No. 5 January 1994

Environmentally Sound Energy Development in India

The "Environmentally Sound Energy Development - India Pilot Project" was launched at the beginning of 1992. (See Box 1.) The study attempts to identify energy development paths which minimize the impact on the environment and at the same time allow India to carry on economic activity which is likely to result in a 5% growth rate in GDP during the next two decades. The study will also determine the amount of investment required in the various key sectors to follow the path of minimizing environmental impacts.

A brief overview of some of the key issues is presented in the following pages. The project includes a comprehensive study of energy demand in all sectors, i.e. households, industry, commercial, transport and agriculture. Only the industrial and household sectors are described below as examples, although transport and agriculture are recognised to be particularly important for the country's energy future. Likewise, detailed studies of all energy supply sectors, oil, coal, power, renewables and biomass, are being done but only selected examples are summarised here.

Results from the sector studies are collected in an extensive database being constructed at TERI, and used in the energy system model TEESE to calculate the consequences of different development scenarios. Full reports of these activities will be issued on completion of the project at the end of 1994.

Energy demand from industry

Industries account for over 50 per cent of the total commercial energy consumed in India. More than two-thirds of the total energy consumed in the industrial sector is consumed by a few energy-intensive industries such as iron and steel, cement, petrochemicals, caustic soda, textiles and the paper industry. These are also sectors whose activities have major environmental impacts.

It is estimated that industries are responsible for about 40 per cent of the total environmental impacts in the country. Several reports published since the early eighties have also identified the need to improve energy efficiency in the industrial sector. This would have the twin impact of reducing specific energy consumption and limiting the impact of industrial activity on the environment.

Estimates for the potential for savings vary from 20 to 40% across sectors. These comprise savings that could be achieved by improving housekeeping practices, small investments in production facilities, and major changes in technological processes. Indian industries can be grouped as small, medium and large industrial sectors. While the energy intensive industries are in the large and organized sectors, several of the industries that produce energy consuming equipment, such as electrical appliances, are in the small and unorganized sectors. This poses extreme difficulties for the formulation and implementation of policies.

The industrial component of the study aims to:

Household energy

The household sector accounts for over 40% of the total energy consumption in India, if non-commercial energy is included. A large part of the energy used by households is in the form of traditional fuels such as biomass, animal dung, and collected firewood. As in most developing countries, there is a sharp divide between the urban and rural household energy consumption structure.

As cities expand, their energy budgets rise steeply. Indications are that the present trend of concentration towards bigger cities cannot be sustained. Sustainable development would need a more balanced urban growth with accelerated development of small and medium towns, on an ecologically sound basis. Urbanisation leads to greater demand for commercial fuels. At the same time, biomass fuels, particularly firewood, do not lose their importance, and their supplies also need to be planned for.

The fuel-mix chosen by a household depends on the supply and cost of fuels. The present urban energy system is inequitable, causing undue hardship to the poor. There is a need to draw up an integrated energy supply and pricing framework, keeping the specific problems of the urban poor in focus.

The household components of this study aims to:

Energy supply issues

India generates approximately 300 billion kWh of electricity from an installed capacity of over 70,000 MW. Coal production is 230 million tonnes and oil production is approximately 23 million tonnes. Natural gas came into prominence in the last decade and production is now approximately 18 billion m3. The contribution from renewable energy sources (other than large hydro) is as yet very small, mainly from wind energy and from mini- and micro- hydropower stations.

The rapid growth forecast for energy demand will require corresponding increases in the energy supply sectors. Energy production on the scale required is likely to result in serious environmental impacts unless steps are taken to limit these impacts on land, air and water systems. It is expected that the following supply constraints will exist through to the year 2012:

Some of the specific environmental issues which have to be addressed are:

The project includes a detailed study of the environmental impacts of coal mining, exemplified in a case study of the Talcher coalfield, described in Box 3.

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