Paris Agreement to constrain India's energy policy

Worries of India being left out of the negotiations for the Paris Agreement rulebook starting November have ended with the government moving to ratify the global climate change compact on October 2.  The ratification by adequate number of countries will bring the agreement in to force. It will become operational in 2020. Between now and 2020 countries will set the international

regulations and rules in place to implement the agreement. At home, the Indian government has already embarked on the steps required to fulfil its commitments by setting up inter-ministerial committees to look at different commitments and obligations that will arise out of implementing the agreement. This, senior officials in the exercise believe, require new regulations, perhaps a law, to necessarily monitor and collect emission data from different sectors of the economy – which was so far only estimated for submission to the UN.

Internally, it will also have to set its energy policy in tune with the international commitments on greenhouse gas emission intensity reduction. India committed to ensuring 40% of its installed capacity by 2030 will be from non-fossil fuel sources – this means wind, solar, nuclear, biogas, large and small hydropower. The back end projections done to reach this number will now have to be integrated into the new energy policy that Niti Ayog is championing for the NDA government. An early draft of this energy policy has been prepared and shared within the government but it is yet to be refined.

The power ministry drew up two future scenarios for its energy supply and demand that meet the international climate commitments. It projected a steady annual growth rate of 8% growth in GDP between now and 2030 or a 8.5% growth rate under a scenario where manufacturing sector grows at greater than current speed. Under the enhanced manufacturing growth scenario, which also includes the NDA’s commitment of round the clock electricity to all, the ministry estimated electricity-to-GDP elasticity of 0.9 forecasting an electricity supply requirement of 3675 TWh and electricity demand of 3125 GWh in 2030.

The government has already committed to 100 GW of solar power by 2022 and 60GW of wind power capacity during the same period. This, the government projected would have to be enhanced by another 25-50 GW over the remaining 8 years in case of solar and 15-30 GW in case of wind.

With the, increase in the share of renewable portfolio the need for balancing power would have to be kept in mind, the ministry noted to provide the bridge between the intermittent sources of power and the base load. Keeping in the mind the currently high costs of balancing power the proposal is to either maintain the installed capacity of win and sun at half of the rest or keep the actual generation from these two sources at 10-15%.

The power ministry has begun to now address the challenges of building adequate balancing power and the grid strength required to support such supply and demand character. The government will internationally require to look for lowered costs for this – storage being an expensive option.

 The power ministry estimated that with the energy mix it plans and the energy efficiency mission operating well it could do much better than the international commitment given of reducing the energy intensity of its GDP by 30-35% by 2030 below 2005 levels. It estimated that at optimum the energy intensity could go down by as much as 50% from the existing 0.049 kilogram of carbon dioxide equivalent per rupee of GDP to 0.024 by 2030. At this rate India’s per capita emissions of greenhouse gas would still remain below the existing global average, the energy and climate experts of the government estimated at 4.14 tonnes of carbon per capita. The non-fossil fuel capacity too, the government estimated could reach a much higher target than that internationally committed and hit past the 50% mark by 2030.

But the challenge, the internal assessment by the government noted, was the availability of international finance and reduced prices of technology – both of which currently seem difficult to come by. The last international meeting on climate finance under the UN negotiations showed that developed countries were ‘green-washing’ the existing finance instead of providing additional funds, say negotiators.

The international negotiations over next four years are also going to be strongly focused on building a transparency and disclosure regime that can help countries such as India keep track of what are the real new funding routes opening for the climate or green energy sector and where it would have to deploy its own resources. At the same time it would have to set its own house in order and set up a regulator to pull in standardised emission data from industry and different sectors of the economy to provide the inventory to the Paris Agreement on a regular basis. The negotiations over next four years will also set the terms for how deep the scrutiny of this data would be at the international level.

The international negotiations starting November 8 in Morocco are, in the least expected to set out deadlines for these rules to be put in place and how the manner in which they will be devised.