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Subsidising renewable energy makes sense: BP

New Delhi | Updated on March 13, 2018 Published on March 13, 2018

Supporting the incubation of renewable energy and letting it grow till it can compete with traditional sources is a sensible approach, says Spencer Dale, Group Chief Economist at BP.

“There is a theory that states that there should be support for new industries (such as renewable energy) till they find scale and it makes perfect economic sense,” Dale told a select gathering of journalists here.

“Once it (renewable energy) has hit scale, the economic argument for continuing subsidies becomes less compelling. But, continuing them for the period of time when new technologies find their feet and begin to compete against established technologies in the energy sector makes perfect sense,” he added.

But, the prevalence of subsidies in the energy sector on the whole does not find his agreement.

He said, “In terms of subsidy at the point at which you use energy, moving gradually away from them leads to more efficient allocation and consumption patterns. Otherwise people end up either using too much of one energy or don’t end up using it more efficiently.” BP’s Energy Outlook 2018 edition has said that in India, renewable energy growth is going to be a chunk of the total growth.

Dale said: “In terms of the fuel mix, we see a rapid growth in renewable energy. We see wind and solar energy together accounting for about 20 per cent of the growth of energy over the next 25 years.”

Coal is here to stay

Despite the spurt in renewable, coal will remain the mainstay of India’s energy mix.

Dale said: “But coal remains a very significant part of the fuel mix. We see the share of coal gradually declining over time, but in the evolving transition scenario, coal is accounting for about half of the overall growth in energy demand and still has a share of about 50 per cent by 2040. So coal remains as an important central feature of the Indian economy.”

“Coal today accounts for three-fourth of all power generated and under the evolving transition scenario, we have it falling to two-third,” he added.

According to Dale, electric vehicles may not exactly have a significant impact on fossil fuel demands.

Published on March 13, 2018
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