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Energy Scenario 2050 by World Energy Council: A Critical Appreciation, Shri R V Shahi, Former Secretary, Ministry Of Power

Energy Scenario 2050 by World Energy Council: A Critical Appreciation
[R V Shahi's Weekly Column for Infraline, March 24, 2008]

The World Energy Council, the premier global energy organization, has brought out a comprehensive report on World Energy Scenario 2050, towards the end of 2007. The report is the outcome of a very extensive work done over a period of three years and it projects the world energy scene till 2050 on the basis of different types of assumptions, and therefore, presents various scenarios. Analysis of energy consumption across various continents and regions and the possibilities of enhancing energy consumption across various countries have been forecast and presented. The report starts with a mention about the energy statement made in 2000 by the World Energy Council (WEC). The Council had identified three important aspects of energy in its statement - Accessibility, Availability and Acceptability, and they coined the phrase "Three A's of Energy". Accessibility refers to the extent of population of a continent, or of a region or of a country, having access to energy. It needs to be underscored that even today more than two billion population in the world (which constitutes more than one third of the total population) does not have access, in practical sense, to commercial energy. It is a global challenge to provide to this group of people which has remained deprived of any level of modern living in absence of access to energy. Availability of energy refers to the supply side of energy. Availability or lack of it has direct impact on accessibility. There are countries which have been able to produce or source energy for their people and therefore energy is available; accessibility in these cases is higher. For a country this could present a macro level picture. However, within a country there could be significant differences across different geographical areas. For example, Indian States like Delhi, Gujarat, Punjab, Haryana and Maharashtra etc. have significantly higher level of per capital electricity consumption in the range of 1,000 to 12,000 kwh per year while north-eastern States are in the range of 60 to 150 kwh. Acceptability (the third A) refers to the societal response to issues like environmental ramifications and climate change impacts arising out of production and consumption of energy.

The degree of relevance of these three A's across different parts of the world varies. For example, highly developed economies in Europe and North America and a few others in other continents do not have the problem of accessibility or availability but they do have the problem of acceptability in the sense that environmental concerns are high as they have gone beyond the limits which could normally be now acceptable to the society. Global warming concerns are not new. Kyoto Protocol was signed ten years back. Impact of increasing level of production and consumption of various forms of energy was properly projected and a line of action was also drawn. In the last two years the climate change concerns have assumed much greater proportion and have accordingly attracted attention in almost all the countries at the highest level of the governments. Acceptability issues have, therefore, occupied the central stage in countries where the issues of accessibility and availability are either non-existent or negligible. The WEC Report has presented a comparative position of various continents from the point of view of these three parameters.

Prior to these three A's of WEC, we were also familiar with three A's, but they meant Accessibility, Affordability and Availability. What was being advocated was that both availability and accessibility will have a link with affordability. If the price is too high and therefore beyond the affordable limit of individuals it would have a bearing on the other two aspects. I recall, when we were formulating the Rajiv Gandhi Grameen Vidyutikaran Yojna with the objective of creating Rural Electricity Distribution Backbone (REDB) and networks for household electrification, and with the aim and goal of "Providing Power for All" by 2012, an issue came whether all will get electricity by 2012. We were quite clear that infrastructure will enable access for all, but getting electricity connection will definitely depend on individuals being able to buy power and pay for it, may be it may be power at cross-subsidised rates.

In the approach of the WEC, which has added a new dimension, and rightly so, that is Acceptability. Affordability is subsumed in availability. Accordingly the following ingredients constitute Availability - (a) Reliability, (b) Energy quality, (c) Affordability, (d) Infrastructure, (e) Conservation, (f) Energy security, (g) Regulation, (h) Technology. The aspects covered under Acceptability, as per WEC, include - (a) Safety, (b) Climate, (c) Air pollution, (d) Public attitude.

Among the elements under Acceptability, "Environmental concerns are among the most important concerns shaping the future of the energy industry around the world". The relevance of various aspects (three A's) have been presented in tabular form, as given below (Table 7.1 of the Report).

S.No. Country 2005-2020 2020-2035 2035-2050
i. Africa Accessibility Focus Accessibility & Availability Acceptability focus - Reduced emission growth
ii. Asia Accessibility & Availability Focus Availability & Accessibility Focus Acceptability Focus -Reduced emission growth
iii. Europe Acceptability Focus - Reduced emission growth Acceptability Focus - Stable emission growth Acceptability Focus - Low Carbon Economy
iv. Latin America Accessibility Focus Availability Focus Acceptability Focus - Reduced emission growth
v. North America Acceptability Focus - Reduced emission growth Acceptability Focus - Stable emission Growth Acceptability Focus - Stable Emission growth

While the general approach towards developing the matrix seems to be in order, what need to be commented are a few specifics in this Table:

  1. For Europe and North America, the Table presents for the period 2005-2020, reduced emission growth. As a matter of fact their per capita CO2 emissions are so high that even during this period there is a need to reverse the trend rather than reduced "growth".

  2. For a number of African, Asian and Latin American countries, even during the period 2035-50, it is unlikely that they would be able to reach levels of energy consumption that we could expect reduced emission growth.

One of the most important findings in the WEC Report is that, by the year 2050, the energy production and consumption will have to be doubled so as to address the major concerns of accessibility and availability among the deprived groups, countries, regions and continents. "It is clear that all the scenarios involve a substantial increase in global energy supply by 2050, of the order of a 100% increase." Approximately 500 kwh per head per year has been taken as the minimum level of consumption in a household as per WEC Millenium Statement (2000). Energy Scenario 2050 recommends that by the year 2035 one billion out of two billions, which are deprived lots today, should be brought into the category of those consuming atleast 500 kwh per year and in remaining period till 2050, again half of the balance population should also get covered. While this may be a realistic projection of the target, but the fact that even by 2050, 500 million people will have no access to commercial form of energy, is rather unfortunate.

In Indian context our per capita consumption is about 620 kwhr per year. But this takes into account all areas of consumption - farms, factories, shops, offices, railway traction and households. If we only focus on households the average could be not more than 200 kwh. This is the average, but it could be as low as 30 kwhr to 1000 kwhr. If as per WEC, the minimum household consumption is 500 kwhr, India has to go a long way. And, therefore, the aspects of "accessibility" and "availability" will continue to dominate Indian energy scene for several decades. One of the biggest challenges for India is the scale of disparity among various regions and states in rural areas. There are 12 states which are weak in rural coverage for electricity connectivity and supply. Among them six states (Assam, Bihar, Jharkhand, Orissa, U.P. and West Bengal) are very weak on this front inasmuchas over 75% of rural population do not have access to electricity. India's Integrated Energy Policy (2006) projects a total capacity of more than 800 GW by 2032, which means more than six times of the existing installed capacity. In African and Latin American countries as also in some of the other Asian countries, the increase will have to be of similar size. Therefore the projection by the WEC Report that by 2050 the capacity may have to be doubled seems to be rather conservative.

The Report cautions about the likely pressures on decision makers in view of the complexities which the energy sector will have to go through. Para 7.2.1 says "The pressures on decision makers in both public and private sectors will increase, and in particular, demands on those responsible for energy policy will intensify. Policies formulated today and the resulting actions and behaviours of citizens will have effects and consequences far into the future. Political expediency will have dire consequences for energy sustainability." This is aptly true for Indian context. In the past power sector, over a long period, has been subjected to political compulsions. Even in the post reform days, in spite of Regulatory Commissions being put in place, political compulsions, though reduced, have not gone away. In fact, in last four years the present Prime Minister has been concerned about many of the political actions or inactions, but effect of his statements on many states has been very limited.

Technology changes will have to be faster, "Government policies must therefore be quite clear in their intent and less restrictive in terms of means, permitting those responsible for implementation the requisite degree of freedom to apply the best technology solutions and systems to meet the objectives." Availability and Accessibility, and in fact even Acceptability, all have direct relevance to technological upgradation. Power sector in India and all other developing nations, for the purpose of availability and accessibility, and in developed world, for the purpose of environmental issues, needs radical technological transformation. If we draw a parallel, ten years back, telecom sector did not provide access to vast majority of people, particularly in developing world. Ten year down the line the scene is changed - technology has done it. Indian power sector, so also in many other countries, it is technology which can change the picture. The India's Electricity Act 2003 provides a basic legislative framework. It generates several options for technology to play and market to develop. Legislative measure of this type was necessary; but it is not sufficient. What is needed is administrative intents, facilitations and actions to allow the right degree of freedom and encouragement to evolve and implement new technology solutions. "Policy initiatives are not only necessary at the national level but also must consistently cascade down to sub-national and local levels." How true it is for Indian power sector! In fact, the cutting edge of this sector lies in the court of State level governments and local level administration. Most of the mess of Indian power sector has emanated from these institutions - from their actions and/or inactions. Electricity Act 2003 and various policies framed under the Act have, no doubt, reduced their jurisdiction. But, even now, in many cases, in an indirect way, similar efforts and actions are leading to adverse consequences and distortions.

"Whatever the level of development, a partnership between the public and private sectors - within and across regions - is essential, through which risks and rewards are apportioned..........." In the Indian power sector, and in fact in a few other energy segments, the need for public-private partnership has been fully recognized. Policies have been put in place in power and petroleum, and in a limited way even in coal sector, which encourage private sector participation. But, in a vital infrastructure like power, in most developing economies, role of government would be crucial, particularly during transition phase. China is an example which played a major role in building power infrastructure through direct government intervention and that provided the most needed support for large scale expansion of manufacturing leading, in turn, to a 9-10% yearly economic growth over a long period. On the need for regulating the market as opposed to a free and open market in energy, the WEC Report, has vindicated what some of us had been saying while in the government, though there were many who had a different view on this issue. The WEC Report says (Para 7.2.3) "There is a common misconception that free and open energy markets are sufficient and that government's role is limited to benign oversight. This would be plausible if all players in the market have equivalent market power and freedom of choice. Where this is not the case, some players can dominate and, over time, energy markets can become increasingly distorted, to the detriment of the public interest. At some stage, governments may have to intervene to prevent exploitation of the weak and to restore balance. This is usually achieved through regulations and/or laws." I recall, when the Integrated Energy Policy was being evolved for India by the Expert Committee (set up by GOI in 2004) of which I was a Member, I had to struggle hard to convince many on a similar approach. In fact I came to a point that if "Regulation" during transition period, till energy markets in all the segments mature, and the competition allows consumers the required options, is not recommended by the Expert Committee, I may give a differing note. Finally, we have somewhat similar provision in our Integrated Energy Policy which was signed by all in August 2006.

The WEC Report in the last Chapter 10, provides "Specialist Perspectives" on a number of issues. I have some concern about the articulation on climate change. They have extracted data from IEA, 2005 and World Energy Council, 2007. The concept of Emissions Intensity has been explained to say that emission intensity of economies varies significantly across various countries. The following Table has been included:

Country CO2/E
Million Tonne/mtoe
Tonnes/k usd
Argentina 2.12 303.0
Australia 2.99 597.2
Bangladesh 1.54 144.9
Brazil 1.62 238.7
Canada 2.05 577.1
China 2.90 671.8
France 1.41 238.2
Germany 2.44 406.8
India 1.96 377.9
Iran 2.73 853.3
Japan 2.37 360.6
Korea 2.24 521.6
Mexico 2.39 419.0
Russia 2.44 1247.6
Saudi Arabia 2.41 1118.5
South Africa 3.18 841.6
Sweden 1.05 216.0
Thailand 2.26 448.0
U.K. 2.36 342.5
U.S.A. 2.50 553.8

The comment that I have is that they should have also presented a Table on Per Capita Emissions of CO2. India has been advocating that per capita CO2 emission in India is about 1 ton as compared to world average of over 4 tones and 19 tones of U.S.A., over 10 tones of U.K. etc. WEC must recognize, apart from other parameters on this subject, the per capita CO2 emission also. It is this parameter which establishes the relative contributions of different countries towards climate change related problems.