The importance of energy efficiency to drive the low-carbon agenda

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The low carbon agenda is the over all reduction of greenhouse gases, especially carbon dioxide, to keep pollutant emissions and climate change in check. The goal of the agenda is to achieve economic, environmental and social development while keeping the emissions at their minimum. The optimal way to achieve the low carbon growth is to become more energy efficient in every aspect of our lives. This means energy efficient buildings, transport, homes and industries. Due to the increase in population and income, the commercial and residential sector has grown rapidly in the past few years accounting for 29% if the total electricity consumption of the nation and this number is only to rise in the future. Seeing that our lifestyles are largely carbon dependent at the moment, this growth calls for an energy efficient infrastructure in place. The Bureau of Energy Efficiency (BEE) is tasked with the job of creating schemes for promotion of energy efficient appliances and setting regulatory standards.

In order to reduce its carbon footprint, the Indian government has mandated the new coal power station to use energy efficient technologies. Old power stations have been drafted to be renovated and modernised. Old thermal power stations have also been given targets to make them more energy efficient. The National Smart Grid Mission has been implemented to counter energy loss and make energy supply an efficient process.

A prime example of energy efficiency is Europe which saw a 40% decrease in energy consumption per unit GDP between 1990 to 2006. The World Energy Council estimated that if the whole of the world were to have energy efficiency of Europe in 2006, 420 Mtoe of fuel could been saved globally, which means that some 1.3 GT of CO2 emission could have been avoided.

Setbacks

The statutory framework for energy efficiency in India is fairly recent and begins with the Energy Conservation Act, 2001. The Bureau of Energy Efficiency (BEE) was then constituted under the Act in 2002. In 2008, the National Mission for Enhanced Energy Efficiency (NMEEE) was launched as part of the National Action Plan for Climate Change (NAPCC). The NMEEE estimates the Indian energy efficiency market to be around Rs. 74,000 crore. It is tasked with the job of making policies to strengthen the energy efficiency market. The NMEEE is also takes measures to achieve the goals of saving 23 million tonnes per year and reduce greenhouse gas emissions by 98.55 million tonnes per year. The Perform, Achieve and Trade scheme (PAT) was launched in 2013 as a mandatory energy efficiency policy for reducing carbon emissions from the carbon intensive economic sectors.

But India experiences a divide between the policy and the implementation aspect of energy efficiency. These policies have had lukewarm implementation and seen financial setbacks. The government seems to have taken a market approach to the energy efficient policies but the lack of investments from the private sectors indicate that this approach is flawed.

There is lack of participation of the private sector in the investment and implementation of energy efficacy policies which has been attributed to the market and institutional failures.

Despite the government policies, energy efficiency initiatives have failed to come into he spotlight in India unlike renewable energy. This has caused the sector to be deprived of investments. The current priority of the government is to get the economy growing. When this is the top agenda, resorting to energy efficient means takes a backseat over industrial expansions and the renewable energy drive. These are also safer investments compared to investments in energy efficiency as they are more institutionally organised, established in the market and do not have as high an initial investment cost.

There is also the divide between the public and private sector. Currently, they seem to be functioning separately but if they come together and jointly take up the issue of energy efficiency, it would tend to the nation’s clean energy needs much more efficiently.

Moreover, energy efficiency programmes are operated at individual project level. This greatly limits the scope of their applicability. What should be done is that they should be made functional at a higher, overarching level.

Another deterrent in the path to energy efficiency is politics which sidelines environment friendly development with bouts of power struggles.

Way forward

Planning Commission’s Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth estimates the cumulative cost of the low carbon strategies over the next twenty years to be about 834 billion USD at the 2011 prices. If this cost is to borne completely by domestic resources, then the estimated cumulative loss of GDP is around 1344 billion USD at 2011 prices. However, a drop in emission intensity is estimated to be between 22-42% by 2030 depending on the various low carbon strategies adopted.

Energy demands can be reduced without compromise to economic development by changing the energy policies of nations. The key points in this matter are to incentivise efficient energy and to implement new energy standards effectively.

Technological improvement is the most significant contribution towards energy efficiency. Energy efficient projects have a steep initial capital costs. Though this evens out in due time because of low costs of maintenance and operations, the returns of profits are at a rather slow rate. Policies should be made taking into account market failures, disparities in information and knowledge and also the high upfront costs and there should be incentives to attract investors and provide them safe with a safe investment environment.

The Planning Commission’s Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth pointed out that low carbon development goes hand in hand with inclusion and growth. The Report emphasised that the Low Carbon Growth model which the country has adopted has inter-sectorial implications. The Report recommended a two pronged approach: The first approach would ensue only the low carbon targets of the nation and the other would be a combination policy instruments, regulations, subsidies etc.

The Report also recommended that the Planning Commission should conduct periodical checks on the implementation of carbon strategies and present it before the Union Cabinet. It opined that since carbon agendas are inter sectorial and inter disciplinary, a body like the Planning Commission which can coordinate among the different ministries would be the ideal to carry out such a task.

The sooner the government realises that development can be achieved while still being energy efficient, the better will be its citizens’ chances of having a safe habitable environment in the future. For this, the state has to abandon its current role of a mere market regulator and take on more responsibilities. There is an urgent need for implementation of policies which can be achieved through coordination between the centre, state and the local bodies and conferring bodies like the BEE with more resources, responsibilities and status.

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