The Politics and Economics of Climate change in India

1. The Politics and Economics of Climate change in India S L RAO

2. India-Imperatives • Consistent and high economic growth • Improve the living conditions of hundreds of millions of severely deprived people • Subsidize vulnerable groups by making affordable and safe energy available to them • Augment shortage of domestic fuel resources for hydroelectric, nuclear, and even thermal energy based on coal, gas and nuclear fuels. I • Overcome constraint of accessing oil and gas from India’s neighborhood in Central Asia and Iran • Function within an election-led democracy and no political party willing to lead public opinion to pay the full cost of energy.

3. India-Pressures Compete with China for overseas fuel resources so far been won by China but private sector entry changing equations To cope with rising energy prices by private sector entry and more independent regulation To cope with growing pressure from developed economies to mitigate carbon emissions To find other non-carbon emitting energy sources-i.e., nuclear energy and renewable energy.

4. Growth and Inequality • In past years employment growth concentrated in services and infrastructure, not agriculture-over 60% of population dependent on it. • Hence wide inequalities in income distribution. • Overall poverty (calorie consumption terms) declined; over 300 million on <$1 per day; 500 million on < $2. • Cultivable land availability restricts agricultural growth to improvements in productivity; needs more water, fertilizers, pesticides, etc, requiring substantial additional energy. • Employment growth from infrastructure, transport and manufacturing-more energy

5. Rural Poverty and Energy use • Over 500 million people not connected to electricity • burn dry leaves, twigs and branches in squalid and unventilated huts • impacts on the health of women and children. India has highest incidence of tuberculosis in the world; high respiratory disease, bronchial asthma, Bronchitis, Pulmonary TB and chest infection. Risk of contracting respiratory diseases and eye diseases increase with longer duration of use of bio-fuels. • Forests contribute 39 % of the fuel wood need. 314 Mt of bio-fuels are gathered annually. 85 million households spend 30 billion hours annually in fuel wood gathering. The total economic burden of dirty biomass fuel was estimated to be Rs.299 billion.

6. Rural Poverty and Energy Use-2 Biomass added 577 million tonnes to emissions. Women and girls bear the drudgery of collecting biomass, and the health impact of burning biomass is on women and children lack of safe and convenient energy leads directly or indirectly to illiteracy, gender inequality, disempowerment, high infant and maternal mortality. To eradicate such abysmal poverty of so many, India needs consistent and inclusive 8% GDP per annum growth over the next 25 years and must improve access to modern commercial energy for all.

7. Energy Needs At 9% annual growth of GDP, installed capacity of commercial energy, assuming declining elasticity of use, will rise from 155 GW in 2006-07 to 960 GW in 2031-32. • Will leave per capita consumption behind many other countries. • Limited potential growth for hydro-land shortages, environmental considerations, geological, political and resettlement & rehabilitation problems. • Flexibility in supplies possible from use of coal, gas, nuclear and renewable energy. • Coal is the highest carbon emitter and India will need considerable quantities of coal in the coming years. • India’s scientists and Soviet technology India to 4000 MW of nuclear. capacity No private sector. Bush Administration freed supplies of uranium and technology. • Plan to raise capacity from 4120 to 20,000 MW by 2020, to 63,000 MWe by 2032, and aims to supply 25% of its electricity from nuclear power by 2050. • India hopes in a decade or so to breakthrough in using its large reserves ofthorium.

8. Emissions and Energy Needs • India’s carbon emissions are far lower than developed countries, and also China. Even at 9% growth, India’s emissions will be lower in absolute terms and per capita • India’s food policies aimed to provide cheap food to the urban poor and this kept farm prices much below international levels. Farmers were subsidized on key inputs including electricity. The whole subsidy structure must change but is politically sensitive because large voter groups must be appeased. • With rising costs of electricity, subsidies must be rationalized • Costs will go up also with new energy sources from nuclear and renewable

9. Renewable Energy • National renewable envisages 10% additional grid power from renewable energy • Installed capacity from grid-interactive renewable power rose from 3,500 MW in 2005 to 6,050 MW; 18% of additional grid interactive renewable power capacity, i.e., 2602 MW commissioned during 2006 to 2009. • 13.5 % came from wind power; 4.5% from small hydro power (2 %) and bio energy (2.5%). • Actual energy available is around 30% of capacity in wind and solar, erratic availability, no storage, high costs. • State regulators require distribution companies to buy 10% as renewable. This raises costs. • CERC introducing transferable R.E. certificates for trade between high low renewable energy potential states.   • Policies in place for waste heat recovery, co-generation and energy efficiency improvement • High emission industries targeted fro emission reduction • Urgent need for up to date technologies • Considerable investment opportunities particularly in Solar

10. Nuclear Strategy

11. Possible development of nuclear installed capacityGwe=Giga Watts of Electricity; LWRE=light water reactor; FBR-fast breeder reactor Assumptions: FBR technology is successful expect 2011 8 GW of LWR acquired through imports by 2017. Developed Advanced Heavy Water Reactor using Thorium by 2020.

12. Opportunities in Nuclear Energy in India • TOP PRIORITY IS TO RAPIDLY EXPAND ELECTRICITY CAPACITY • Equipment Supplies • Different stages of nuclear energy • EPC contracts • Operations • Technology

13. Conclusion • India needs large additions to energy to push growth. • Government must reduce subsidy outflows, raise energy tariffs, target better, plug leakages • Poor must be subsidized-better targeting • Energy efficiency to get highest priority, as well as R & M of old plants • Improved coal technologies • Maximize use of gas in thermal • Renewable can only offer marginal additions to capacity, and at high cost. • Nuclear capacity will reduce coal burning • Rising costs and the poor a major concern

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