Will India Suffer From an Energy Crunch?

An assessment of how India is doing in terms of energy depends very much on how the question is framed. If we are to measure the current state against our past, we seem to be doing well indeed: the Planning Commission estimates that the total primary energy supply increased from 83 million tonne of oil equivalent (mtoe) in 1950–51 to 440 mtoe in 2001–02. Over this period, commercial energy supply increased even more significantly, from 22 mtoe to about 300 mtoe, while power generation went up from 5 billion Kw-hours to 515 billion Kw-hours.

But we remain woefully constrained in terms of overall energy availability. Per capita energy consumption is a third, and per capita electricity consumption a fifth, of the world average. While higher energy and electricity consumption is not an end in itself, availability of adequate and modern forms of energy is generally correlated with human and economic development.

Worse still, the distribution of energy use in the country is highly skewed, with a wide disparity between the energy haves and have-nots. About a third of our total primary energy supply still comes from non-commercial sources (biomass, dung) that are used mostly in a traditional fashion—direct combustion-by an estimated two-thirds of the country's population (mostly the rural poor) for their energy needs. The only worse performers are the poorer African nations and a few countries in Asia. And over 40 per cent of the households in India still do not have electricity.

In terms of energy supply, we are fortunate to have fairly extensive coal resources. While detailed assessment of reserves is needed, there is a general consensus that coal will be a mainstay of the country's energy future. But the difficulties in rapid increase in power generation capacity have become apparent in recent years. Oil and gas resources are much more limited, resulting in high dependency on imports (for oil, about 70 per cent of total use). The tightening global oil markets, driven by the United States' enormous appetite and China's growing demand, are likely to pose continuing problems for India—our oil consumption and imports saw an annual growth of over 5 per cent and 9 per cent, respectively, between 1990 and 2002.

Looking forward, the major challenges for the Indian energy sector are three fold:

We need to enhance national energy availability and energy security. Our policies have mainly focused on increasing energy supply. Demand-side management has received little or no serious attention. There is enormous scope for managing the demand and increasing energy efficiency across the board. While the energy intensity of our economy-energy used per unit of the GDP (in purchasing-power-parity terms)-has improved over the years, it is still 25 per cent greater than that of Japan.

On the power front, the best way to contribute to energy security is to make sure that the country's coal resources are fully assessed and then extracted and used efficiently.

Advanced renewables and nuclear power have potential in principle and technologies such as wind power have made enormous strides in recent years, but these options still have a long way to go before they make a significant contribution. On the hydrocarbon front, measures to reduce petroleum use in transport will have benefits for energy security, in addition to easing our balance of payments and reducing pollution.

We need to reduce the inequities in energy availability across populations, especially in rural areas. Enhancing the supply of clean and modern energy services to the poor will result in health benefits, relieve women and children from the tedium of collecting fuelwood, and open up opportunities for socio-economic development. Improved cookstoves or fuels such as kerosene and lpg can play a significant role here. The use of renewable technologies such as biomass gasifiers and solar photovoltaics can help bring electricity to remote areas. The creation and financing of sustainable business models to supply energy services to rural consumers is a challenge.

We need to reduce the social and environmental disruptions associated with the energy sector. Our rush to increase energy supplies has led to unacceptable insults to communities and the environment, be it in the case of coal mining, the siting of thermal, hydro and other power projects, or the disposal of waste. It is critical to explore innovative models for management of highly-contested social and environmental issues associated with energy projects.

The problem of global climate change has enormous implications for the energy sector. Options such as biomass-based energy technologies and energy-efficiency measures, which have immediate benefits, should be implemented and the institutional first steps needed to develop a low-carbon energy sector should be provided.

Meeting these challenges will not be trivial. It will require moving away from the piecemeal approach to energy policy that has been our hallmark—here, one hopes, the Planning Commission's recent Integrated Energy Policy will help. It will require developing capacity for systematic and detailed data collection and policy analysis, greater transparency in policy making, and openness to public participation. And most of all, it will require examining critically our past and existing efforts, learning from our mistakes, and developing better policies that go beyond simplistic supply-side, subsidy-driven, or market-centred approaches that are treated as panaceas to our energy problems.

Ambuj Sagar is a senior research associate at Harvard's John F. Kennedy School of Government.