A low carbon economy is possible

The development agenda of the country seeks to accelerate and sustain the economic growth rate of 8-9 per cent from now on through 2031-32. This would inevitably require an increase in energy use by almost 6 times from the present level.

Such massive increases in energy supply in a world that is increasingly becoming constrained by climate change concerns led by energy related carbon emissions will not be easy.

Further, the primary energy sources for fuelling the growth trajectory will largely be based on fossil fuel. Apart from climate change concerns, availability and cost of fossil fuels will continue to be a challenge, posing a threat to India’s energy security. Low carbon growth strategies by adoption of energy efficiency across all sectors are necessary to hedge against this as much as possible.

FUTURE STRATEGY

The performance of the country on the energy efficiency front during the last few years provides the hope that this is possible.

The recently concluded XI Plan has set the tone for treating energy efficiency as a resource in the planning process. The Government set a target of 5 per cent reduction in energy consumption by verifiable actions related to energy efficiency, equivalent to 10,000 MW of avoided capacity addition.

The Ministry of Power and the Bureau of Energy Efficiency (BEE) have reportedly exceeded the target and have achieved around 12,000 MW of avoided capacity by implementation of various programmes. These interventions prioritised sectors where the scope of efficiency enhancements is large.

The overall programme has delivered impressive results, particularly in home appliances, where STAR labeling has now become a household identity.

The buildings sector, too, has been able to stimulate the ‘Green Building movement’ while interventions in the industrial sector are making economic sense to the industry to invest in energy efficiency.

The ongoing XII Plan strategy, therefore, must focus on consolidating these gains, while expanding the scope of these interventions to hitherto uncovered sectors. The ones that readily come to mind are the transport sector, where efficiency norm for passenger cars and transport vehicles is long overdue; small and medium enterprises (SMEs), agriculture and municipal sectors, etc.

APPLIANCES AND BUILDINGS

Some of the suggestions for significantly enhancing the offtake of energy efficiency are as follows:

(a) Expanded STAR Labelling Programme that must target at least 80 per cent of energy-using appliances. At present about 20-odd equipments are covered by the programme, of which the application in respect of 4 equipment is mandatory. There are many high-energy-consuming appliances that are out of this fold, most notable being those in the transport sector.

The standards laid down for the current set of equipments need to be upgraded. BEE has been working on an innovative concept of introducing ‘Super Efficient’ appliances in the market, ahead of time as a part of an international effort. Such Super Efficient appliances are ones whose energy performance is at least 30-50 per cent better than the best available in the market at present. They need to be implemented in those equipment where the growth rate is the highest (ACs, refrigerators, fans, etc).

All government procurements of energy-related equipment must be towards higher efficiency equipment.

(b) Mandatory application of energy efficient/ green building code must be made for all new commercial buildings that have connected load of 500 KW or more. In addition, application of the STAR rating programme for buildings need to be made more vigorous in an attempt to drive demand for efficient buildings from the consumers’ side. Government could once again take the lead by requiring all its offices to undertake energy efficiency upgrades.

DEMAND-SIDE MANAGEMENT

(c) The innovative Perform Achieve and Trade (PAT) mechanism, part of the National Mission for Enhanced Energy Efficiency (NMEEE), announced recently, needs to cover more industrial establishments and sectors. At present, it is applicable to around 400 notified establishments in 8 sectors. Some of the new sectors that need to be covered are refineries, telecom, and auto manufacturing.

(d) Demand Side Management (DSM) has the potential of delivering 20-25 per cent reduction in consumption as per several assessments done by the Planning Commission, BEE, and others. DSM could provide the much needed relief to the financially crippled distribution sector by enhancing their revenue realisations and plugging leakages.

The Electricity Regulatory Commissions (ERCs) need to encourage utilities to invest in DSM, particularly in municipalities, agriculture and accelerated adoption of high efficiency end-use equipments. Given that the electricity business is regulated and all expenditures by the utilities must have regulatory approval, ERCs need to create an enabling framework for allowing DSM-related expenditures of utilities as pass-through in tariff.

FINANCE AVAILABILITY

In order that these interventions become practicable, availability of financial resources at reasonable rates for energy efficiency and enhanced awareness amongst all stakeholders is necessary.

To stimulate financing of energy efficiency investments, Ministry of Power and BEE have set up innovative financial instruments namely, the ‘Partial Risk Guarantee Fund’ and the ‘Venture Capital Fund’. These funds can mitigate the risk perception of banks and financial institutions towards energy efficiency project finance.

One of the major successes of the last 5 years has been the STAR labelling programme. Apart from the fact that the programme was well structured and implemented, it owes its success to the impressive consumer awareness campaign implemented by BEE.

The demand for efficient appliances has grown rapidly during the last few years, primarily because consumers are willing to pay a higher price for efficient equipment.

The recent increase in electricity tariffs almost all across the country would certainly enhance the willingness of the consumers to pay for energy efficiency.

In order that this is achieved, the institutional structure evolved during the last 5 years needs to be sustained and strengthened. The State Designated Agencies (SDAs), which are the implementing entities at the state/ UT level, need further strengthening in terms of their capacity and technical expertise. Ministry of Power and BEE have initiated this effort in the last 5 years and would need to accelerate it.

Support by the Government during the XII Plan could put the economy on a low carbon economic development path.

(The author is Programme Officer, OzonAction Programme, UNEP, Bangkok. Views are personal.)

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