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Ramprasad Sengupta Professor of Economics Jawaharlal Nehru University New Delhi, India 110067 email: rps0302@gmail.com March 2012. Presentation for the Seminar on 12th March 2012 At the Economics Department , Presidency University, Kolkata
Production Processes of an economy directly or indirectly draw upon resources from nature as a stock flow or fund service resource. Resources are used entropically in production and consumption processes.
The
relations of Material Balance, the phenomena of Solar Energy flow and Nutrient Cycles-put a bound on the maximum attainable rate of regeneration and supply of resources and the rate of absorption of wastes by the natural environment as required by the economy. Law : Recognition of the problem of scale of an economy and limits to its growth over time, for any given regime of science and technology.
Entropy
L.E.MATTER
H.E.MATTER
ECONOMY
L.E.ENERGY H.E.ENERGY WASTE HEAT
ECOSYSTEM
RESOURCE REGENERATION & WASTE ABSORPTION
The World Commission on Environment and Development (1987) characterized a development process to be sustainable if it ensures such use of resources of all kinds man made capital, natural capital and human capital that the level of human well-being is monotonic non-declining over time. Discussions at Rio 1992 and Johannesburg 2002 was based on the presumption of sustainability so defined. The concept focuses on intergenerational equity and not so much directly on intra-generational or current distributional equity. The concept also presumed substitutability between the ecological capital and the man-made / knowledge capital and therefore relied on the concept of weak sustainability, not that of a strong one.
Asian developing countries with the gap between the rich and the
poor of the world growing over time.
BIOCAPACITY (global hectares per capita) Populatio Total n Biocapacit Grazing (million) y Cropland land World China India Japan North America Canada USA Europe(E U) 6.476 1323.3 1103.4 126.1 330.5 32.3 298.2 487.3 2.1 0.9 0.4 0.6 6.5 20 5 2.3 0.64 0.39 0.31 0.16 2.55 4.89 2.3 1 0.37 0.15 0.01 0 0.43 1.8 0.29 0.21 Ecological Fishing (Deficit) of Ground Built Land Reserve 0.17 0.06 0.04 0.06 0.88 3.96 0.55 0.29 0.07 0.07 0.04 0.06 0.1 0.09 0.1 0.17 -0.6 -1.2 -0.5 -4.3 -2.7 13 -4.4 -2.4
Such erosion of eco-capacity and thereby loss of primary productivity of common property resources affected the livelihood and economic conditions of the poor and the marginalized section of population the most.
As a result the there has been a switch from the concept of sustainable development to that of green development by the UN for the future deliberation and choice of development strategy for solving the major global developmental issues. This has involved the following two concerns: 1) The removal of poverty and destitution and focus on intragenerational equity issue in development including issues relating to resource use and its benefit sharing. 2) The conservation of ecological capacity of the earth or of the ecosystems to ensure the sustained supply of eco-services.
3) This implied a shift of emphasis from Substitutability to complementarity and therefore towards strong sustainability and thrust on the reduction of environmental risks. Implications in respect of bio-diversity conservation .
Energy Security for the Households : Removal of Energy Poverty for cooking and lighting
Environmental Security 3. Conserving eco-capacity or bio-productivity for the removal of environmental security by way of i. raising the efficiency of energy resource use both on demand side of final energy and supply side of energy
ii. Substitution of carbon intensive fossil fuel by a. low carbon fuel (natural gas, coal gas methane, etc. ) b. carbon neutral fuel (bio-fuels bioethanol, biobiesel, bio-gas, other bio-masses) c.carbon free fuel (abiotic fuels hydro, solar, wind, etc.) d. Neuclear fuel. Green or low Carbon Energy Sectors Growth is to be combined with equity in macroeconomic growth of income and energy distribution
How far Indian Economic Growth has been Low Carbon? What is the prospect of Low Carbon Growth of India? What are the supporting policies?
India
China
USA
World
Per Capita National Income (PPP$) in 2007 TPCES per capita (kgoe) in 2007 Electricity consumption per capita (in thousand KWhr) in 2007
Comparative Primary Energy Use across some Major Countries and Regions
Per Share of Electricity Energy Capita Biomass in consumption Energy Intensity of total Countri National per capita (in per capita GDP Income Primary es thousand Kwh) kgoe 2007 (Kg/PPP$) (PPP$) Energy in 2007 2007 2008 2007 (%) India 2930 529 0.204 27.2 714
China
USA High Income Countri es
6010
48430
1484
7766
0.294
0.182
9.9
3.5
2488
14314
37665
5321
0.154
3.7
10283
15
Comparative Carbon Dioxide Emissions across some Major Countries and Regions
Carbon Dioxide CO2 int. Of Population Emissions GDP Countries (million) Kg/2005 PPP$ (million metric 2008 tonnes) 2006 2006 India China USA High Income Countries World 1140 1325 304 1069 6697 0.6 1.0 0.5 0.4 0.5 1509.3 6099.1 5748.1 13377.9 30154.7 Per capita Carbon Dioxide Emissios (Metric Tonne) 2006
Fuel Shares 2008 (%): Fuels Coal Oil Primary Comm. Energy 57 32 Electricity Generation 68.6 4.1 Final Energy 23 50
N.Gas
Nuclear Hydro Non Conv. Electricity
7.8
0.8 2.2 0.3 ---
9.9
1.8 13.8 1.8 ----
6
---21
Sectoral Shares in Final Energy: 2008 Final Energy Mtoe Industry 120.4
Transport Commercial & Public Services Agriculture 45.32 29.64
16.45
3.98
Energy poverty:
Concept 1 : Unclean Fuel
Rural Urban
INDIA 66th round 61st round 66th round 61st round 82.02 84.08 34.41 45.06 18.94 23.42 6.21 7.66
Rural
Urban
Poverty Ratio (HH) lighting INDIA 66th round 61st round 66th round 61st round 22.89 25.35 35.06 46.81 20.64 25.48 6.89 9.52
Lorenz Curve of Consumption Expenditure and Concentration Curve of Fuel Consumption for cooking (real unit) of Rural Sector of India
1 0 .2 .4 .6 .8
.2
line_45
.4
.6
.8
Lorenz_Curve CC_lpg_cooking
CC_kerosene_cooking CC_biomass_cooking
Lorenz Curve of Consumption Expenditure and Concentration Curve of Fuel Consumption for lighting (real unit) of Rural Sector of India
1 0 .2 .4 .6 .8
.2
line_45
.4
.6
.8
Lorenz_Curve
CC_electricity
CC_kerosene_lighting
Share of net imports and domestic production in the total quantity of crude oil supplied to India economy, 1970-2007
100%
90%
80% percentage share 70% 60% 50% 40% 30% 20% 10% 0%
Years
Net Imports
Domestic production
22
Source: Authors calculation based on data from GOI, 2010 and GOI, 2006
100
in US Dollars/bbl
80 Brent 60 Dubai
40
20
24
Transport
In Billion Rupees
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
500000
400000
300000
200000
100000
0 1994
1995
1996
1997 1998 1999 2000 2001 2002 Combustible Renewable & waste
2003
2004
2005
2006
2007
2008
Gas
Crude oil and Petroleum products Coal 26
200000
150000 100000
50000
0 ` 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Non Fossil fuels (including nuclear, hydro, geothermal, solar etc) Gas Crude oil and petroleum products Coal 27
Sector wise Total Final Commercial Energy consumed in the form of Petroleum Products (in thousand tonnes of oil equivalent)
100000
90000 80000 70000 60000
50000
40000 30000 20000 10000
0
1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Industry
Transport
Residential
Agriculture
Services
28
Supplies of Total Primary and Final Commercial Energy and CO2 Emissions.
400 350 300 CO2MT 250
mtoe
TPCES
FNLEN
CO2MT
29
Source: Based on IEA Data on Energy balances of Non-OECD countries, different volumes.
0.100
0.080
0.060
0.040
0.020
0.000
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
T PESCMINT
CO2KGINT
2005
30
Annual Average Growth Rate in the Pre-reform and Post-reform Periods (%)
Period
Primary Energy CO2 intensity CO2 Commercial Intensity of CO2 emission of overall intensity of Energy GDP energy overall GDP 5.55 4.56 1.1 -1.72 5.96 4.36 Energy Intensity of GDP 0.63 -3.52 0.389 -0.191 CO2 emission 5.88 3.87 1.5 -1.91 CO2 intensity of energy 0.394 -0.214 CO2 intensity of GDP 1.42 -2.37
Primary GDP Commercial Growth rate Energy 4.4 6.39 5.47 4.09
Decomposition Analysis of growth of CO2 emission intensity of GDP by the Refined Divisia Method for the period 1971 to 1990
1.5 1 0.5 0
Structural Effect
Period 1990 to 2005 0.5 0 -0.5 -1 -1.5 -2 -2.5 0.145 Energy Int effect Structural Effect Fuel mix effect -0.06 Residual -0.188 Total Change
-2.27
-2.37
Projection of Future Energy Requirement for India as per Intergrated Energy Policy Committee Report (2006)
Use of a Linear Programming Model of Cost Optimisation of the energy system for meeting the requirement of 8 9 % growth of GDP. A Partial Equilibrium Model of bottom up type. Choices of fuel and technology in power and using elasticity approach of aggregate and sectoral energy requirement. No costs of externalities are considered. Coal based development of the energy sector was found to be the least cost option.
Concern for weakening the link between the growth of GDP and the energy use and that between the energy use and the pollution arising induced the consideration of the following options
1. Forcing full development of hydro, 2. Maximisation of use of nuclear potential 3. the use of gas to generate 16% of electrical energy (where natural gas is supplemented by coal bed methane and in situ coal gasification), 4. demand side management to reduce electricity demand by 15% , 5. the attainment of higher conversion efficiency of thermal power generation to 38-40% from the pre-existing level of 36% for 500 MWE plants, 6. rise of railways share in freight traffic from 32% to 50%, and increase of fuel efficiency of motor vehicles by 50%, and 7. forced utilisation of the renewable potentials to the extent of 3000MWwind power, 10,000 MW of solar power, 50,000 MW of biomass power, 10 Mt of bio-diesel, and 5 mt of ethanol by 2031-32.
13489 1220
157 9 34 29
16
86 136
87 3(LNG)
23 38
37
Resources
1 Hydro Power Capacity (in MW) 2 Biomass (a) Fuelwood (b) Biogas*
3 Bio-Fuels @
(a) Biodiesel (b) Ethanol 4 Solar @ (a) Photovoltaic 1200 1200 <1 <1 10 5
(b) Thermal
5 Wind Energy 6 Small Hydro-power
Based on the assumption of Community Plants. @ Based on assumptions regarding land availability (for details see the source) Source: Planning Commission, 2006a.
38
Resource Base
330 42,200
10,000 5,00,000
1,50,000
Very large
Table 27: Projected Primary Commercial Energy Requirement for Maximum Hydro-Nuclear-Gas Potential Use and for GDP Growth Rate of 9% in India by the Expert Committee for Integrated Energy Policy.
Total Primary Commercial Energy (mtoe)
379.19 546 1011 1858 6.4 % share of Coal 54.9 51.8 51.5 50.4 6.3 Oil 34.0 34.1 30.8 29.5 5.6 Natural Gas 7.6 8.8 11.0 12.9 8.0 Hydro 2.3 2.2 2.3 1.9 5.9 Nuclear & NonConventional 1.2 3.1 4.4 5.3 11.2
Year 2005 2011-12 2021-22 2031-32 Compound Annual Growth Rate (%) of Total Use of Fuels GDP elasticity of fuel use Rate of Growth of Energy Intensity of GDP(%) Per Capita Consumption of Commercial Energy in 2032 (kgoe)
0.71
0.7
0.62
0.88
0.65
1.24
-2.6
-2.7
-3.4
-1.0
-3.1
2.2
1266
638
373
163
24
67
Share of Non-Comm En. in Total (%): 2005 27.8, 2011-12: 23.6, 2021-22: 15.2, 2031-32: 9.1 Rate of Growth: 0.76 Source: Planning Commission 2006.
60 50 40 30 20 10 0
54.1 45.5 25.7 5.5 9.8 0.7 4 0.1 26.4 10.7 1.9 5.3 0.1 10.1 41.1 22.8 9.8 2.2 12 6.4 5.6
Coal
Crude Oil
Natural Gas
Hydro
Nuclear
Renewables
Non-Commercial
Future Projections for Best Environmental Scenario: It is important to notice that the dependence of India on coal in 2031-32 will remain 51% in electricity generation and have a share of over 41% in the total primary energy mix even as per the best environmental scenario among the options.
The gas resource is to be used only for peaking power even when it is forced as an option.
The capacity utilisation of hydro power is found to be low because of the low availability of water resources. However, the total energy need as per the best option economises the requirement of the total primary energy resources by 21%, demand for primary commercial energy by 19% and that of coal and oil by 38% and 28% respectively in 2031-32 vis-a-vis the coal dominant option. However, even at the best scenario the non conventional renewables cannot provide more than 5.6% of total energy requirements. Any failure of other options to provide the designated supply, the economy of India has to fall back upon coal to meet any deficiency.
The CO2 emission is correspondingly expected to go down by 35% vis-a vis the coal dominant option in the terminal year 2031-32. The CO2 emission is projected to grow from the current level of 1 billion tonne per year to 5.5 billion tonne as per the high coal development scenario and 3.9 billion tonne as per the most environmentally conserving scenario. Even with all these energy sector developments, Indias per capita carbon emission would be in the range of 2.6 to 3.6 tonnes of CO2 while the same for the US and the World on the average has been 20 tonnes and 4.5 tonnes respectively in 2004.
Macro economic approach : Demand based on income, energy prices (Models with nos: 1A, 2A, 3A)
2.
Sectoral approach: Alternative Demand Behaviour: (a) Sectoral Income, Real Energy Price and Technology Energy Intensity. (Models with Nos: 1B, 2B, 3B) (b) Sectoral Income, Share of Electricity in Final Energy, and Energy Intensity (Models 1C and 3C)
Alternative Growth Rates: 8% (Models 1A 1C, 2A 2B ), 6% (Models: 3A, 3B, 3C) Real Energy Prices (a) no change in prices since 2005 (Models:1A 1B, 3A 3B) (b) Real Energy prices increasing at 3% compound rate per annum. (Models: 2A-2B)
3.
4.
Others
GAS OIL
COAL
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
GAS
5000
4000
OIL
3000
2000
COAL
1000
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
6.62 0.831
5.84 0.733
5.76 0.72
5.18 0.85
47
Projection of CO2 intensity of GDP (gms/Rupee) and Per capita CO2 (tonnes)
8 % growth with no price change 2005 2021 2031 % drop 2021 % drop 2031 Per capita CO2 (tonnes) 2031 29 38 41 30-32 25.4 - 29 22 27 8% growth with 3 per cent price rise 41 23-28 16 25.4 32 44 41 61 6% GDP growth rate and no price range 41 16 24 27 31 17 24 24 34
3.4 3.6
2.1 3.2
2.4 2.8
IEPR India per capita CO2 (2031-32): 2.6 3.6, China per capita CO2 = 4.7 (2006) US per capita CO2 = 19.3 (2006)
64
55
61 58 52 54 52 56
52 57 48 52 53 53
47
53 54
51
Notes: The exchange rate for 2004-05 is assumed to be Rs 42.25 per US Dollar. Source: Authors estimates based on GOI, 2008
50
Role of different energy sources in India's Power Generation Capacity as on March 31, 2010 Hydro, (in MW)
36863
Thermal, 102454
Hydro
Renewables
Capital Cost and the Typical Cost of Generation of power from Renewable Sources
Source
Estimated Cost of Generation per Unit (Rs. Kwh) 1.50 to 2.50 2.00 to 3.00 2.50 to 3.50 2.50 to 3.00
2700 1500
Technologies
Kindly note that the wind project costs are in the range of about Rs.56Crs/MW, but the Solar PV grid connected project costs are coming down every year (with more R&D, innovation, new technology, technology maturity and market creation. The Solar PV costs could be in the range of about Rs.18-20 Cr/MW (lower without backup battery storage). The average electricity generation cost for solar PV is still about three times that of wind, which has reached grid parity. CERC tariff vs. state tariffs INR/Kwh
Energy Resources Biomass Cogenertion Solar PV Solar Thermal Small Hydro Wind CERC Tariff 4.6 3.4 4.5 3.7 17.9 15.3 4.3 3.1 5.1 3.4 15.0 13.0 13.8 8.5 3.2 2.4 4.3 2.9 State Tariffs 4.9 3.0
However, kindly note that solar projects sanctioned under Jawaharlal Nehru
National Solar Mission through competitive bid, the lowest tariff awarded was Rs.10.95/unit and the highest was Rs.12.76/unit
55
Cumulative Achievements
Power from Renewables A. Grid Interactive Renewable Power Bio power from agro residues etc. MW Wind Power Small hydro (<25 MW) Cogeneration (Bagasse) Waste to Energy MW MW MW MW
Nuclear Power
Success of Fast breeder reactor cycle depends on the co-operation of the Nuclears suppliers group of supplying fuel and LWR and of the national level political economic problems. Thorium cycle again is contingent upon the success of LWR cycle. Origin of the problem is poor availability of Indias uranium. Enough thorium is available in India which can be used as a blanket cover in the reactor in Uranium cycle to generate fissile material to be used in the next cycle of Thorium Uranium. Resolution of political problems and problem of safety essential.
Policy Implications
Impact of energy conservation or use of alternative energy resource sectoral and macro level ICOR and Implication in respect of growth rate. Any problem of financing Low Carbon Growth in the context of low carbon development strategy for India Any reduction in the Growth Rate for CO2 mitigation? What should be done about Energy Pricing? Can the higher energy costs be passed on to consumers? About 70-75% of CO2 arises from power and transport sector. Hence policies of carbon intensity reduction need to focus on these sectors. Supply side Issues: The problems with hydro development : water rights issue, rehabilitation and resettlement of people. Forest and Biodiversity loss.
Gas of limited availability. Problem of importing gas from Middle East because of geopolotics.
Fast development and deployment of Carbon free technologies - renewables and development of the required entrepreneurship are high priorities.
58
Special comments on energy poverty and requirement of carbon space for the household. Household to depend on biomass : Difficulty in eliminating energy poverty cooking if poverty removal means minimum need by clean fuel supply .
Electrification of all homes possible. Non conventional technology development like decentralised energy development using renewables for sustainable energy supply for households. Some additional carbon space provision is imperative for removing lighting and cooking energy poverty and for greater mobility of people for access to opportunities.
Cost ordering of Mitigation option to reduce environmental stress : 1. Energy Conservation, Demand side efficiency improvement options. 2. Supply side efficiency improvement of coal thermal plants 3. T& D Loss reduction 4. Non conventional Renewable technologies 5. Coal gasification or liquification. Financing carbon intensity reduction should not be a problem if 8% growth is attainable.
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