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Rediff.com  » Business » India can save energy and grow

India can save energy and grow

By Subir Roy
December 12, 2007 13:21 IST
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The hour of reckoning on climate change is drawing near. The process has begun in Bali for the UN family to agree on a new climate treaty in five years (by 2012) that will enable the world to recede from the precipice of irreversible man-induced climate change that will have a severe downside, particularly for poor people.

The main issue for India is its reluctance to accept emission reduction commitments that will tie its hands in pursuing growth to end poverty, something you cannot do without consuming more energy and raising emissions.

On the other hand, there is the need to be a good global citizen, share responsibility for mitigating global warming as matters like climate and emissions do not know national borders.

 It is difficult for large countries like India and China on a high growth path to opt out as though they didn't create the problem, they will have to be a party to the solution. This is because they will account for a large chunk of future emissions.

What is more, a polluting environment is good for nobody, adding as it does to national healthcare costs and the fallout of environmental damage. Plus, it is in the clear self-interest of an energy-deficient country like India to tackle head on the challenge of raising energy efficiency.

 It is by now well known that India ranks nowhere in terms of per capita energy consumption and carbon dioxide emission. But if we look at countries with which India bears comparison, the picture changes a little when it comes to carbon dioxide emission per unit of energy consumed.

It is still well off in comparison with most rich countries, Russia and China, but not Sweden and other Scandinavian countries. It is marginally behind Korea and substantially behind Brazil. Thus, the role models are there not just in northern Europe but among one of the BRIC countries too.

 The picture is equally significant when we look at how energy-efficient and carbon-intensive our economy is. Here India is well-off in comparison with only Russia and China and way behind the rich countries and also Korea. But the picture changes dramatically when we look at national income calculated in terms of purchasing power parity (PPP).

By that measure, India's energy and carbon-intensity are among the best, a shade behind Brazil and Japan (it has been seeking to reduce its dependence on energy, which it has to entirely import, since the first oil shock of 1973) and ahead of both the rich countries and Russia and China.

On carbon-intensity, Sweden's status is exemplary and Brazil is also way ahead, but India does better than the rich countries, sometimes by a wide margin. The point about PPP is that it is a consequence of low costs and incomes.
A haircut is much cheaper in India than in the US, making the consumer's rupee stretch longer, but the difference will get eroded as barbers and others earn more over time. So as incomes go up the issues of energy and carbon-intensity will become more challenging.

 India has not yet made the kind of dramatic commitment to cut energy-intensity that China has, by 20 per cent during 2006-10, but things have been moving, as the record shows.

While the economy has been growing by around 9 per cent since 2004, energy consumption has gone up by only 4 per cent. Average specific energy use in high energy-consuming process industries like cement, steel, aluminium and fertilisers has significantly declined in the decade 1996-2005 -- by 25 per cent in steel and nearly 50 per cent in cement.

A UNEP and World Bank study, called the three-country energy-efficiency project (covering China, India and Brazil) notes that a new energy-efficiency lending programme financed by Indian banks has made progress.

There are a lot of low hanging fruits which can be plucked by such simple acts as installing more energy-efficient boilers and use of fluorescent lamps in homes and public places.

Steps like these can cut energy use by 25 per cent. So a lot can be done and something is already being done to improve the Indian economy's energy-efficiency and carbon-intensity without sacrificing the goal of rapid growth.

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Subir Roy
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