricity Regulatory Commissions to specify a
percentage of electricity that the electricity
distribution companies must procure from renewable sources. Several Commissions have
already operationalized this mandate, and also notified preferential prices for electricity
from renewables. This has contributed to an acceleration in renewable-electricity capacity
addition, and over the past three years, about 2,000 MW of renewable-electricity capacity
has been added in India every year, bringing the total installed
renewable capacity to over 11,000 MW. Of this, a little over 7,000 MW is based on wind
power; India now has the fourth largest installed wind capacity in the world. The National
Hydro Energy Policy has resulted in the accelerated addition of hydropower in India,
which is now over 35,000 MW.
(ii) Enhancing Efficiency of Power Plants:
Coal is the mainstay of Indias energy economy, and coal-based power plants account for
about two-thirds of the total electric generation installed capacity of about 135,000 MW.
In addition, the Electricity Regulatory Commissions are also linking tariffs to efficiency
enhancement, thus providing an incentive for renovation and modernization. New plants
are being encouraged to adopt more efficient and clean coal technologies, and four new
plants under construction have adopted the more-efficient supercritical technology for
power generation.
(iii) Introduction of Labeling Program for Appliances:
An energy-labeling program for appliances was launched in 2006, and comparative star-
based labeling has been introduced for fluorescent
Tube lights, air conditioners, and distribution transformers. The labels provide
information about the energy consumption of an appliance, and thus enable consumers to
make informed decisions. The labeling program now covers about two-thirds of the
refrigerators and air conditioners and almost all fluorescent tube lights sold in India.
(iv) Energy Conservation Building Code:
An Energy Conservation Building Code (ECBC) was launched in May, 2007, which
addresses the design of new, large commercial buildings to optimize the buildings
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energy demand. Commercial buildings are one of the fastest growing sectors of the Indian
economy, reflecting the increasing share of the services sector in the economy. Nearly
one hundred buildings are already following the Code, and compliance with it has also
been incorporated into the Environmental Impact Assessment requirements for large
buildings.
(d) Accelerated Introduction of Clean Energy Technologies through the CDM
The CDM National Designated Authority has approved over 700 CDM projects, and
about 300 of these have been registered by the CDM Executive Board. The registered
projects have already resulted in over 27 million tones of certified CO2 emissions
reductions, and directed investment in renewable energy and energy projects by reducing
the perceived risks and uncertainties of these new technologies, thereby accelerating their
adoption.
As the Indian economy opens up to international competition, it would become more
energy efficient. This is well demonstrated by India's steel & cement industry. However,
following policies are recommended, some of which can be implemented through
voluntary targets undertaken by industry associations as opposed to external inspection
and enforcement.
(a) Increase coal use efficiency in power generation from the current average of 30.5
percent to 39 percent for all new plants.
(b) Promote urban mass transport, freight movement by railways, and energy efficient
vehicles. Enforce minimum fuel efficiency, standards for all vehicles.
(c) Force the pace of energy efficiency improvement in energy using appliances and
equipment and fiscal incentive to the firm which commercialises equipment that exceeds
energy efficiency target. Enforce labelling with major financial repercussions if
equipment fails to deliver stated efficiencies. In extreme cases resort to black listing of
errant suppliers at consumer information web sites and for government procurement.
(d) Promote minimum life cycle cost purchases instead of minimum initial cost
procurement.
(e) Require industry with a turnover in excess of say 50 crores to employ at least one
certified internal energy auditor reporting directly to the board/owner like the current
internal auditor. For smaller industries achieve the same by clubbing a group of them
together or requiring each industrial estate to provide such services collectively for a fee.
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Annual audits must include energy audits for all specified energy intensive industries and
industries with a turnover exceeding say Rs.100 crores.
(f) Establish benchmarks of energy consumption for all energy intensive sectors.
(g) Disseminate information, support training and reward best practices with national
level honours in energy efficiency & energy conservation.
(h) Institute specialisations in energy efficiency / energy conservation and environment in
all technical colleges and commence certification of such experts.
(i) Augmenting Resources: India's energy resources can be augmented till 2031-32 by
exploration to find more of coal, oil and gas, or by recovering a higher percentage of the
in-place reserves. Developing the thorium cycle for nuclear power and exploiting non-
conventional energy, especially solar, offer possibilities for India's energy independence
beyond 2050.
At a growth rate of 5% in domestic production, currently extractable coal resources will
be exhausted in about 40 years. However, only about 45% of the potential coal bearing
area has currently been covered by regional surveys. Further, it is felt that both regional
as well as detailed drilling can be made more comprehensive. Covering all coal bearing
areas with
comprehensive regional & detailed drilling could make a significant difference to the
estimated life of India's coal reserves. Finally, India's extractable coal resources can be
augmented through in-situ coal gasification which permits using coal deposits which are
at greater depth or not easily extracted by conventional methods. Similarly extracting coal
bed methane before and during mining can augment the country's energy resources.
Again, enhanced oil recovery and incremental oil recovery technologies can improve the
proportion of in-place reserves that can be economically recovered from
abandoned/depleted fields. Finally, isolated deposits of all hydro carbons including coal
may be tapped economically through sub leases to the private sector.
(j) Role of Hydro and Nuclear: It is seen that even if India succeeds in exploiting its full
hydro potential of 150,000 MW, the contribution of hydro to the energy mix would be
around 5-6%. Similarly, even if a 20-fold increase takes place in India's nuclear power
capacity by 2031-32, the contribution of nuclear energy to India's energy mix is also, at
best, expected to be 5-6%.
Though its contribution to energy requirement is small, hydro electricity's flexibility and
suitability as a peaking power make it valuable. Moreover, hydro development especially
storage schemes are critical for India as India's per capita water storage is the lowest
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among all its comparators. Creating such storages is critical to India's water security,
flood control and drought control.
Nuclear, on the other hand, theoretically offers India the most potent means to long-term
energy security. India has to succeed in realising the three-stage development process
described in the main report and thereby tap its vast thorium resource to become truly
energy independent beyond 2050. Continuing support to the three-stage development of
India's nuclear potential is considered essential.
(k) Role of Renewables: Renewables are unlikely to make a major impact on India's
energy mix till 2031-32. Even with a 20-fold increase in capacity, renewables cannot
account for more than 5-7% of India's energy mix. However, from a longer-term
perspective and the need to maximally develop domestic supply options as well as the
need to diversify energy sources, renewables remain important to India's energy sector. It
would not be out of place to mention that
solar power could be an important player in India attaining energy independence beyond
2050.
Subsidy for renewables may be justified on several grounds. A renewable energy source
may be environmentally benign. It may be locally available making it possible to supply
energy earlier than a centralized system. Grid connected renewables could provide system
benefits by generating energy at the lagging ends of the grid. Further, renewables may
provide employment and livelihood to the poor. However, the subsidies should be given
for a well-defined period or upto a well-defined limit and should be linked to outcomes
(energy generated), and not just outlays (capacity installed).
Power Regulators must create alternative incentive structures such as mandated feed-in-
laws or differential tariffs to encourage utilities to integrate wind, small hydro,
cogeneration etc. into their systems. A subsidy could also be given in the form of a
Tradable Tax Rebate Certificates (TTRC) based on energy generated. The rebate claim
becomes payable depending upon the amount of electricity/energy actually certified as
having been supplied.
An annual renewable energy report should be published providing details of actual
performance of different renewable technologies at the state and national level. This
would include actual energy supplied from different renewable options, availability,
actual costs, operating and maintenance problems etc. It should also report on social
benefits, employment created, women participation and empowerment.
Policies for promoting many specific alternatives are suggested in the main text. These
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include fuel wood plantations, bio-gas plants, wood gasifier based power plants, solar
thermal, solar water heaters, solar photovoltaics, bio-diesel and ethanol.
2.2 DEMAND SIDE MANAGEMENT AND ENERGY EFFICIENCY
4.0 INTRODUCTION
In rapidly growing economy of India, the energy requirements have been increasing
at a very fast pace. Indian economy has been gradually reforming itself with the
developments taking place in the dynamic global energy scenario as well as with the
advancements in technologies worldwide. The Government of India at the highest
level is giving top priority to the attainment of nations long-term energy security.
India ranks 5th in the world in terms of primary energy consumption, accounting for
about 3.5% of the world commercial energy demand in the year 2003. The total
commercial energy consumption of various sectors stood at 218 million toe (2003-
04). If it perseveres with sustained economic growth, achieving 8-10% of GDP growth
per annum through 2030, its primary energy supply, at a conservative estimate, will need
to grow 3 to 4 times and electricity supply by 5 to 7 times of present consumption. Its
power generation would increase to 780,000 MW from a current level of about
120,000 MW and annual coal demand would be in excess of 2000 million tons from a
current level of 350 million tons. This extraordinary growth in energy demand will
place great stress on the financial, managerial and physical resources of the country.
For meeting desired growth rate of the economy, the country faces formidable
challenges in meeting its energy needs and in providing adequate energy in various
forms to users in a sustainable manner and at reasonable costs. While it is essential
to add new power generation capacity as well as ensure availability of substantial
commercial fuels to meet the nations growing energy requirements, it is equally
important to look out for options that help in reducing energy demand by various end use
sectors. The need for enhancing energy conservation efforts has become very
important.
4.1 THE ENERGY CONSERVATION ACT
The planning process so far has been leaning heavily towards the supply side
strategies. Efforts made to implement DSM, energy conservation and energy
efficiency measures were symbolic, lacked continuity due to absence of a well knit
institutional mechanism at the national and state levels. The 10thplan period (2002-
07) is marked by enactment of the Energy Conservation Act, 2001 and setting up of
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the Bureau of Energy Efficiency (BEE) at the national level. The Act has given
mandate to BEE to implement the provisions of the Act, and spearhead the
improvement in energy efficiency of the economy through various regulatory and
promotional measures. Some key activities that BEE is pursuing include the
development of energy efficiency labels for refrigerators and other mass produced
equipment, certification of energy managers and auditors, assisting industry in the
benchmarking of their energy use, and energy audits of prominent government
buildings. A beginning has been made by the State Governments in designating
agencies to oversee implementation of the Energy Conservation Act and deliver
energy efficiency services including through public-private partnership.
Integrated Energy Policy (IEP) laid out a vision of providing energy security to all
citizens. IEP emphasizes energy efficiency & demand side management as essential
components of the natural energy strategy.
4.3 ENERGY CONSERVATION STRATEGY IN THE 11TH FIVE-YEAR PLAN
The basic aim of the energy conservation strategy in the 11th Five Year Plan will be to
prioritize and implement the provisions under the EC Act 2001 by decentralizing the
energy conservation programmes at the State level. The strategy will strengthen the
existing institutional linkages, and pursue the task of consolidating the energy
conservation information, trends and achievements and create a market for energy
conservation and for energy efficient goods and services.
Keeping in view the provisions of the Act, an appropriate institutional mechanism and
energy database will be developed in the 11th Plan by BEE. As a part of the mechanism,
a fully dedicated Energy Conservation Information Centre (ECIC) with Information
Technology facilities will be set up within BEE and Central Energy Conservation Fund as
mandated under EC Act will be established by the Government of India. Collection of
such information is a mammoth task and requires systematic handling and coordination of
efforts of various agencies.
4.3.3 Institutional Network
BEE will strengthen its existing institutional linkages with SDAs, and formalize its
association with various other national level institutions such as PCRA, NPC, TERI,
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CEA, energy centres in academic institutes/universities, etc. with a view to utilize their
expertise and knowledge in the field of energy conservation. In its institutional network,
BEE will also include a number of sector specific associations and research institutions,
and private organizations in various states, and will delegate specific tasks to facilitate the
implementation of energy conservation programmes.
4.3.4 Energy Conservation Programmes in the Targeted Sectors
In the 11th Five Year Plan, BEE will focus energy conservation programmes in the
following targeted sectors:
(a) Industrial Sector (Energy Intensive Industries).
Industry sector offers maximum potential for energy conservation. The Government
of India has recognized this when a number of energy intensive industries have been
included as designated consumers in the EC Act. To bridge the efficiency gaps in the
various units within the same industrial sub sector, BEE in association with SDAs,
industry associations and research institutions, will develop 15 industry specific
energy efficiency manuals/guides for the following sectors: Aluminum, Fertilizers, Iron
&Steel, Cement, Pulp & Paper, Chlor Alkali, sugar, textile, chemicals, Railways, Port
trust, Transport Sector ( industries and services), Petrochemical &Petroleum
Refineries, Thermal Power Stations &hydel power stations , electricity transmission
companies & distribution companies. The manuals will cover Specific energy
consumption norms as required to be established under the EC Act, energy efficient
process and technologies, best practices, case studies etc. Follow up activities will be
undertaken in the States by SDAs. and manuals will be disseminated to all the concerned
units in the industries.
(b) Small and Medium Enterprises (SMEs)
Many of the energy intensive SMEs clusters located in various states of the country are
said to have large potential for energy savings. In quantitative terms, there is very little
authentic information and data is available with re