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Presentation on theme: "INDIA’S ECONOMIC GROWTH, Energy SCENARIOS AND CLIMATE CHANGE"— Presentation transcript:

S L RAO at University of Alberta

2 OVERVIEW In 2004 India was shining; then government lost elections, using that slogan Economic fundamentals-’real’ economy-erratic industry and weak Agriculture, poor infrastructure, excessive subsidies, poor social security administrative incapability to spend efficiently on any programmes, high deficits, volatile foreign funds Global meltdown of 2008-layoffs and slower growth in 2008, 2009 Vast domestic market, huge potential market of the Poor, young and ambitious population, immense technological and managerial capability Large part of population not served by commercial energy Major fuel is and will be Coal India’s exemplary energy efficiency and emissions record

3 The Past Ten Years And Now
GDP growth: From , 6.1, 4.4, 5.8, 4.0, 8.5, 7.5, 9.5, 9.7*; %? New year-5%? Industrial production negative growth Dec 08, Jan 09. High and Rising Savings rate Rise in Capital formation Esp. Private Sector Deepening Export Inflation at single digit for a decade; 7.7% last year, 4.2 in Dec 2005; despite fuel, power, light & lubricants at 7.1; from , ); Rising in , Nov %; Now almost zero Export growth trends; onwards: 22.1, 15.0, 21.4, 27.6 & in now drop of 20% Rapid growth of I.T. and B.P.O. Resilience: Survived face-off with USA and sanctions after nuclear explosions

4 India- A Fast Growing Economy with Greater Potential
Mobile Users million (Jan 2009); Million new mobile users in last 10 months; growth continues Internet connectivity in million; still growing 5.25 mn broadband connections (Dec 2008); growing 5.4 million PC’s sold in 2006; slowing down Cars: expected 30% growth p.a.; Will rise again with NANO 2010-over 94 mn cable & satellite households Advertising industry at Rs4000 crores=$800 million Slow down in Retailing; Special Economic Zones, Media Agriculture 20% of GDP, poor productivity, declining public investment, too many poorly targeted subsidies; Weak Infrastructure-Power, Roads, etc Social infrastructure-Health, Education, etc Poor Delivery systems

5 Demographic Dividend 2004-Population =1080 million of which
Age between 15 and 64=672 million Below 15 and over 64, non-working or dependent population=408 million Dependency ratio of 0.6; 2020 Average Age: India-29; China-37; Japan-48: youngest working age population in world Less children=more women at work; more saving; greater growth

6 2009 - Macro Economy Indicators
Falling GDP growth forecasts; %?; revival in 2010 BOP current a/c deficit widening again; also Trade deficit doubled despite fall in crude prices; last year due Oil imports bills, now export & foreign investment decline Predicted Layoffs by year end-10 million Corporate performance under pressure but margins ok: FY %; Rising from FY , then 7.48, 9,24, 8,73, 9.84, (FY 08), 8.54; Rising crude and gas costs hurt economy; but falling prices coincided with recession To reemphasize local and cheaper energy inputs: local coal, local gas, hydro, nuclear, renewables, renewables Climate Change and New Coal Technologies, ownership and investment issues India is in a squeeze-economic growth imperative-fuel cost rising-emissions

7 Weak Agriculture Supports 60% of population
Agriculture was 32% of GDP in 92-93; 17% in (AE) Agriculture growth or decline has direct effect on GDP; 97 GDP + 7.8% Agriculture +8.8; & A-9,3 Static rice, erratic wheat, production: (mn t) R W Land availability limited: Since 1980 crop area for food grains static at around 124 mn hectares Total Investment in Agriculture falling in 1990s as % to GDP from 1.92 in 90-91; 1.83 in 99-00; %

8 Weak Agriculture-2 Fall is in public investment; private keeps rising; funds for public investment diverted to poorly targeted subsidies(water, power, fertilizer) Productivity levels are low: 100kg/HA; India and China in 2006: paddy & 62.65; wheat & 44.55; cotton 6.0 & 33.3; g.nut 8.6 & 31.2, s.cane &825.25 Poor policies encouraging unsuitable crops: free electricity; minimum support and procurement prices same; annual price increases; no ground water policy; free power to agriculture60% population lives on agriculture In downturn, companies turning to rural markets, with new Marketing methods Huge potential as diversification progresses

9 Weak Infrastructure Non-implementation of integrated energy policy; no coordination between electricity, coal and gas Government ownership of Electricity distribution, coal Government implementation poor on Roads Infrastructure regulation/implementation awaiting overhaul State ownership- high inefficiency, slow decision-making, corruption, delays Federal Constitution; states at loggerheads with Centre; need for coordination

10 Trends of Human Development Indicators in India from 1951 to 1999-2003

11 HDI indicators Improvement on all fronts; others have fared much better HDI Rank out of 174; Sri Lanka 89; China 96; Indonesia 110; India 124; Pakistan 148 India: +60 population in millions %=65; %=113 -Age mn; mn -Urbanization: %; %? -Issues: Livelihoods, health, education, housing, water, roads, sanitation, social security, law and order Poor public health and important reason for low HDI

12 Current Economic Crisis: Not just an imported phenomenon
Rising deficits-not shown by Centre in Budgets-Oil Bonds, FCI bonds, Fertilizer bonds, Farmer Loan write-offs, etc Putting Growth over inflation control Desperation to add to Foreign Exchange Reserves Participatory Notes and round-tripping of Indian funds Exemption from short-term capital gains tax; Mauritius as largest foreign investor; Very volatile FII funds-stock market like yo-yo as funds ebbed and flowed 4. Power shortages; many not connected

13 Liquidity and Falling Rupee
Banking meltdown in USA worsened situation FII’s, foreign banks withdrew to support liquidity in their HQ Stock markets collapsed-SENSEX from to almost 8000 Rupee collapsed-in 11 months from Rs 38 to $ to Rs 50 Overseas borrowing marked to market-upset balance sheets of Indian companies and P & L as interest costs shown in Rupees Energy investment affected adversely

14 Poor Implementation- Lack of basic Administrative Reform
Government has been very inefficient in its expenditures; more subsidies than asset building Similarly Public Distribution System-e.g. food grains, sugar, edible oils, cheap kerosene; Other subsidies poorly targeted, physical handling and inefficiencies-fertilizers, free or cheap power to agriculture; Social Programmes- NHRM, SSA-not efficient in spending honestly. NREG should have added to purchasing power but with estimates ranging from 40 % to 60% wasted and leakage, its effect has been reduced. Unspent funds in most programmes Infrastructure spending is also slow, eg., NHAI. Many projects delayed due too many Ministries, lack of coordination, non-accountability of bureaucracy

15 India’s Potential World’s Largest Pool of Trained Manpower:
200 million college graduates (~16%) 500 million trained, skilled workforce (~40%) Universal Literacy 2. World’s Leaders in Industry and Commerce 30 of Fortune 100 from India 3. India Accounts for 10 % of World Trade A broad scope of products and services India as a Source of Global Innovations New Businesses, New Forms of Organization, New Technologies

16 India’s Potential Source of Innovations for the World
5. Focus on the Bottom of the Pyramid as a Source of Innovations for the World (Leaders in Health, Education, Energy, Transportation, Sustainable Development for all) Markets 6. A Flowering of Art, Literature, Films and Science ( 10 Nobel Prize Winners from India) 7. A New Moral Voice for People Around the World India as a country where Universality and Inclusiveness is widely practiced. India becomes the most Benchmarked country for its capacity to accept and benefit from its diversity TO IMPROVE LIFE OF MANY, & ACHIEVE ITS POTENTIAL, INDIA NEEDS CONSISTENT HIGH ECONOMIC GROWTH AND ENERGY SUPPLIES

17 Energy Consumption India has lowest energy consumption today
Even with 8% annual growth till 2030 India will not catch up with most others Coal will be the most important energy source With lower calorific content, electricity using Indian coal will be much more

18 Per capita Energy consumption by Countries
TPES (kgoe) Electricity Consumption (kwh) Oil Gas (Cu.m.) Coal (Kg) Nuclear (kWh) Hydro India 439 553 111 30 257* (375) 16 69 India 8% GDP growth)** 1250 2471 331 149 925* (1388) 256 273 World Average (2003) 1688 2429 635 538 740 403 423 OECD (2003) 4668 8044 2099 1144 1651 1924 1076 U.S.A. (2003) 7840 13066 3426 2176 3410 2624 948 China (2003) 1090 1379 213 32 1073 215 South Korea (2003) 4272 7007 2264 627 1541 2570 101 Japan (2003) 4056 7816 2146 845 1247 1859 816 * Per Capita coal consumption of India has been estimated based on the calorific value of hard coal used internationally (6000 kcal/kg) to maintain uniformity. The figures in brackets are the actual per capita consumption based on Indian coal with a calorific value of 4000 kcal/kg. Source: Integrated Energy Policy : Report of the Expert Committee Pg No 32

19 India has low CO2 emissions (CO2 equivalent emissions-mmt)
1990 2000 CAGR % Russia 3208 1833 -3 Germany 1246 1019 -2 U.K. 738 640 -1 Japan 1103 1297 2 USA 5080 6209 India 988 1485 4 China 3837 4820 5 Brazil 1180 1477 6

20 Major Investment Required in Energy Supply & Infrastructure
Investment (billion dollars) Total Currency Investment 172 247 347 766 Source: International Energy Agency

21 India’s Energy Mix Over Time (%)
1965 2001

22 Constraints With just 4% of global GHG emissions, India under pressure to curb fossil fuel consumption India must find ways to decouple growth in GDP and fossil fuel for energy, but ensure universal lifeline access Primary Energy in million tonnes Oil equivalent to 1887 Of which, Non-commercial % Coal % Oil & Gas % Hydro & Nuclear %

23 The Burden of Traditional Fuels in Rural India
Study based on an integrated survey of 15,293 rural households from 148 villages in three states of rural North India and one state in South India. Symptoms of diseases related to air and water pollution, expenditure on health and person days lost, demographic and socio-economic information, measurements of air quality in the kitchen, outside the kitchen and the home were collected. Indicators for respiratory functions (Peak Expiratory Flow) were measured for most adults present. The doctors examined a sub-sample of individuals for confirmation of diseases. The study estimated that 96% of households use biomass energy, 11% use kerosene and 5% use LPG for cooking. Most of them use multiple 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. Respiratory symptoms are prevalent among 24 million adults of which 17 million have serious symptoms. 5% of adults suffer from Bronchial asthma, 16% from Bronchitis, 8.2% from Pulmonary TB and 7% from Chest infection. Risk of contracting respiratory diseases and eye diseases increase with longer duration of use of bio-fuels. Total economic burden of dirty biomass fuel estimated at Rs.299 billion ($7.5 bn) using a wage rate of Rs.60 per day, comprising of opportunity cost of gathering fuel, working days lost due to eye infections and respiratory diseases, and the cost of medicine. As women are the primary sufferers of the adverse impact of use of biomas fuels, there is a close linkage between gender and energy. Gender and energy issues have remained on the periphery of energy policy, and require greater attention and backing. Source: Parikh Jyoti et al (2005)2 Integrated Energy Policy: Report of the Expert Committee Pg No7

24 Rural Household Energy Consumption mainly firewood and dung in rural, electricity in urban
July 1999-June 2000 Fuel Type Physical Units Mtoe Rural Urban Total Fire Wood & Chips (Mt) 158.87 18.08 176.95 71.49 8.13 79.62 Electricity (Bk Wh) 40.76 57.26 98.02 3.51 4.92 8.43 Dung Cake (Mt) 132.95 8.03 140.98 27.92 1.69 29.61 Kerosene (ML) 7.38 4.51 11.89 6.25 3.82 10.07 Coal (Mt) 1.20 1.54 2.74 0.49 0.63 1.12 L.P.G. (Mt) 1.25 4.43 5.68 1.41 5.00 6.41 Source: Derived from NSS 55th Round, (July 1999-June 2000) data, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation, Government of India Integrated Energy Policy : Report of the Expert Committee Pg No 8

25 Commercial Energy Requirements (One Scenario-Coal dominates; oil next; gas could rise)
Year Hydro Nuclear Coal Oil Natural Gas TPCES 8% 9% 12 17 257 283 166 186 44 48 496 546 18 31 338 375 214 241 64 74 665 739 23 45 464 521 278 311 97 111 907 1011 29 71 622 706 365 410 135 162 1222 1378 35 98 835 937 486 548 197 240 1651 1858 CAGR -% (Compounded Annual Growth Rates) 5.9 11.2 6.3 5.1 5.6 7.2 8 6 6.4 Per Capita consumption In 2032 (Kgoe) 24 67 569 638 331 373 134 163 1124 1266 In 2004 (Kgoe) 6.5 4.6 157 27 306 Ratio 2032/2004 3.7 14.6 3.6 4.1 2.9 3.4 5.2 Source: Integrated Energy Policy : Report of the Expert Committee Pg No 28

26 Model Results- Commercial energy requirements
BAU-from 391 MTOE in to 2123 in , of which coal rises from 193 to 1176 Hybrid-from 391 to 1503 in with coal from 193 to 767 Energy intensity in BAU scenario falls from kgoe per Rupee of GDP in 2001 to in 2031 fall of 23% In Hybrid-from to 0.012, fall of 29%

27 Projected Commercial Primary Energy Requirements
Projections for Electricity Requirements (Based on Falling Elasticities ) Total Energy Requirement Energy Required at Bus Bar @ GDP Growth Rate 8% 9% 633 592 89 131 761 774 712 724 107 109 153 155 1097 1167 1026 1091 158 168 220 233 1524 1687 1425 1577 226 250 306 337 2118 2438 1980 2280 323 372 425 488 2866 3423 2680 3201 437 522 575 685 3880 4806 3628 4493 733 778 960 Note: Electricity generation and peak demand in is the total of utilities and non-utilities above 1 MW size. Energy demand at bus bar is estimated assuming 6.5% auxiliary consumption. Peak demand is estimated assuming system load factor of 76% up to 2010, 74% for to , 72% for to and 70% for and beyond. The installed capacity has been estimated keeping the ratio between total installed capacity and total energy required constant at the level. This assumes optimal utilization of resources bringing down the ratio between installed capacity required to peak demand from 1.47 in to 1.31 in Integrated Energy Policy : Report of the Expert Committee Pg No 20

28 Energy efficiency Ratio of Total Primary energy Consumption to GDP in PPP terms-2005: India 0.15;China 0.22;USA 0.21; Russia 0.47 India has shown in least energy consumption growth to GDP growth: Av GDP +8% p.a. & 3.7% annual energy consumption growth India’s population 3,5 times USA and 3 times EU20, but GDP growth is double with lower absolute incremental consumption of fossil fuels China grew faster on incremental basis; but in absolute terms, since 2002, it consumed over 9 times fossil fuel compared to EU20, 10 times of USA, and 11 times India India has achieved this result by denying modern commercial fuels to over half its population

29 Energy Efficiency must improve further in India
Indian energy intensity is =Japan & Brazil Below U.K. at 0.14, Denmark-0.12 India can improve energy efficiency by at least 20% based on currently available technologies Can improve especially in some industries, buildings, transport,

30 Maximum values of domestic coal availability-not enough for needs
Fuel (MT) 2001/02 2036/37 Coking coal 27 50 Non-coking coal 299 550 Lignite 25 MT - million tonnes Source: National Energy Map for India: Technology Vision 2030:

31 Area under plantation (%)
Estimates of bio-diesel production Year Area under plantation (%) Bi--diesel (million tonnes) 2006 0.0 2011 5 2.0 2016 10 3.9 2021 25 9.8 2026 70 27.5 2031 90 31.9 2036 100 35.4 Source: National Energy Map for India: Technology Vision 2030: Pg.No. 57

32 Renewable energy source potential
Source/technology Unit Potential/ availability Potential exploited Biogas plants Million 12 3.22 Biomass-based power MW 19500 384.00 Efficient wood stoves 120 33.86 Solar energy MW/km2 20 1.74 Small hydro 15000 Wind energy 45000 Energy recovery from wastes 1700 16.20 Source: National Energy Map for India: Technology Vision 2030: Pg.No. 13 Source: National Energy Map for India: Technology Vision 2030: Pg.No. 134

33 Other Efficiency Measures & Sources -POWER
Clean Coal can double life of coal from present years from conventional mining Coal bed methane can double gas reserves Circulating Fluidized Bed Combustion (CFBC) technology enhances options with low quality Indian coal and lignite Integrated Gasification Combined Cycle technology (IGCC) with imported coal can raise consumption efficiencies Nuclear energy Expanded Hydrocarbon supply options in India and overseas Integrated renewable energy policy Solar cells in arid lands, deserts, mountaintops, home & vehicle roofs Market reforms-subsidies, free energy, efficiency of generation, distributed power

34 CO2 Emissions Profile (In million tonnes) Scenario 2001 2011 2021 2031
BAU 917 1663 3332 7267 Hybrid 1479 2443 4774 Sector in 2031 HYB Power 2879 1329 Industry 2830 2510 Transport 1377 759 Others 181 176 Total

35 Barriers to GHG Mitigation POWER
High upfront capital cost per MW of Power & hence tariffs, cross-subsidies Lack of experience and technical know-how in advance power generation technologies IGCC not demonstrated commercially for high ash Indian coal Lack of funds with states for R & M Renewables-high generation cost

36 Barriers to GHG Mitigation INDUSTRY
Cement, iron & steel, petrochemicals, other chemicals improved Pulp & Paper, Textiles, Fertilizers, etc, behind SME’s-credit & capital constraints

37 Barriers to GHG Mitigation TRANSPORT
Need for tough regulatory standards-e,g, fuel economy on auto manufacturers Huge investments required MRTS- divert resources from other priorities; & no door-to door connectivity Need to change lifestyles and individual preferences

38 Regulatory Aspects of GHG Mitigation
EXISTING: Programmes for energy efficiency in industry, appliances, buildings, municipalities UMPP-supercritical boilers Created Bureau of Energy Efficiency Notified norms for vehicle exhaust emissions from 2010 Minimum 10% by 2012 of total energy sales as R.E. REQUIRED: Trading in certified energy savings in excess of mandated savings Incentives for Energy efficiency-e.g., differential taxation on certified energy efficient appliances Financing of energy efficiency through public private partnerships

39 Suggested Technology Deployment Programme
Power generation technologies Hydro power generation Commercialize IGCC Demonstration of commercial of commercial scale thorium based reactors demonstrated Supercritical boilers/ulta-supercritical boilers Ultra-supercritical boiler to be commercialized Advanced gas turbines (for example, H-frame Turbine) Refinery-residue-based IGCC Demonstration of commercial scale IGCC plants using indigenous and imported coals Fast breeder nuclear reactor End-use technologies Cogeneration State-of-the-art industrial processes to be adopted Use of waste recovery in industrial processes Lighting technologies: CFL, LED Energy-efficient white goods refrigerators, alternating current T & D loss reduction: HVDC, HVAC, and amorphous Core transformer R & D in exploration and production of fuels Natural gas from gas hydrates In-situ coal gasification to be commercialized Natural gas from from gas hydrates to be commercialized In-situ coal gasification Deep-sea natural gas commercially available Deep-sea natural gas CBM CBM production to be commercialized Mining of cool from seams greater than 300 metres Commercial mining of coal from seams greater than 300 metres CBM – cool bed methane: CFL – compact fluorescent lamp, LED – light emitting diode; HVDC – high voltage direct current; HVAC – high voltage alternating current; IGCC – integrated glasification combined cycle; T & D – transmission and distribution R & D – research and development Source: National Energy Map for India: Technology Vision 2030: Pg.No. 201



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