The Hindu Business Line : Sustainable development tops energy meet agenda

THE crucial issue of the world's energy future being delivered in a sustainable manner took centre stage at the tri-annual World Energy Congress (WEC).

Besides sustainable development, there were two critical issues that went hand in hand, yet were contrary to each other. On the one hand was the delivery of electricity to the two billion worldwide who have no access to it, and on the other were the hitches that arose in tackling and adapting to the rising energy costs on the back of hardening fuel prices and environmental concerns such as global warming.

Making the situation no better was the stronger growth in demand for energy in certain pockets of the world. China recorded a 16 per cent growth in electricity consumption over the last 18 months, with the Canton province proving to be extremely power hungry, registering a 25 per cent growth in the same period.

"We need to approach the situation with a coherent strategy for practical energy solutions," argued Mr Francois Rousselly, Chairman and CEO of EDF, France, in his inaugural address at the WEC.

Meanwhile, the energy strategy is still cooking, awaiting Russia's response on whether or not to ratify the Kyoto Protocol. The protocol binds the developed nations, the major emitters of green house gases like carbon dioxide that cause global warming, into a commitment to limit their emission over time. This would be done through market mechanisms such as carbon trading. Europe already has a `grey' market in carbon trading.

Renewable energy sources like solar and biogas, among others, offer themselves in the market place with several riders. For one, they are expensive. Secondly, they are yet to demonstrate their ability to satiate the growing demand of the industrial and commercial world.

In Europe, the economics of renewable projects is enhanced owing to the fiscal regime that is stringent on emission norms and rewards renewables with tax breaks. The pressure groups voting for green power are aided by the fact that in most countries the minister for environment holds the portfolio of renewable energy sources.

Carbon trades in Europe have already indicated that the price of power is going to go up by around 20 per cent in the next few years once the carbon quotas are assigned to various countries, most likely next year if the Protocol is ratified, according to experts. In that case, the power intensive industries would be rendered non-competitive. This, since power contributes to around 80 per cent of the greenhouse gas emissions and the quotas would be clamped on the main culprit, the coal-fired stations.

In the ultimate analysis, the issue is one of abatement of carbon emission.

The opportunities for India are immense. Consultants Ernst &Young are already working on over 30 projects to bring in capital from large overseas corporates keen on reducing their emission. Since carbon is a commodity, priced currently in the unofficial European market, the abatement of carbon emission by the project would generate a revenue stream that will minimise the cost of financing the project.

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