National Energy Policy

There are four key objectives of National energy policy: Access at affordable prices,Improved security and Independence, Greater Sustainability and Economic Growth.
Considering poverty and deprivation in India, access to energy for all at affordable prices is of utmost importance. We are yet to provide electricity to nearly 304 million people, and clean cooking fuel to nearly 500 million people, which still depend on Biomass. The policy aims to ensure that electricity reaches every household by 2022 as promised in the Budget 2015-16 and proposes to provide clean cooking fuel to all within a reasonable time. While it is envisaged that financial support will be extended to ensure merit consumption to the vulnerable sections, competitive prices will drive affordability to meet the above aims.
Improved energy security, normally associated with reduced import dependence, is also an important goal of the policy. Today, India is heavily dependent on oil and gas imports while also importing coal. In so far as imports may be disrupted, they undermine energy security of the country. Energy security may be enhanced through both diversification of the sources of imports and increased domestic production and reduced requirement of energy. Given the availability of domestic reserves of oil, coal and gas and the prospects of their exploitation at competitive prices, there is a strong case for reduced dependence on imports. In due course, we may also consider building strategic reserves as insurance against imported supplies.
The goal of sustainability acquires added importance and urgency in view of the threat of catastrophic effects of climate change as well as the detrimental effects of fossil fuel usage on local air quality. In India, sustainability is also closely linked with energy security. Our fossil fuel requirements, which comprise nearly 90% of our commercial primary energy supply, are increasingly being met by imports. This means that cutting fossil fuel consumption would promote the twin goals of sustainability and security. Hence the policy lays heavy emphasis on de-carbonisation through the twin interventions of energy efficiency and renewable energy.
The energy policy must also support the goal of rapid economic growth. Efficient energy supplies promote growth in two ways. First, energy is the lifeblood of the economy. It is an important enabling factor of growth and its availability at competitive prices is critical to the competitiveness of energy-intensive sectors.
Second, being a vast sector in itself, its growth can directly influence the overall growth in the economy. energy security and sustainability are mutually reinforcing in our case since our energy imports are predominantly fossil fuel based. Reduction in imports and in emissions can both be achieved through an expansion of renewable energy consumption. On the other hand, as long as fossil fuels remain the cheapest source of energy, the goal of energy accessibility at affordable prices would come in conflict with the goal of sustainability and possibly energy security as well. Until such time as the costs of generating, transmitting and distributing renewable energy drop sufficiently to allow its delivery to the customer at lower cost than energy from fossil fuel sources, a conflict is likely to exist among the above three objectives. Energy efficiency is, however, one goal that reinforces all the four objectives.

Energy security

Energy security can be defined as “the uninterrupted availability of energy sources at an affordable price”.

Energy security has many dimensions: long-term energy security mainly deals with timely investments to supply energy in line with economic developments and sustainable environmental needs. Short-term energy security focuses on the ability of the energy system to react promptly to sudden changes within the supply-demand balance. Lack of energy security is thus linked to the negative economic and social impacts of either physical unavailability of energy, or prices that are not competitive or are overly volatile.

Energy security for india

Threats

In the 60s and 70s, developed nations like the US, UK, Germany, France and Japan were racing ahead by developing newer technologies and consumer products that were change lifestyles leading to a shift from conservative to indulgent energy consumption.

Everything seemed fine until leading oil producing nations, grouped under OPEC and led by the largest oil producer of the time, Saudi Arabia, abruptly decided in 1973-74, to increase the price of crude oil. This sudden increase in oil price triggered a global crisis, whose impact was felt across all nations but the brunt of it was taken by those nations that were highly dependent on oil to power their respective economies.

As a result of this sharp increase in the price of oil, India experienced a runaway inflation that touched 28% in subsequent years, triggering an economic and political crisis. The same was true for several other oil-dependent nations. Another energy crisis was seen in subsequent years caused by political and economic isolation of Iran, another major oil producing nation. This too, led to a major crisis globally. India had been a major importer of oil from Iran and has had a tough time trying to maintain a balance between the international sanctions and preserving good relations with Iran.

Naturally, India was impacted on both critical phases. The problem for contemporary India is that our economy is on the verge of take-off and we desperately need energy to power the growth and unless India addresses this vital issue well ahead of time, we will be increasingly vulnerable to global events beyond our control, and that is certainly not reassuring for an emerging India, not by a long shot.

India’s Strategic and Economic Dilemma

India’s current mix of energy sources includes Coal (40%), Biomass (26%), Oil (22%), Natural Gas (8%), Hydro-power (2%), Nuclear (1%) and Renewable energy (1%). It is obvious that India will continue to depend on fossil fuels like coal, oil and gas for the next several decades, which means that a large quantum of our requirement would have to come from overseas sources. And that is where India’s strategic position becomes vulnerable.

Coal: A Polluting Fossil

The problem with India has been the fact that India’s need to import coal has been rising significantly. During 2013-14, India imported 171 million tonnes of coal, an increase of 17.9% over the previous year. It is estimated that by 2030, India will need to import close to 900 million tonnes of coal to meet its energy needs.

This alone, poses a significant challenge to India. On one hand, the nation needs coal to power its growing energy requirement, on the other hand, there is growing international pressure to reduce carbon emissions. Both contrary but imperative.

China faces a similar dilemma. Through the late 80s, it took a conscious decision to significantly increase thermal power generation. As a result, it invested heavily in setting up thermal power plants that used coal as its raw material. The need for coal outgrew domestic production and soon China emerged as the world’s largest importer of coal.

Oil: An Expensive Option

Another fossil fuel that is giving sleepless nights to rapidly developing nations like China and India is crude oil. The need for oil too has been rising. While the current low levels of oil price is providing relief to oil-dependent economies, the same is not likely to sustain for long, as any international crisis can once again trigger an unpredictable price rise, causing economic chaos.

The crisis in countries like Libya, Iraq and now Russia, all major oil producers, is a good example of the associated risks of depending on international oil supply and India’s share of oil in its energy mix stands at 22%. That exposes India to risks on account of global events which are beyond its control.

Natural Gas

A Cheaper and Cleaner Option To mitigate its dependency on crude oil, India has been increasing investment in exploration and production of natural gas from sources within the country. To further meet the demand-supply gap in energy, India has been sourcing natural gas from overseas and continues to look for more sources to tie-up regular supply. Natural gas is seen as less polluting when compared to coal and oil, and is also cheaper.

India is looking to import natural gas through pipelines from Iran and other Central Asian countries. The lines are expected to pass through countries like Pakistan and Afghanistan. While the proposed pipelines are likely to prove economically favourable in the long term, the political and military risks associated with this is still to be sorted out by the government.

Shale Gas

An Emerging Alternate In the meantime, another possible source that can be a game changer for countries like India and China is the emergence of shale gas as a cheaper and easily available alternate to oil. The United States is currently the largest producer of shale gas, while India too is known to have significant shale gas reserves. The problem is that the long-term environmental impact is still being debated, as is the risk involved with fracking, a method of retrieving gas from the earth crust.

Renewal Energy

The Way Forward Renewable energy, which includes solar and wind, contribute 1% to our energy mix. Both are clean, sustainable and abundant sources of energy. The problem for both not becoming very popular has been the high cost of power. With technological improvements it has now reached levels where it is commercially viable to generate power. In times to come, the per capita cost of power is likely to come down further, making it even more viable and an environmentally favourable alternate to traditional fossil fuels.

Energy Security in India is the dream of the 21st century for the nation. And after implementing many policies will definitely move India an inch closer to achieve the dream. Huge financial investment especially in the energy sector is the need of the hour. CDM activities are equally important to sustain the concept of energy security. The new era of renewable sources will play a vital role in the nation’s target to be energy secured.

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