(Provisional transcript as delivered)
Introduction to the Fifth Plenary Session: Energy Security
Dr John Chipman
Ladies and gentlemen, we will now begin the Fifth Plenary Session. One of the biggest global themes of discussion that is now very much linked to the security agenda is the question of energy. The IISS is itself interested in doing much more in energy security and environmental issues. Our bimonthly journal, Survival, published its latest issue only a few days ago with a rather dramatic title, ‘The Impending Oil Shock.’ This is a subject on which we are intellectually engaged and we would like to do more research from different perspectives. It is therefore not an accident that we should choose to have the theme of ‘Energy Security’ as the concluding session of this conference. Perhaps if we had been a little more up to date, we would have squeezed Food into the subject, but that absence only means that we have more subjects that we might be able to discuss at subsequent India Global Forums. We will certainly take on board, as I will say in my concluding remarks, your own thoughts about how we could structure and improve this new IISS product.
We are delighted to have with us as our first speaker Suresh Prabhu, which is the former Union Minister of Power in India. He has also been Industry Minister, Minister of the Environment, and he holds a wide array of functions within the private sector, and has spoken and written a great deal about this subject. He began his political career in 1996 so you can see how quickly he has developed his reputation in India as a government minister, and as a spokesman on a variety of different issues.
Suresh Prabhu
Former Union Minister of Power, India
Thank you very much. Good afternoon, friends. For the last two days, we have been listening to various aspects of India’s growth story. To grow more, India will need more energy. If we are growing now at 8-9%, to grow at that level itself we need a huge level of energy. At the same time, absence of energy, lack of energy, or the cost of energy will determine the rate of growth. To grow we need energy, but to sustain growth we need energy. Energy is going to be one of the most important aspects of this growth story. In fact, we are already seeing that the current high cost of energy is putting much pressure on our growth figure. I therefore think we need to look at energy as a very important consideration in planning for our growth.
There is another dimension to this: the social dimension. Today, almost 45% of the people in India do not have access to commercial energy. They do not use energy from the grid, they do not have electricity, and that is a major challenge. We have already seen that there is a direct link between poverty and energy. If we want to remove poverty, we need to use energy. That means that we need more and more energy even for social properties.
India happens to be one of the lowest consumers of electricity in the world. Currently, the per capita consumption of electricity in India is 600 kilowatts per annum. This chandelier has so many bulbs. Just one bulb, burning for a few hours, would take one kilowatt per hour. The Human Development Index ranking has India stands lower is for many reasons, but also because of the lower consumption of energy.
Therefore, for economic reasons and social reasons, we need to have more electricity. Currently, India’s peak level shortage is at something like 18-19%. Energy shortage is at approximately 8-9%. There is a direct link in India between drinking water and energy. In Delhi, most of the water that we get in the tap is coming from ground water. You cannot take that ground water out unless you use electricity. There is a direct linkage now between water and electricity. There is also a relationship between water and agriculture. Almost close to two-thirds of Indian agriculture now is carried out using ground water. Most of the ground water now cannot be taken out with out hand pumps so we have to use electricity. There is therefore now a linkage between electricity and agriculture.
For a variety of reasons, we need to use more electricity than we are using today. These reasons include economic growth social reasons and other aspects. Today, we are using coal as the main portfolio of energy in India. Hydro energy represents approximately 22% of the electricity mix. Nuclear energy represents approximately 2-3%. If you include hydro renewable energies then the percentage used is high. If you exclude hydro, then renewables represents approximately 5-6% of the mix. I am not happy with the type of renewable mix that we have with the energy.
In India, one of our major challenges is in public transport. We do not have enough. We therefore need huge amounts of energy for the purpose of public transport. In India, the human population is increasing very quickly.
Indian industry is one of the most competitive in terms of its use of energy, barring very few sectors, but that again needs to use energy. In cooking, almost 98% of biomass is actually used for cooking. Only 5% comes from liquefied gas (LPG). Therefore, we are actually using energy for cooking in a significant way. 39% of this comes from the forest sources. We really need to look at this profile while planning for the future.
India has to grow at 8-10% for 25 years. Something has to happen to make sure that our power is improved completely, we have a reasonable level of living. To do reach that 8-10% growth, in the next 25 years we would need four times more energy than we need now. That is four times more in just 25 years. The electricity we would need would be approximately five times more, perhaps about one million megawatts of electricity that we would need in the next 20-25 years. We would need something like two billion tonnes of coal by that time.
As our population is increasing, we are seeing an increase of 15% in [two years?]. We have seen a 10% increase in the use of cars in the last 20-25 years. During the next 25 years we will also need more fuel in order to run these vehicles.
We are seeing that when we have more electricity, the demand increases. A good example of this is in China. China has added almost six times more to its grid size in the last 30 years, but now the shortages have increased rather than decreased. This is because when you have more electricity, the more demand comes in which had earlier been suppressed. That is the reason why we need more – not just from a historical basis – but because the aspirations of new income earners would have to be satisfied. We need to plan for this, considering several aspects of it.
Our import dependency will increase in the years to come. Coal is a mainstay, but even today we are importing almost 15% of our coal. Oil imports will rise to almost 90% in the next few years, and therefore import dependency will be one of the key features of our energy profile. Of course that is not something we want, but it will happen.
Cost is going to be an important aspect. 45% of the houses do not currently electricity. Affordability is going to be a very important issue. Clean energy is also going to be extremely important. We are going to have a new protocol in the next two years time – hopefully in Copenhagen – which should succeed the Kyoto agreement by 2012. Obviously our concern now is to make sure we have a clean source of energy. We do not want to burn fossil fuels, emit greenhouse gases, and cause pollution in a way that will cause some other cancers. Our concern now, as part of our energy policy, is on how to have clean energy.
We really need to have more renewable energies. India has almost 300 days of good sunshine in almost all parts of the country. That is an energy which can be harnessed. We have a huge coastline on the east and west coasts, and we can generate electricity on oceanic forces. We also have a wind potential which is not fully harnessed yet. Renewable energies can be one of the best answers to our problems. Unfortunately, our current focus, which our government has prepared for the integrated energy policy, is that even if our energy from renewable sources increases 40 times more than today, by 2030 the percentage of renewable energy in the total energy portfolio will be just 5-6%. This is worrying, and we really need to increase our portfolio from the renewable sources.
Energy efficiency and [demand sale?] management will be an important component of addressing this problem. The potential of demand sale management and energy efficiency put together represents something like 30%. On a realistic basis, we could go up to 23% of that without any problem.
While dealing with this, we need to address some other problems. When estimating our energy needs, we need to find out what model we will adopt. Will we adopt the Chinese model, for example? China is importing from whatever sources or commodities, bringing them to the mainland. Of course to bring the energy, they are using energy. They are then using more energy to process it, and then they are re exporting it to other countries. To do that, the energy intensity is very high. They are also bringing in people from the hinterland to the places where the manufacturing is taking place. In the process of moving people in and moving them out, again they are using huge levels of energy. We have to think about a model which will determine to what extent we are going to have more need of energy.
Another issue is the size of the population. By 2050, India is going to be the most populous country in the world; more than China. We should be proud to be ahead of China in many other areas, but not in population. A real demand sale management issue should be in controlling the population. If you can control the population, that would be the best demand sale management there would be. Unfortunately, that is missing from our public agenda at the moment.
As I said, our reliance of acquiring energy is going to be from imports. That could be a potential area of conflict. Few countries are going to acquire the same source of energy and it is something which we should be guarding against. Is it possible that, rather than creating a conflict area, we can use it as a possibility of peace and prosperity? There is a good example of that in India itself. Currently, India is importing energy from Bhutan. In fact, as a result of this, the Bhutan’s hydro electricity which is imported into India is leading to Bhutan having the highest per capita income in the region. We could do the same from Nepal or many other places, such as in Latin America. Latin America has almost 26% of the water of the world, 12% of the land, and only 6% of the population. We are currently making biofuels in India, which could lead to a food crisis and, more importantly, a water crisis because today we want to stop burning fossil fuel and therefore addressing one problem, but actually we are going to burn water through biofuels. We should look at the possibility of doing that from Latin America or Africa. It is something that the global community can look at.
Another issue is whether we should look at acquiring electricity from one centralised location, and whether we should get electricity to 100,000 villages through only one grid, or if we should distribute the generation of electricity. Should we generate locally and also distribute locally? That is something that is doable. In fact, I was the one who helped to draft the Electricity Act 2003, which allows a distributed generation. This is possible and we should look at it.
To make this happen, we should find out whether we can use a different source of energy. Forests are one of the major sources of abating climate change. They act as forest carbon syncs. As I was saying earlier, more population means more people will need to take land. At the moment the land is forest land for agriculture, for habitation and for other purposes. Unless we give them commercial energy, they will use some of these to meet their energy requirements. Therefore, forests are under threat because we are not addressing the energy issues properly.
To make this happen, we have to bear in mind that one of the most important issues is environmental security. If we do not look at that, all our energy considerations will be lost. We will have more than enough energy for everyone, but everyone will be gone by then. We must make sure that the environment becomes an integral part of our energy policy. That is what is really important. When we find the solution to one problem, it should not be by creating another problem.
We signed the Montreal Protocol to lower the ozone depleting substances. One of the gases that replaced an ozone depleting substance in fact caused a greenhouse gas emission. We therefore solved one problem and created another one. While solving energy problems, we should not create other problems. That should be the strategy that global players must adopt. India would like to do the same.
We have a big challenge. We will need to address it with the cooperation with international bodies. Climate is an issue that cannot only be addressed by India. In fact, India is a victim of it rather than the cause of it. However, we still need to address it. To do that, we need to have a collaboration of international players. I hope this forum will add to the beginning of that process.
