The Hindu Business Line : Report of panel on energy security — Confines itself to known technologies

THE Planning Commission had set up an Expert Committee under the Chairmanship of eminent economist and Member, Planning Commission, Dr Kirit Parikh, to prepare an energy policy linked with sustainable development that covers all sources of energy and addresses all aspects, including energy security, access and availability, affordability and pricing, efficiency and environment.

The Committee has completed its report and submitted it by the end of December 2005. As expected, the report covers the ground assigned to it competently and has come out with cogent recommendations.

The question of energy security gains importance in the light of the country's large dependence on imports for its oil requirements. Countries around the world have been concerned with energy security, especially in the light of the rising price of crude.

The latest to join the crusade for energy security and, in fact, declare the goal of independence from oil imports, is the US President, Mr George W. Bush. In his State of the Union message in January 2006, he declared: "Keeping America competitive requires affordable energy. Here, we have a serious problem. America is addicted to oil, which is often imported from unstable parts of the world. The best way we break this addiction is through technology".

He has announced an advanced energy initiative, an increase in clean energy research. "We have to change the way we power our activities. We will increase our research on better batteries for hybrid and electric cars and pollution-free cars that run only on hydrogen. We will also fund research in cutting-edge technologies, on producing ethanol not just from corn, but also from wood chips and stalks and switch-gears. The goal is to make this new kind of ethanol practical and competitive within six years."

His stated goal is to replace 75 per cent of oil imports from the Middle East by 2025.

I must confess that President Bush, who is not exactly known for innovative thinking in energy-related matters, surprised the world (and shocked parts of it) with his goal of independence from West Asian oil. I, however, expected no less a technocratic solution from a Committee headed by Dr Kirit Parikh. Instead, he has produced what is, at best, a collection of estimates and run-of-the-mill solutions on technology taken as given. He has not dared to think beyond the confines of current known technology.

That said, the Kirit Parikh Committee report has helped restate some obvious but emphatic home-truths about India's energy situation. Given the constraints on indigenous availability of petroleum and gas reserves, he points out that coal has to be the bulwark of our energy policy. This means a whole set of changes are needed to raise the production of coal required to power our electricity generation. The estimates are mind-boggling.

Coalmines require years of preparation and large sums of money for investment, besides rehabilitation of the persons displaced from mine areas. But, given the constraints of India's own gas and petroleum reserves, dependence on coal cannot be avoided. At the same time, the Committee points out the need to revitalise our ports to handle the large imports, which will surely become inevitable in view of the rising demand. One aspect the Committee has not touched on — perhaps deliberately — is the need to ensure washed and quality of coal supplied. To depend on the market forces alone for the quality of coal may be foolhardy. Perhaps, the threat of imports may put some sense into our monopolist PSUs which own our coalmines and supply power stations with an admixture of coal and stones.

Washing coal can help, but it will raise costs. It is to be noted that in most developed countries, coalmines supply washed coal and this should become a feature of our energy scene if coal is to be efficiently used and certainty of power supply assured.

Another aspect of the energy situation not touched upon in the Parikh Committee report is the priority to be given to improving transmission and distribution systems to make best use of available power supply — some of which is distributed in different geographies. There is an axiom in power supply economics that for every crore of rupees we spend on generation, we need to spend at least that much or more on distribution.

The occurrence of power shortages in different regions co-existent with local surpluses in other areas requires to be remedied through more efficient transmission systems. Much improvement has, of course, taken place in recent years in this respect. But I would have expected an energy policy committee to have placed adequate emphasis on the need to avoid disruptions in power supply due to separation of particular regions from the main grid.

This has happened in Western India more than once and has been known to happen even in advanced systems, as in the US. Energy security needs better grid management, which may also require, besides careful monitoring, introduction of high voltage direct current transmission systems, which can assure a free flow of energy without being tapped en route.

While the report is fairly exhaustive in regard to various supply options, including the nuclear one, it dismisses the sugarcane-based ethanol option in a few sentences. I feel it would have been more appropriate if the Expert Committee had studied the latest available information on the Canadian Company, IVOGEN, and its innovation of synthesising ethanol from wood wastes using a genetically engineered enzyme.

The plant is currently operational in Germany, and President Bush has referred to a similar solution for the US. It is through such technological breakthroughs that we have to look to solutions to the problem, such as what potable alcohol based on molasses may offer to the gasoline additive use of ethanol derived from sugarcane.

Even Thailand has developed an ethanol project based on corn. China has established the world's largest ethanol plant. I wish the Parikh Committee had shown itself open to suggestions regarding technological solutions of the kind that are now available and will help us break the constraint of limited water and land availability.

The Committee has offered a few radical suggestions on supplying power on a subsidised basis to villagers who are below the poverty line, primarily to rescue the women from their drudgery and unhygienic working conditions when exposed to smoke arising from the use of wood-chips, dung, etc.

The Committee disposes of the cost problem summarily by saying that we are already bearing part of the subsidy to rural consumers involved in such supplies and resurgent India can afford it. While I agree that gender sensitivity and poverty alleviation are worthwhile motivations for the Committee's recommendations to give power and LPG at subsidised rates to the rural areas to improve the quality of life, I feel that there are other implementation aspects to be considered.

The possibility of missing the targets in the distribution of subsidy is inherent in any scheme of dole distribution. Apart from that, the traditional fuel, such as wood-chips and dung, are part of the rural landscape. There must be better ways of using them in smokeless chulhas, rather than resort to the costlier alternative of generating power centrally and distributing it to villagers.

The villagers, who are otherwise engaged in collecting wood waste and cattle dung, have to search for ways for their proper utilisation in the new context. To be sure, there is much to be said for the humanitarian benefits of the Parikh Committee recommendation of cheap electric power and LPG for cooking. But all that requires much investment, and there is always the scope for other power users hitching a ride on the back of those supplied subsidised power. On the contrary, the Parikh Committee could have expressed its disapproval of the populist pricing policies for petro-products, which keep prices of imported products low and increase their consumption.

If price is a proper signal for discouraging socially inappropriate behaviour amongst economic agents, one would have expected a Committee of eminent economists to insist on proper price signals to the community at large regarding imported petro-products. The Committee has made a few suggestions on import parity prices, but not strongly recommended a cessation of populism in petro-product pricing. I also wonder how the Government will treat the recommendations of Dr C. Rangarajan on the same subject, which have come up at the current juncture.