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Introduction: Energy versus emissions: The big challenge of the new millennium

By Rakesh Kalshian

To maintain its economic growth rate of 8-10%, India needs all the energy it can get. But the momentum of economic growth overrides crucial environmental concerns. How can India sustain a high economic growth rate and leapfrog into a sustainable energy regime without irreparably harming the environment?

Medha Patkar and her fellow Narmada Bachao Andolan (NBA) activists recently went on indefinite hunger strike in New Delhi to protest raising the height of the Sardar Sarovar dam until all the already displaced families had been properly rehabilitated. Amidst much media hoopla and hectic politicking, the UPA government agreed to review the contentious issue. The review committee did a survey of the ground reality which bore out NBA’s grievances.

 But the potato turned out to be too hot for the government to handle and it finally dropped it in the Supreme Court (SC). The SC decided to take the middle ground, issuing an ultimatum to the state governments to complete the rehab work while letting construction of the dam continue. The NBA cried foul but there wasn’t much else it could do.

This episode illustrates yet again the inexorable logic of economic growth which often overrides human or environmental “obstacles” that may come in its way. India is well on its way to becoming an economic superpower and, galloping at an annual economic growth rate of 8-10%, it desperately needs all the energy it can harness. Dams, nuclear reactors, thermal power stations, all symbolise this much-needed energy without which the nation’s economic horses may slow down.

At this rate, there will of course be environmental casualties. Dams will submerge valuable forests, thermal power stations will lead to acid rain, mining will scar landscapes, industries and transportation will vitiate air and water, and nuclear reactors will pose potential radiation hazard, not to mention climate change, which is arguably the result of carbon emissions produced by burning fossil fuels.

This raises a number of questions: Will India be able to sustain a high economic growth rate without irreparably harming the environment? How long can India depend on oil and gas imports, which account for over 65% of its consumption, especially in the face of rising prices? Should India build more big dams or set up more nuclear power reactors to tide over its energy crisis? Can India continue to rely on its abundant reserves of coal, which currently accounts for over 60% of its electricity production, and still be able to meet its carbon reduction commitments? Shouldn’t India invest more in renewable energies like wind and solar while at the same time working towards evolving and creating systems that are less energy-intensive, such as promoting public transport between and within cities? Or evolving a system of incentives and disincentives that persuades people to adopt less consumerist lifestyles so that even as India’s economy grows, its energy consumption declines?   

Admittedly, energy is a complex subject and there are no easy answers to these questions. A mix of foresight, courage and inventiveness will determine what forms of energy India chooses to power its economic growth with and whether it could leapfrog into a sustainable energy regime without losing its competitive edge in the world economy. But the way things are moving now, the future doesn’t look all that bright and sustainable. A draft report on energy policy authored by Kirit S Parekh, member (energy) of the Planning Commission, paints a rather dismal picture. For instance, in the business-as-usual scenario, India will exhaust its oil reserves in 22 years, its gas reserves in 30 years and its much-vaunted coal reserves in 80 years. More alarming, the coal reserves might disappear in less than 40 years if India continues to grow at 8% a year.

But things might begin to look up if India is able to harness alternative energy sources, such as hydel, biofuels, solar energy, and even nuclear energy. For instance, it estimates that wind energy can generate 10 million tonnes of oil equivalent (mtoe) and energy plantations could contribute 30 to 60 mtoe from about 10 million hectares. This would not only create livelihoods but also provide income in the form of carbon credits that can be sold at 20 euros per tonne of carbon dioxide. Solar energy could contribute a useful 2.4 billion tonnes of oil equivalent for 10 million hectares, says the report.

In the long run, so several gurus of energy have predicted, India may have to move towards greater use of renewable forms of energy, for which it has abundant resources. Globally, the renewable energy industry is no longer in a state of infancy, with global investments in 2004 totaling $28 billion as compared to $6 billion in 1995. Total installed capacity based on renewable energy was 155,000 MW in 2004, of which wind power itself totaled 48,000 MW. A focused, goal-oriented programme of R&D would bring down costs of renewable energy devices and meet the needs of a diverse range of applications and customers. The Clean Development Mechanism under the Kyoto Protocol was supposed to provide the necessary impetus to popularising renewable technologies in countries like India, but unfortunately, renewable energy CDM projects are conspicuous by their absence.

At any rate, despite contributions from alternative resources, the oil import bill will continue to balloon—indeed India might be importing as much as 90% of its total oil requirement in the year 2031-32, assuming domestic production will be a paltry 35 million tonnes. Natural gas (including coal-bed methane) imports will be anywhere from 0-66% against a requirement of 77 to 290 million tonnes. The range is pretty wide because it is difficult to say what the fuel matrix will be, with much depending on how alternative fuels are harnessed. In any case, coal will continue to be the main propeller of India’s economy, and to meet its spiralling energy needs, coal production will have to increase by four to five times the current level, and rail capacity to move the coal will also have to rise three to four times.

Given such a bleak prognosis of its energy future, India has begun embracing energy resources that were considered unsustainable until recently. Thanks to the threat of climate change and spiralling oil and gas prices, big dams and nuclear power have acquired new currency. The recent Indo-US deal is a harbinger of the changing geopolitics of energy security. Indeed, international financial institutions like the World Bank and Asian Development Bank are no longer averse to funding big dam and nuclear projects. And both hydro and nuclear power might become eligible under the Clean Development Mechanism of the Kyoto Protocol!

But dams and nuclear reactors have long gestation periods and are fraught with social and political risks. In the short to medium term, India’s voracious appetite for energy can only be met by an increasing amount of imported oil and gas. But owing to cold relations with Pakistan and Bangladesh, it can’t access gas from Central Asia as the pipeline has to pass through Pakistani territory, while Bangladesh is unwilling to sell its gas or allow a gas pipeline from Myanmar to pass through its territory. Nationalism and oil are proving a volatile mix. Resolving territorial disputes and improving relations with traditional adversaries will become increasingly important for India if it is to meet its energy import needs by peaceful means.

All this implies that India will have to look further afield -- to Central Asia, Russia, and even as far as Latin America for access to gas and oil. The Oil & Natural Gas Commission (ONGC), for example, has invested in offshore gas fields in Vietnam, as well as energy projects in Algeria, Kazakhstan, Indonesia, Venezuela, Libya and Syria, while Indian Oil Corporation is looking to invest in deepwater exploration in Sri Lanka. Reliance Industries, India's largest private sector oil firm, also has stakes in an offshore field in Yemen and a liquefied natural gas project in Iran, and is in talks to acquire energy assets in Nigeria, Chad, Angola, Cameroon, Congo and Gabon in Africa as well as in South America and the Middle East. Indeed the desperation for gas and oil is such that India is even willing to compete for energy resources in some of the most unstable parts of the world such as Sudan and Myanmar. In Sudan, India has invested $1.5 billion and it is trying to strike a gas deal with Myanmar’s military junta.

So where does the concern for climate change and the environment fit in all this realpolitik over fossil fuels? On the fringes, one would imagine. For instance, the Indo-US nuke deal or the six-nation clean air pact between India, China, South Korea, USA, Australia and Japan makes a mockery of the Kyoto Protocol. India and China have said in so many words that they will not commit themselves to any carbon cuts in the second phase of Kyoto as reducing poverty through economic growth will remain their top priority. The US too backed out of the Kyoto Protocol saying that any carbon reduction commitments would hurt its economy. If the Indo-US deal is anything to go by, the world is more likely to see a shift towards more and more bilateral economic and technological deals to tackle climate change rather than through the dictates of international treaties.

In the ultimate analysis, whether India will eventually be able to shift to a sustainable energy paradigm or not will hinge crucially on how cleverly Indian policymakers can reconcile the material aspirations of a billion-plus people with the laudable goals of equitable access and environmental sustainability. Till then, it’s going to be all about the survival of the cleverest, about who’s going to corner the maximum energy resources at the cheapest rates.

(Rakesh Kalshian heads environmental programmes at Panos South Asia. He writes on the politics of development and environment.)

InfoChange News & Features, June 2006