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A sensible policy framework for energy conservation is urgently needed in India

According to reports, India’s per capita energy consumption is extremely low. In spite of that, petroleum, oil and lubricants (POL) represent the largest import bill for India. India thus knows that a surging oil import bill is inevitable. However, there are ways to ensure that the rate of this bill can be controlled if one only takes energy conservation more seriously than is being done today. How serious is the problem? And what could be done to improve the conservation of energy? To discuss this, DNA got together a panel of experts to get their views. The panel comprises (in alphabetical order) Anil Kumar Jain, Executive Director, Chief – Engineering Services, ONGC; Dr. Anjali Parasnis, Associate Director, TERI and K. Radhakrishnan, Deputy General Manager (I&C), HPCL. Moderated by DNA’s R.N.Bhaskar with editorial support from Surbhi Shah, the discussion dwelt of several key issues. Given below are edited excerpts:

DNA: How do you look at the field of energy conservation especially when it comes to hydrocarbons and the environment?

Parasnis: When I look at energy, I think of only two very important things. One is fuel, and the other is coal-based electricity. In the fuel sector, we check trends and do some analysis. I see some very interesting trends in India. While the subsidy [per vehicle] has reduced by more than 15%, the number of vehicles has increased around five-fold. In the city of Chennai it has grown the most. Mumbai ranks fourth.

So while petrol prices keep going up, subsidy is being lowered, the number of vehicles keeps increasing. It shows that people can afford to pay for the fuel and the vehicles. Moreover there are also people who can afford to travel by AC [airconditioned] buses. So if we increase the tariff for public transport, but make is more comfortable, more people could opt for it [thus reducing the demand for cars and hence fuel].

DNA: So more people could opt for mass rapid transport systems if they were made more convenient and comfortable.

Parasnis: Yes. It should be made more comfortable. Like AC buses. Maybe the tariff could be three times more than the normal fare. But there are people who can afford it. So my point is that – in India – even though we say that it is a developing economy, and poor, the data show that many people can afford better modes of transport [which also save the nation fues costs]. We need better mass rapid transport systems.

DNA: Absolutely.

Radhakrishnan: Look at the larger context of energy. Energy demand in India has been going up and it has to go up because we are growing. We have been growing at a decent rate as compared to other developing or developed countries. So when your GDP is doing well, obviously you’ll need more energy to sustain that growth. That is one part.

The other part, interestingly, is that the per capita consumption of energy continues to be low as compared to developed countries. So we have a paradoxical situation. But the aspirations of the public to consume more and more to improve the standards of living cannot be ignored. It cannot be denied. Yet, as a country which has a large population and must import huge quantities of energy inputs, the strain on our foreign exchange also cannot be overlooked. It is in this context that energy conservation has to be emphasized.

DNA: True. Consumption of fuel has direct link to standard of living.

Radhakrishnan: And this will require other sets of policy measures to be brought in.

Jain: There are two aspects to this debate. One is conservation; the second is consumption, right? What has happened with us is that we were late in developing as a country compared to other developed countries. So when we began developing we thought we could be to consume as much energy as we could afford, right?

Gradually, the need to conserve energy began being talked about. However, we still remain one of the lowest energy consuming nations on a per capita basis, and yet when we talk of energy conservation we assume that we are in the maximum energy consumption stage. We believe that, if you conserve energy, even if you consume less electricity, the country will import less, and that you’ll be better off. That’s one dimension to the situation. The second dimension is that fossil fuels are limited and you have to start working on alternate energy sources.

Then there is a third dimension, that when we consider the Indian perspective, we need to ask: what is happening to us. We are talking in terms of policy. For instance, there is a a paper, there is a policy statement, that fuels would be taken completely out of APM [administered pricing mechanism] in 2005, ‘06. Had that happened, it would have been a good thing. But as the economic conditions changed, we went back on these promises and what we did was a ‘dieselisation’ of the economy.

That also explains why the voices asking for energy conservation have increased. Yet, considering the kind of population we have, our energy consumption will have to go up. We will have to consume more energy. And if the country has to consume more energy Hence we need to put energy conservation on a policy paper implementation plan. It must be viewed in a larger perspective; it has multiple dimensions – both for India and the world.

DNA: True. You have energy used in the form of oil – diesel, petrol, kerosene, or even gas. And you have coal, which is largely used by power plants and steel industries. There could be tremendous challenges and opportunities in both areas when it comes to energy conservation. Any views?

Parasnis: Yeah. As you rightly pointed out there are opportunities and challenges both and now that since we’re growing and our aspirations are increasing, and demand is also increasing. But unfortunately there is a cap to it. Because everything is imported. As it is, we are very fragile, susceptible to any changes that could happen in the global economy or the global scenarios.. We are exposing ourselves to that kind of a vulnerability which is a global vulnerability.

And because of which we at TERI promote sustainable development. It’s not only renewables, it could be also “we can use this fuel, but we have to do it in a sustainable manner”. This way, our growth pattern and whatever resources we have at our disposal can keep pace with each other.

And we should be independent, rather than dependent on some foreign country for oil and coal. So our first objective has to be that we have to maintain our pace. But at the same time we have to remain independent.

DNA: Where do the opportunities lie?

Parasnis: And I feel that, we were always very sustainable, So somewhere, you know, we have lost touch with our roots, our own traditions, which are very sustainable. And if we start following it then I think that half of the problem would be solved. That is my very honest opinion.

I think when we look at society at large, in includes several components, including industry we can’t isolate industry from society.

But at the same time see if you compare the domestic sector and we talk about urbanization that is where the problem lies I feel.

DNA: Okay.

Parasnis: If we empower rural areas and make them more prominent in terms of facilities and everything else, then there will be less pressure on urbanization. If we don’t focus on it then of course there will be urbanization.

So we have to think about various aspects. And okay, industry is definitely a need, It’s required. But I think that there is a lot of wastage also.

But every industry should also looked at as a resource rather than you know it’s just a production house. So we have to really think about all these aspects in depth and it can’t just be thought about superficially. And we need to also think about all the sectors together only then we can think of holistic growth or a sustainable development. So development can’t be unidirectional.

Radhakrishnan: We in the oil industry, or for that matter energy industry, keep telling the public that it is not as if the government does not want the public to consume energy. We know that consuming energy would mean growth — growth and all of those related activities. What we have been telling is, “consume energy responsibly”. And I think that this statement has a profound meaning.

DNA: It’s a good phrase.

Radhakrishnan: Now typically if you take our oil and gas industry, the major consumer is the transport sector, which consumes as much as about 45%. Almost all of this is diesel. If I add petrol, it’s another 10% so it comes to about 55%. So out of every 100 liters of petroleum products, 55 get consumed by the transportation sector. Here we have both individual driven vehicles as well as the vehicles which are used for mass transportation like buses or carrier goods. Now our experience as well as the experience of PCRA [Petroleum Conservation Research Association] has been that it is definitely possible to save fuel to the extent of at least about 10% on an average by doing some very basic things.

DNA : In other words responsible usage itself brings about conservation

Radhakrishnan: Yes. Now the numbers which we get indicate that a 3% saving across all the sectors would mean saving a Rs.15,000 crores of saving a year. That’s huge money.

So I think opportunities there are a plenty. But sustainable development is something which each individual should try and understand – what is the full meaning of the word sustainability and how does it impact the individual and the nation as a whole.

I think, whether it is industry or vehicle usage or – for that matter – the household gas-cylinder, benchmarking should become a norm in the country. Then I can, on reaching that benchmark, measure development as well. In summary I would say that there are huge opportunities without really having to curtail growth forcefully.

As for challenges, we face them every day – managing both the supply side and the demand side. Supply side yes, now that the delta between domestic consumption of petroleum products and production again has been widening; the gap has been widening. For this, we may have to introduce some intensive steps and grow the supply side. issues.

DNA: Why are we not considering other energy sources which could be harnessed beautifully at zero import cost

Jain: Let me touch on another aspect. One issue that was spoken about was urbanisation. Some believe that urbanization is a big problem. And one can be very sustainable in villages; and even now we are very sustainable in villages. But the fact is that if you look back into history – about how people will move ahead, or will be be doing whatever we have been doing in the past – we are moving the same way.

I mean, urbanization has a natural correlationship with development. It will happen; you can’t stop it. People will migrate. So, yes, we were very sustainable in our village model and even today, even though 60% of the population still doesn’t have access to electricity. So 60% of the population don’t know what we are talking, because to them “What is energy?”

And then you’re burning that fuel that you have in a village – maybe from cow dung. But beyond that they do not know what is energy? So it’s basically when we talk of coal and fuel we are actually dealing with the problem of urbanisation.

Coming to innovation, it can happen in a society which is developed. You start talking of innovation not when you are poor, not when you are hungry. Then, the only thing that comes in your mind is “how will I fill up my stomach?” But when your stomach is filled up then you start talking many other things.

Take water. They say that the next war will be about water, right? Yet, we are destroying water, since it is freely available in our taps. How many of us are aware about it. Are we not educated? Are we not aware about it? Don’t we read about it? So knowing about it or making people aware about it and actually doing what you want are two different things.

We are talking about achieving conservation. To discuss conservation is important. But how do you make people realize that it is important? We go through education, communication, media and this is what all of us are doing, each in his own way. But what is the larger picture?

DNA : Pricing?

Jain: Exactly! Pricing. Policy. Policy and its implementation. A very simple example, a recent example, is when IOC, BPCL and HPCL said that supply of LPG [cooking gas or liquefied petroleum gas] are linked to the Aadhar card to reduce the subsidy bill. Overnight, the bill for gas has come down. I mean, the full programme hasn’t even begun, and the consumption has come down.

And even at this stage when the policy stated that people will have to pay Rs.950 per cylinder and that subsidy will be reimbursed to customers only if they are linked to the Aadhaar Card and that only nine cylinders per year would be available for reimbursement of subsidy, people have begun saying that “I will have to pay Rs.950, so why not save money? I’m anyway getting that subsidy.”

Radhakrishnan: The effect was that LPG consumption came down by little over 10%.

Jain: There you are. I was just trying to bring out where those opportunities lie. The opportunity is right in front of you. And whom you want to really subsidise? Most diesel cars are Mercedes or big cars. Many new cars are coming out with diesel versions. Why?

Parasnis: Yeah. I think when it comes to opportunities we have to focus on specific sectors. So if you take the buildings and construction then you must understand that they contribute to 40% of the CO2 emissions. So if we go for green buildings, you could conserve around 20-30% of those emissions and other impacts and the life cycle costs.

So if you want to go into urban areas or rural areas and want to say “we want to have good houses”, why not have green houses over there. They were there earlier, maybe with different material that was used then. Or the construction type was different then.

Jain: Absolutely.

Parasnis: All the houses in the past were green. Why not now? We need to have some modification over past designs and material. If you talk about transport…

Jain: Let’s pick up the low hanging fruits. I’m still saying, do what you have to do, but what you can do very easily do that first. And why can’t you do it I just don’t understand that. It is just the implementation of policies that are lying in front of you.

Parasnis: Yes

Jain: Identify the target. Any society, any government, any public, will have some sections which need support on government. That’s absolutely undeniable. Even in U.S. it is there.

So most developed countries also have a system wherein they will provide a social support to the weaker sections. That is required. Nobody denies that. What we need is implementation of the policy that is already before the government. I am not talking about innovations like green houses or high efficiency cars, better super thermal power plants, pit-head plants, better transportation, better organization, less congestion, distribution. All this can be done. But look at the policy underlying everything. Many people realise the costs only when they are paying. Nothing comes cheap.

Parasnis: I feel that the buying in of the stakeholder is very important. A poor house or a lower income group house, which needs the support of government at some point, you can fix that will give you a subsidy on hundreds units of electricity consumption…

DNA: That is a policy which already exists.

Jain: Which already exists on an average, right? Market unit rate is Rs.5. To you it will be e.1/-. Rs4 into 100 units is Rs.400. The subsidy will come to your account. Now you can use as much of electricity as you want. Your subsidy amount remains Rs.400. This way, there can be no diversion, no misdeclaration. The target group is identified, the market price remains uniform.

DNA : So there is no dual price in the market, hence no theft.

Jain: This is just one such opportunity. Low lying fruit. It has been done worldwide. So I personally feel that in the Indian context the lowest hanging fruits are the easiest thing to be done. Just put in the policy framework in such way that we are correctly able to meet the energy requirements of the country. This also helps the economy, because otherwise our oil import will go through the roof and we may be repeating 1991.

DNA: So your first thing is policy in terms of pricing and what you’re recommending is uniform pricing the market place target the subsidies; the way Brazil did with the CCT [conditional cash transfers].

Radhakrishnan: Just price alone does not address an issue of this type. Second, now all of us are discussing a great deal about environment, green house gases, emission and the rest.

So you may have money to buy as much of fuel as you want – just like what has happened in the U.S. people are consuming gallons and gallons of petrol, but then they are equally concerned about the damage that they are causing to the environment.

So yes, pricing is one aspect. Yes, definitely it will bring in more responsibility as far as the public is concerned.

But again, implementation issues will always be around. It depends on the given size of the population and with the willingness or unwillingness on part of the stakeholders to bring that kind of discipline and transparency.

Look at the way there are people who are talking in favor of such methods and others who are against it.

DNA: But we have a choice, if you want to prevent leakages a centralized system is better?

In fact, I wonder why policies do not encourage use of solar – India is blessed with abundant sunshine – and gas – India has the largest cattle population in the world. That could allow villages to use solar by day and gas by night. It would reduce transmission costs, and even imported fuel bills. And it is sustainable.

Parasnis: Yeah. TERI has done considerable work in these areas. We also believe very strongly that there has to be a multipronged approach, using different energy sources. There could be a combination of solar, there could combination of bio methane and there could be also a combination of bio-fuel as such or rather biomass based technologies.

We have very successfully established a biomass-based technology. It’s called gasifier technology.

And we have given it for both power generation as well as for thermal application.

DNA: Excellent.

Parasnis: We also have a flagship project called Lighting a Billion Lives and under that we have ben electrifying more than 16,000 villages, each comprising around 100 households.

None of these have any access to the grid.

DNA: Oh! Wonderful.

Parasnis: You will be surprised to hear that MSEDCL [Maharashtra State Electricity Distribution Company Ltd] gave us a list of 78 villages in Thane district near Mumbai. None of them had been electrified by MSEDCL as they are in remote areas, Aadivasi areas. So we actually went and electrified those villages. But I feel that biomass based technologies would play a greater role. Solar is not that successful because during the rainy season we have less efficiency from solar panels. As far as solar is concerned the lantern thing has worked out extremely well.

And we have come up with a very sustainable model, because what we realized is if we just give them a lantern and some spare parts, they may not be able to use the technology. So what we do is that we go into a village, which is not electrified at all. We identify the entrepreneurs from the same village, we set up a charging station in their own household.

DNA: Excellent.

Parasnis: And what people do is they get their lanterns and the entrepreneur charges them one or two rupees per lantern. They hand over their lanterns to the entrepreneur in the morning for charging, and collect them as charged lanterns on their way back to their houses in the evening.

They are very happy with these lanterns.

DNA: Excellent.

Parasnis: Once we made a surprise visit to a village and we found out that six people didn’t have the lanterns with them, although they had taken them. So we asked them “where are the lanterns”. They kept quiet. Then admitted that they had sublet them for a marriage function. They were earning a rental on those lanterns.

Radhakrishnan: Very often we tend to look at things with a very narrow perspective. Now, let us take the case of LPG as a cooking fuel. Compare it with other conventional fuels like firewood.

That is what most villagers use. Or they use cow dung or any other alternate sources. Now the planning commission document while talking about the need to improve the penetration of LPG as a cooking fuel in rural households is very interesting. The document talks about addressing a whole lot of societal issues by mainly replacing conventional fuel with LPG.

But there are problems. How would the rural household bear the cost of a cylinder and the basic installation which would involve a one-time cost of around Rs.2,000? The basic installation will be a one-time cost of something like 2,000 odd rupees, plus each time they buy a cylinder. Today it is subsidized, so it’s about Rs.500 else it could be Rs.800-900. So then we came up with this concept of what we call community cooking or community kitchen. And you pay by the hour a bare minimum. That worked out, you know, comparatively cheaper than compared to any other method.

DNA: As closing remarks could I have a few thoughts on what policy initiaves would be required to make energy conservation more meaningful?

Parasnis: Integration of renewable energy.

Radhakrishnan: Actually talking about this policy, one thing which comes to my mind is that Indian markets and Indian consumers are very, very price sensitive.

Now there are many manufacturers who take advantage of this price sensitivity by offering products which is not energy efficient, but are available at a very low price. I think one policy that the government could be to discourage or put a disincentive for manufacturers who offer these low cost energy inefficient gadgets or items.

We have seen in our experience, you know, out in the villages where people are drawing water from the deep wells, you know, for agriculture. The foot valves, you know, 90% of the foot valves which they use are non-ISI, non-standard, items of local make. And when we replace them with, you know, ISI branded foot valves, straight away the difference in energy consumption is to the extent of 25%.

Jain: There are a thousand things that you can do. But the first thing is framework has to be right.

Radhakrishnan: Yes.

Jain: The point is, are you creating a right framework for a society where whatever you are using comes for free. Sunlight as free, wind as free, water as free, everything you are treating as free.

But these are common property. Does one person have the right to plunder it at the cost of somebody else. So you have to create a right framework.

You are not developing that water transport, which in this country, the rivers, the canals, can be excellent movers.

Parasnis: You can even improve the quality of roads.

Radhakrishnan: Road improvement. Yeah. This is again surprising.

See what HPCL is doing. We have plans of putting up something like 60 megawatt equivalent of wind mills of which the first phase of 20 megawatt is already been done.

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