Transcript PROSPECTS AND POLICIES FOR LOW CARBON ECONOMIC …
Policy Research on Energy Infrastructure of India
Ramprasad Sengupta Jawaharlal Nehru University (JNU), New Delhi
Presentation for IGC-ISI Research Network Meeting 20 – 21 December 2010
• Energy Related Policy Research focuses mainly on Energy Security and Climate Change related Control of Green House Gas Emissions. Energy Poverty and energy distribution are issues which are relatively neglected in discussions at global level. • The arguments for more time before any commitment to emission bound and also for more carbon space are generally advanced for India and other developing countries for the removal of poverty and development • What
time frame is required for removing poverty
and committing to any upper bound of CO2 and other GHG emissions? Time and speed are important issues as it is the stock and not the flow of GHG that causes the global warming and the life of CO2 is about 100 years.
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Role of three kinds of infrastructure deserve special attention for their importance in faster removal of income poverty, making growth inclusive and supporting human development.
Water Resource and Water infrastructure.
Roads, Highway and Transport infrastructure. Energy Resource and Energy Infrastructure. Comments on the first two and focus on the energy infrastructure in rest of the presentation. What has been India’s achievement in making economic growth Low carbon and energy conserving?
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300 250 200 150 400
Supplies of Total Primary and Final Commercial Energy and CO
2
Emissions.
1600 TPCES 350 1400 CO2MT FNLEN 1200 1000 800 600 100 50 0 400 200 0 TPCES FNLEN CO2MT Source: Based on IEA Data on Energy balances of Non-OECD countries, different volumes.
Primary Commercial Energy and CO2 intensity over time
0.120
0.100
0.080
0.060
0.040
0.020
0.000
T PESCMINT CO2KGINT
Annual Average Growth Rate in the Pre-reform and Post-reform Periods (%) Period 1971-1990 1990-2005 GDP Primary Growth Commercial rate Energy Energy Intensity of GDP 4.4
6.39
5.55
4.56
1.1
-1.72
CO2 emission CO2 intensity of overall energy CO2 intensity of overall GDP 5.96
4.36
0.389
-0.191
1.5
-1.91
1.5
1 0.5
0
Decomposition Analysis of growth of CO2 emission intensity of GDP by the Refined Divisia Method for the period 1971 to 1990
1.42
0.683
0.313
0.269
Energy Int effect Structural Effect Fuel mix effect 0.149
Residual Total Change 0.5
0 -0.5
-1 -1.5
-2 -2.5
Energy Int effect -2.27
0.145
Structural Effect
Period 1990 to 2005
Fuel mix effect -0.06
Residual -0.188
Total Change -2.37
1.
Models of Future Projection of CO2 Emissions
Macro economic approach : Demand based on income, energy prices 2.
Sectoral approach: Alternative Demand Behaviour: (a) Sectoral Income, Real Energy Price and Technology – Energy Intensity.
(b) Sectoral Income, Share of Electricity in Final Energy, and Energy Intensity 3.
Alternative Growth Rates: 8%, 6% 4.
Real Energy Prices (a) no change in prices since 2005 (b) Real Energy prices increasing at 3% compound rate per annum.
2005
Projection of CO2 emissions (mt)
8 per cent growth with no price change 8 per cent growth with 3 per cent p.a. price rise 6 per cent GDP growth rate and no price change
1083 1083 1083 2021 2726 - 2910 2031 4920 - 5553 GDP
elasticity
0.733 - 0.831
2036 - 2532 3027 - 4597 0.52 - 0.72
2257 - 2442 3493 - 4016 0.71 - 0.85
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2005
Projection of CO2 intensity of GDP
(gms/Rupee)
and Per capita CO2
(tonnes) 8 % growth with no price change 8% growth with 3 per cent price rise 6% GDP growth rate and no price range 41 41 41 2021 2031 30-32 25.4 - 29 22 – 27 23-28 16 – 25.4
16 – 24 27 – 31 32 – 44 17 – 24 % drop 2021 % drop 2031 Per capita CO2 (tonnes) 2031 29 – 38 3.4 – 3.6
41 – 61 2.1 – 3.2
24 – 34 2.4 – 2.8
China per capita CO2 = 3.9; US per capita CO2 = 20.6 (2004) 10
CO2 Intensity Projections- Reference & Sectoral Approach
34 33 32 31 30 29 28 27 26 25 43 42 41 40 39 38 37 36 35 CO2 intensity- sectoral (gm/Rs) CO2 intensity- reference (gm/Rs)
CO2 Emission
(Dir + Indirect Sectoral Share- %): Sc 1B
Oth Svs 10% Trans 13% Res 17%
Agr 12% Ind 49% 2005
Oth Svs 14% Trans 14% Res 25%
Agr 9% Ind 39% 2021
Oth Svs 15% Res 30% Trans 14%
Agr 8% Ind 35% 2031
Comparative Projections of Primary Energy Requirements for the 8% GDP growth: Present Study and Planning Commission
Scenarios Present Study 8% growth Sectoral Approach-
Sc1B
8% Gr, No Price change Primary Energy mtoe 2031-32 1879 Share Coal % 54.72
Share Oil % 26.16
Share Gas % 10.99
Share Others % 8.13
Non commercial % N.A.
IEPC Report, Planning Commission
1702 54.1
25.7
5.5
4.8
9.8
Coal Dominant scenario Maximum use of Hydro, Nuclear & Gas potential scenario Simultaneous use of all strategies for sustainable Energy Development 1652 1351 45.5
41.1
26.4
22.8
10.7
9.8
7.3
14.2
10.1
12 13
Policy Implications
• Any reduction in the Growth Rate ?
• What should be done about Energy Pricing – What about Carbon tax in GST/VAT Regime • About 70-75% of CO2 arises from power and transport sector . Hence policies of carbon intensity reduction need to focus these sectors. • Major problem of the transport sector because of very limited scope of inter-fuel substitution. Both oil security and carbon and other pollutant emissions from transport operation have made the search for alternative fuel and inter-modal substitution quite important. Findings on rail vs road.
• Oil Reserve to production ratio :21, Reserve to Consumption ratio 5, Share of import : 78% • Issue of energy security due to volatility of oil prices around a path of firm rising trend has led to the India government’s policy initiative for bio-fuel – bio liquids • Bio-diesel from Jatropha • Ethanol Policy – molasses route and also direct from cane juice in a situation of excess production.
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Share of net imports and domestic production in the total quantity of crude oil supplied to India economy, 1970-2007
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Net Imports
Years
Domestic production Source: Authors’ calculation based on data from GOI, 2010 and GOI, 2006 16
80 60 40 20 0 120
Crude Oil Spot Prices in US Dollars/bbl (Average Unit Value, FOB)
100 Brent Dubai
17
300 200 100 0 600 500 400
Wholesale Price Indices for Petroleum Products in India (1993-94=100)
Petrol High Speed Diesel Oil Kerosene Light Diesel Oil Aviation Turbine Fuel
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HUBBERT’S MODEL FOR PEAK OIL ANALYSIS
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Q = K/(1+n o e -at ),
n o = (K - Q o )/Q o Q is Cumulative oil production in period t K is ultimate recoverable reserves of crude oil t denotes the time period Q o denotes the level of cumulative oil production in the arbitrarily chosen time period T o • Note that the first derivative of the logistic function is a bell shaped curve which attains its maximum at the time of peak when half of ultimate recoverable reserves (K) has already been exploited (i.e. Q = K/2) and thus represents the complete cycle of annual crude oil production as hypothesized by Hubbert.
• As a result, to model the cycle of crude oil production and determining the peak, he developed the following model: dQ/dt = P = aQ – (aQ 2 )/K 19
P/Q = a [1- (Q/K)]
India's annual crude oil production from 1970 - 2007, in thousand tonnes and in million barrels
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Projections for Biodiesel Demand and Land requirement for biodiesel in India
Authors' Calculations Planning Commission
Year Diesel (Million Tonnes) 30 % 2011 42.59
2021 2031 78.43
144.31
Per hectare yield of biodiesel Biodiesel (Million Tonnes) 20 % Land requireme nt for Biodiesel (Million hectares) 8.52
3.49
15.69
28.86
6.42
11.82
2.441 tonne Year 2011 Diesel (Million Tonnes) 30 % 48.73
2021 2031 81.60
142.66
Per hectare yield of biodiesel Biodiesel 20% (Million Tonnes) Land requireme nt for Biodiesel (Million hectares) 9.75
8.15
16.32
28.53
13.65
23.86
1.196 tonne Per hectare yield of jatropha seeds Quantity of jatropha seeds required for one litre of biodiesel 10 000 kg Per hectare yield of jatropha seeds 3.28 kg 1.2486 litres of Quantity of jatropha seeds required for one litre of biodiesel 4555kg 3.28 kg 21 1.2486 litres of
Forests Land use classification and estimates for India (in million hectares) 1950-51
40.48
1990-91
67.81
2006-07
69.81
40.48
42.63
Not available for cultivation
47.52
Permanent pastures and other grazing land Land under miscellaneous tree crops and groves Culturable waste land
6.68
19.83
Fallow lands
22.94
28.12
Net sown area
118.75
Reporting area for land utilisation statistics
284.32
Total Geographical Area
328.73
Source: Agricultural Statistics at a Glance 11.4
3.82
15 23.37
143 304.88
328.73
10.36
3.45
13.24
25.72
140.3
305.51
328.73
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• Critical Biodiesel Price/High Speed Diesel is the minimum price of HSD/Biodiesel for which returns to a farmer are just sufficient to cover the opportunity cost of diverting land from cultivating a principal crop to jatropha cultivation. • These are estimated based on the Techno economic data on bio-refinery prepared by IRADe for Technology Information Forecasting and Assessment Council (TIFAC) and those on jatropha cultivation prepared by the Tamil Nadu Agricultural University. • The biorefinery cost of producing biodiesel from jatropha seed oil (excluding the cost of feedstock) is assumed to be Rs 9.50 per kg of biodiesel. The biodiesel yield is assumed to be 1 kilogram from 3.28 kg of jatropha seeds.
• The critical biodiesel and HSD prices have been calculated considering that 1 kg of biodiesel is equal to 1.2486 litres of biodiesel and 1 litre of biodiesel is equal to 0.93117 litre of High Speed Diesel. 23
Sugarcane Wheat Bajra Paddy Rapeseed & Mustard Cotton Ragi Groundnut Urad Jowar Sesamum Barley Masur Gram Tur Maize Moong Soyabean Sunflower Safflower VFC Tobacco Critical High Speed Diesel Price (HSD), US $ per barrel 2004-05 Andhra Pradesh
81 64
Haryana
102 60 49 65
Maharashtra Tamil Nadu
97 49 83 52
Uttar Pradesh
83 54 50 53
Uttaranchal Karnataka
87 51 53 106 55 62 55 57 51 59 65 51 47 48 49 50 51 57 53 48 54 57 52 56 46 51 51 61 58 52 54 52 57 56 52 53 59 61 50 47 53 54 52 48 52 53 53 51 24 56
Jowar Maize Gram Cotton Moong Sunflower Urad Paddy VFC Tobacco Groundnut Tur Wheat Bajra Rapeseed & Mustard Soyabean Safflower Ragi Sesamum Masur Barley Critical price of gasoline (in US$ per barrel) for 2005-06 Andhra Pradesh
129.53
136.26
141.72
134.34
139.18
131.31
157.66
142.93
Haryana
136.89
156.00
Maharashtra
90.50
100.60
95.50
93.11
97.62
94.38
94.92
Tamil Nadu
69.30
76.26
72.61
75.95
73.03
Uttar Pradesh
54.49
73.33
57.99
60.79
Uttaranchal
44.00
52.17
143.16
127.61
137.71
145.61
126.22
94.09
92.74
74.28
66.44
60.79
54.88
45.08
147.29
96.28
96.10
84.91
71.11
76.10
66.81
67.01
57.80
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Implications: •There is thus a possibility of conflict between energy security and food security. The issue of land use and sustainable livelihood issue would come up which would have deeper welfare significance. How to regulate land use. Search for alternative technology – fuel cell hydrogen driven electric vehicle car or bus.
•Residential Sector has also a problem of energy poverty – biomass used in unclean unconverted form. Damaging health externality. Here the desired substitution is to be away from bio mass fuel and in favour of fossil fuel – use of LPG, Kerosene and electricity. Income poverty removal would not ensure energy poverty removal. Additional carbon space required to remove energy poverty of Indian household sector.
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Energy Poverty & Emission Control
Rural Sector
Income Poverty (%) % HHs with access to Electricity for lighting % HHs with access to Biomass for Cooking
Cooking Poverty Ratio (%)
Urban Sector
Income Poverty (%) % HHs with access to Electricity for lighting % HHs with access to other fuels, incl. biomass, soft coke,etc. for cooking
(Cooking Poverty Ratio)
Current 28.3
Target 4 44 80-84
82
84 44-48
46
Current 25.7
Target 3 88 96
38 14
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Alternatively, technology for biomass based clean modern fuel development may be important for energy poverty removal as well as low carbon development.. For example bio-char and its economics. It can capture carbon as well. Such decentralised energy production and distribution would have also benefit of income and employment generation Power Sector: Development of nuclear power is of great importance particularly in view of India’s thorium reserves.
Finally : Why not carbon capture? We need to pay some attention to the option of carbon capture than solely emphasising carbon mitigation. Economics of this technology and its economic viability in Indian context needs to be carefully examined. Real challenge is finding the resource use and technology of waste disposal which combines the objectives of low carbon growth with energy security for all - both transport and household sector in particular 28
• Fast removal of Poverty • Energy Conservation and Supply side efficiency • Vulnerability of Transport sector • Bio-diesel and Ethanol solution for India • Energy poverty – More of hydrocarbon use or new technology for bio-mass use (bio-char) • Nuclear power – thorium – uranium cycle.
• Carbon Capture • Real challenge is finding the resource use and technology of waste disposal which combines the objectives of low carbon growth with energy security for all - both transport and household sector in particular 29