Transcript India`s Economic Growth, Energy Scenarios And Climate

INDIA’S ECONOMIC
GROWTH, Energy
SCENARIOS AND
CLIMATE CHANGE
S L RAO
at
University of Alberta
1
OVERVIEW
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In 2004 India was shining; then government lost elections, using that slogan
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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
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Global meltdown of 2008-layoffs and slower growth in 2008, 2009
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Vast domestic market, huge potential market of the Poor, young and
ambitious population, immense technological and managerial capability
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Large part of population not served by commercial energy
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Major fuel is and will be Coal
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India’s exemplary energy efficiency and emissions record
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The Past Ten Years And Now
• GDP growth: From 1998-99-6.5, 6.1, 4.4, 5.8, 4.0, 8.5, 7.5, 9.5,
9.7*; 2008-09 7.1%? 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 03-04-8.1,
03-04-9.8); Rising in 2007-08, Nov 2008- 7.8%; Now almost zero
• Export growth trends; 01-02 onwards: 22.1, 15.0, 21.4, 27.6 & in
08-09 now drop of 20%
• Rapid growth of I.T. and B.P.O.
• Resilience: Survived face-off with USA and sanctions after nuclear
explosions
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India- A Fast Growing Economy
with Greater Potential
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Mobile Users - 362.2 million (Jan 2009); 101.1 Million new mobile
users in last 10 months; growth continues
Internet connectivity in 2010 -200 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
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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
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Social infrastructure-Health, Education, etc
Poor Delivery systems
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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; 2030-0.4
• 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
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2009 - Macro Economy Indicators
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Falling GDP growth forecasts; 2009-10- 5%?; 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 99 4.08%; Rising
from FY 03 5.32, then 7.48, 9,24, 8,73, 9.84, 10.01 (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
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Weak Agriculture
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Supports 60% of population
Agriculture was 32% of GDP in 92-93; 17% in 2008-09 (AE)
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Agriculture growth or decline has direct effect on GDP; 97 GDP +
7.8% Agriculture +8.8; 04- 8.5 & A-9,3
Static rice, erratic wheat, production:
08 07 06 05 00 91 81 (mn t)
R 96 93 92 83 85 74 54
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W 78 76 69 69 70 55 36
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; 2006-07- 2.3 %
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Weak Agriculture-2
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Fall is in public investment; private keeps rising; funds for public
investment diverted to poorly targeted subsidies(water, power,
fertilizer)
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Productivity levels are low: Yield @ 100kg/HA; India and China in
2006: paddy 31.24 & 62.65; wheat 26.19 & 44.55; cotton 6.0 & 33.3;
g.nut 8.6 & 31.2, s.cane 669.4 &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
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In downturn, companies turning to rural markets, with new Marketing
methods
Huge potential as diversification progresses
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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 decisionmaking, corruption, delays
• Federal Constitution; states at loggerheads with
Centre; need for coordination
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Trends of Human Development Indicators
in India from
1951 to 1999-2003
Trends of Human Development Indicators
160
1951
1961
146
1971
140
1981
120
1991
1996
100
1999-2003
80
62.7
60
40
32.1
64.8
58
27.4
18.3
20
7.6
0
Life Expectancy at birth
(Years)
Death Rate
Infant Mortality Rate
Literacy Rate (%)
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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-2001-6.3%=65; 2016-8.9%=113
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-Age 15-59 2001-598mn; 2016-811mn
-Urbanization: 2001-27.8%; 2030-50%?
-Issues: Livelihoods, health, education, housing, water,
roads, sanitation, social security, law and order
• Poor public health and important reason for low HDI
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Current Economic Crisis:
Not just an imported phenomenon
1.
Rising deficits-not shown by Centre in Budgets-Oil Bonds, FCI
bonds, Fertilizer bonds, Farmer Loan write-offs, etc
2.
Putting Growth over inflation control
3.
Desperation to add to Foreign Exchange Reserves
4.
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Participatory Notes and round-tripping of Indian funds
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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
Power shortages; many not connected
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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 21000 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
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Poor ImplementationLack of basic Administrative Reform
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Government has been very inefficient in its
subsidies than asset building
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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.
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expenditures; more
Many projects delayed due too many Ministries, lack of
coordination, non-accountability of bureaucracy
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India’s Potential
1.
World’s Largest Pool of Trained Manpower:
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200 million college graduates (~16%)
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500 million trained, skilled workforce (~40%)
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Universal Literacy
2.
World’s Leaders in Industry and Commerce
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30 of Fortune
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100 from India
3.
India Accounts for 10 % of World Trade
A broad scope of products and services
4.
India as a Source of Global Innovations New Businesses,
New Forms of Organization, New Technologies
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India’s Potential
5.
Focus on the Bottom of the Pyramid as a
• Source of Innovations for the World
• (Leaders in Health, Education, Energy,
Sustainable Development for all)
• Markets
Transportation,
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
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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
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Per capita Energy consumption
by Countries
TPES
(kgoe)
India 2003-04
439
Electricity
Consumption
(kwh)
553
Oil
(kgoe)
111
Gas
(Cu.m.)
Coal
(Kg)
Nuclear
(kWh)
Hydro
(kWh)
30
257*
(375)
16
69
256
273
India 2031-32
(projected @ 8%
GDP growth)**
1250
2471
331
149
925*
(1388)
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
32
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
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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
2
India
988
1485
4
China
3837
4820
5
Brazil
1180
1477
6
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in Energy Supply &
Infrastructure
Investment
(billion dollars)
2001-2010
2011-2020
2021-2030
2001-2030
Total Currency
Investment
172
247
347
766
Source: International Energy Agency
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India’s Energy Mix Over
Time (%)
Nuclear
0%
Hydro
8%
Hydro
5%
Oil
24%
Nuclear
1%
Oil
31%
Gas
0%
Coal
55%
Coal
68%
1965
Gas
8%
2001
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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 2005-06
• Oil equivalent
513
1887
• Of which, Non-commercial
28%
• Coal
38%
• Oil & Gas
8%
• Hydro & Nuclear
26%
2031 -32
1536 to
22
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
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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
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Rural Household Energy Consumption
mainly firewood and dung in rural,
electricity in urban
Physical Units
Mtoe
July 1999-June 2000
Fuel Type
Rural
Urban
Total
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
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Commercial Energy Requirements (One
Scenario-Coal dominates; oil next; gas could
rise)
Coal
Year
Hydro
Nuclear
Oil
Natural Gas
TPCES
8%
9%
8%
9%
8%
9%
8%
9%
2011-12
12
17
257
283
166
186
44
48
496
546
2016-17
18
31
338
375
214
241
64
74
665
739
2021-22
23
45
464
521
278
311
97
111
907
1011
2026-27
29
71
622
706
365
410
135
162
1222
1378
2031-32
35
98
835
937
486
548
197
240
1651
1858
CAGR -%
(Compounded
Annual Growth
Rates)
5.9
11.2
5.9
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
157
111
111
27
27
306
306
Ratio 2032/2004
3.7
14.6
3.6
4.1
2.9
3.4
5.2
6.3
3.7
4.1
Source: Integrated Energy Policy : Report of the Expert Committee Pg No 28
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Model ResultsCommercial energy requirements
• BAU-from 391 MTOE in 06-07 to 2123 in 2031-32,
of which coal rises from 193 to 1176
• Hybrid-from 391 to 1503 in 2031-32 with coal from
193 to 767
• Energy intensity in BAU scenario falls from 0.022
kgoe per Rupee of GDP in 2001 to 0.017 in 2031 fall
of 23%
• In Hybrid-from 0.022 to 0.012, fall of 29%
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Projected Commercial Primary Energy Requirements
Projections for Electricity Requirements (Based on Falling Elasticities )
Total Energy
Requirement
Energy Required at
Bus Bar
@ GDP Growth Rate
@ GDP
Growth Rate
@ GDP Growth
Rate
@ GDP
Growth
Rate
8%
9%
8%
9%
8%
9%
8%
9%
2003-04
633
633
592
592
89
89
131
131
2006-07
761
774
712
724
107
109
153
155
2011-12
1097
1167
1026
1091
158
168
220
233
2016-17
1524
1687
1425
1577
226
250
306
337
2021-22
2118
2438
1980
2280
323
372
425
488
2026-27
2866
3423
2680
3201
437
522
575
685
2031-32
3880
4806
3628
4493
592
733
778
960
Note: Electricity generation and peak demand in 2003-04 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 2011-12 to
2015-16, 72% for 2016-17 to 2020-21 and 70% for 2021-22 and beyond. The installed capacity has been estimated keeping the ratio between total
installed capacity and total energy required constant at the 2003-04 level. This assumes optimal utilization of resources bringing down the ratio
between installed capacity required to peak demand from 1.47 in 2003-04 to 1.31 in 2031-32. Integrated Energy Policy : Report of the Expert
Committee Pg No 20
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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 2001-06 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
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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,
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Maximum values of domestic coal
availability-not enough for needs
Fuel (MT)
Coking coal
Non-coking coal
Lignite
MT - million tonnes
2001/02
27
299
2036/37
50
550
25
50
30
Estimates of bio-diesel production
Year
2006
Area under plantation
(%)
0
Bi--diesel
(million tonnes)
0.0
2011
2016
5
10
2.0
3.9
2021
25
9.8
2026
2031
2036
70
90
100
27.5
31.9
35.4
Source: National Energy Map for India: Technology Vision 2030: Pg.No. 57
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Renewable energy source potential
Source/technology
Unit
Biogas plants
Million
Biomass-based power
MW
Efficient wood stoves
Million
Solar energy
MW/km2
Small hydro
Potential/
availability
Potential
exploited
12
3.22
19500
384.00
120
33.86
20
1.74
MW
15000
1398.00
Wind energy
MW
45000
1367.00
Energy recovery from
wastes
MW
1700
16.20
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Other Efficiency Measures & Sources
-POWER
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Clean Coal can double life of coal from present 40-45 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
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CO2 Emissions Profile
(In million tonnes)
Scenario
BAU
Hybrid
Sector in
2031
Power
Industry
2001
917
917
2011
1663
1479
2021
3332
2443
BAU
2879
2830
HYB
1329
2510
Transport
1377
759
Others
Total
181
7267
176
4774
2031
7267
4774
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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
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Barriers to GHG Mitigation
INDUSTRY
• Cement, iron & steel, petrochemicals, other
chemicals improved
• Pulp & Paper, Textiles, Fertilizers, etc,
behind
• SME’s-credit & capital constraints
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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
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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
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Suggested Technology Deployment Programme
2006-11
2011-21
2021-31
Commercialize IGCC
Demonstration of commercial of
commercial scale thorium based
reactors demonstrated
Power generation technologies
Hydro power generation
Supercritical boilers/ulta-supercritical
boilers
Ultra-supercritical boiler to be commercialized
Advanced gas turbines (for example, Hframe 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
State-of-the-art industrial
processes to be adopted
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
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
Deep-sea natural gas
CBM
CBM production to be commercialized
CBM – cool
methane:
CFL – compact
fluorescent
– light emitting diode;
Mining
of bed
cool
from seams
greater
than lamp,
300 LED Commercial
mining of coal from seams
HVDC – high voltage direct current; HVAC – high voltage alternating
current;
39
metres
greater
than 300 metres
Source: National Energy Map for India: Technology
IGCC – integrated glasification combined cycle; T & D – transmission and distribution
Vision
2030:
Pg.No.
201
R & D – research and development
THANK YOU
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