Kirit Parikh’s speech at the Inaugural Session,
The main question
addresses by integrated Energy Policy Committee within a 25-year
- What are
our energy requirements? What are our recourses? What are our
- And above
all what policies do we need to follow?
As far as our energy requirement and recourses are concerned some
things emerge starkly clear:
- If the economy
is grow at 8 percent over the next 25 year our primary energy
supply would have to increase three or four fold. The electricity
generation capacity would have to be rise five to six times to
800000 to 900000 MW from its current level of 160000 MW these
pose formidable challenges particularly when seen in the context
of our energy resources.
- We are not
richly endowed with primary energy sources that are economic today.
At current level of consumption we will run out of know extractable
reserves of oil in 23 years, gas in 38nyears and coal in 86 years.
However with a growth rate of coal consumption of 5 per cent per
annum we will run out of extractable coal in 45 years.
- Full exploitation
of wind power and hydro power potential and full development of
nuclear power, if US-India nuclear understanding does not go through,
can provide no more that 15 to 20 per cent electricity needs in
- Biomass based
renewables compete for land and that limits their potential.
- Solar has
high potential but cost Rs .20/KWhr today.
- Coal shall
remain India’s most important energy source till 2031-32 and possible
- Our dependence
on imported energy will increase.
With this background and boards vision of reliability meet the demand
for energy services for all sectors including the lifeline energy
needs of vulnerable household in all parts of the country with safe,
clean and convenient energy at least –cost the Integrated Energy
Policy at our options.
We must expand our domestic resources through exploration and
new coal extraction technologies such as in –situ coal gasification
to tap our vast energy resources that are difficult to extract
We have to develop our energy resources including renewables
as wind and Biofuels. Appropriate policies to encourage development
of all resources are needed.
Appropriate relative prices provide the right incentives for
optimal choices. Competitive markets help determine appropriate
prices. However competition is not always easy to realize in
energy markets. Effective and credible regulatory oversight
is necessary for pricing, resources allocation and even ensuring
(v) Energy efficiency and energy conservation are our most important
options .A unit of energy saved at the consumer’s end is more
than a unit of energy produced. Thus a Negawatt produced by
negative energy consumption is more than a Mega watt. We can
save 20 to 25 per cent of energy by perusing efficiency and
- Pursuit of
these options poses important challenges even for economy where
the energy sector is working well. But we have many lacunae in
functioning of our energy economy that increases costs, reduce
production and deter investors. These needed to be addressed.
The persistent shortage of power lowers the growth rate of economy.
We need to cut down technical and commercial losses, expand
our transmission network, strengthen distribution system and
create new generating capacity.
Coal production need to increase dramatically and quickly. Producers
other than coal India Limited need to be encouraged to provide
competition and bring in new technology.
Central mine Planning and design Institute Limited (CMPDIL),
which is only organization, empowered to do coal exploration
has a limited capacity. Exploration capacity needs to be enlarged
by g\brining in new players.
Pricing of oil and gas are still "administered" and
not transparent. We need to introduce competitive pricing at
the refinery gate and retail level. A well-defined mechanism
for the gas pricing needs to be articulated. States and Centers
roles in making this happen have t o be identified.
A clear policy for gas pipelines and distribution network needs
to be formulated. An independent regulator should be appointed.
As our dependence on energy import grows. The global energy scene
becomes important for us. The risk of supply disruption, and of
sudden increase in prices needs to be factors in our strategy. Oil
product pricing under a volatile global market poses its own challenges.
- To minimize
risk of supply disruption we need to diversify the sources of
imports as well as diversify the fuel that we import.
- To guard
against market risk of sudden price increase as also against risk
of supply disruption .we should maintain a security cum buffer
stock of 90 days oil consumption. The effective ness of stock
can be increased if it operated corporately with other countries
who maintain stocks.
in pipeline networks and transmission grids help reduce technical
risks failures and outage.
6. Since our
presently known resources will not last much as beyond 25 years
we need to plan for future. R & D can help increase energy efficiency
there by stretching our resources. R & D can develop and reduce
costs of new technologies thus expanding our resource base. Our
present expenditure on energy R & D, except for nuclear energy,
is miniscule compared to that government and industry spend in developed
countries. Thus the Integrated Energy Policy suggests that.:
- A National
Energy Fund (NEF) be set up to finance and coordinate energy
R & D.much of R & D can be considered a public good.
Government thus better finances it. Initially an allocation
of Rs 1000 crores should be made for energy R & D excluding
- A number
of technology missions should be mounted for developing technologies
of vital importance for India, near-commercial technologies
and rolling out new technologies in a time bound manner. These
technologies (where India should focus) for efficiency improvement;
and carbon sequestration;
technologies covering solar thermal and photovoltaic;
- Bio fuels
such as bio and ethanol;
- Bio mass
plantation and wood gasification and community based biogas
research and development in all stages of the innovation
chain to reach target goal (such as that in place in the
departments of atomic energy and space research) should
be used to develop more energy efficient industrial plants,
machinery & processes efficient appliances, hybrid cars,
super batteries , nuclear technologies related to thorium
and fusion , gas hydrated , and hydrogen production storage
, transport and distribution .
NEF should provide R & D funding in support of applications,
innovative new ideas, and fundamental research etc.to researchers
in different institutions, universities, organizations and
even individuals working independently.
electricity and clean cooking fuels to all are very important for
improving human well-being. Lifeline energy needs of all households
should be met. This would require targeted subsidies.
best way for providing subsidy for electricity and cleaner
fuels, kerosene or LPG, is to entitle targeted households
to 30 units of electricity per months and LPG, kerosene
or biogas purchase from a local community size plants equivalent
to 6 kg of LPG per month.
- A system
debit card must be introduced to deliver such a subsidy.
The entitlements can only be used for purchase of these
products. With modern ICT, debit card readers operated on
battery and feeding data using mobile technology, can work
in rural areas of the country as well.
reduce drudgery of those who still need to gather fuel develop
woodlots within one kilometers of the village. Provide finance
through self-help groups to transform women., Who, today
are only energy gatherers ,into micro entrepreneurs engaged
in rural energy markets and energy management.
groups can form co-operatives for developing and managing
fuel wood or oil seed plantations with the same effort they
put towards searching and gathering fuel wood today.
setting up off –grid generation facilities in rural areas,
encourage the organized sector to adopt rural community/communities
in their areas of operations.
consequences of energy use can be contained as done in many industrialized
countries. An application of polluter pays principles or set of
implementable and consistent standards are recommendations by the
9. Concern vis-à-vis
the threat of climate change has been an important issue in formulating
the energy policy. Even though India is not required to contain
its GHG emissions, as a signatory to the UN framework Convention
on Climate Change and a country, which has accepted to the Kyoto
Protocol, India has been very active Proposing Clean Development
Mechanism (CDM) projects.
10. Since the
impact on the country’s poor, due to climate change, could be serious,
the report has suggested a number of initiatives that will reduces
the green house intensity of the economy by as much as one third.
policy framework and the thrust of development suggested here need
to be made more specific. To this end once the policy framework
is accepted, details roadmaps of developments should be chalked
out and specific policy measures for implications drafted.
12. I hope this
conclave will provide us guidance on the way forward.