Is India Being Prudent In Utilizing Its Energy Resources?

A few facts about energy consumption in India:

With the advent of the industrialization, energy happens to be the pivotal factor in the growth of our country. Energy consumption and usage forms an inseparable factor of the modern day life of our country, so much so, that the per capita energy consumption is directly proportional to the per capita GDP of our country. The per capita energy consumption of our country is about 1/3rd of the world average per capita commercial energy consumption.  It is about 1/20th of the per capita energy consumption of USA, about 1/10th of the per capita energy consumption of Europe and 1/4th of the per capita energy consumption of China.

While the world’s average per capita energy consumption is diversified amongst the various sources of energy, and is dependent on fossil fuel by about 86%, the proportion of fossil fuel in India’s energy basket happens to be 94%. In a global perspective, coal accounts for 30.5%, oil for 33%, and gas for 24% (fossil fuels) for the world energy demands. The alternative sources of energy namely nuclear energy accounts for 4.7%, hydro power 6.4% and renewable energy 1.5%. The same statistics for our country would be 54% for coal, 31% for oil and 9% for gas considering the fossil fuels. The alternative sources of energy of our country are as follows:  hydro – power 4%, nuclear power 1% and renewable energy sources 1%.  Besides these commercial sources of energy, India also consumes energy from non – commercial sources, like biomass, firewood, cow dung etc. However, the proportion of such sources in the total energy consumption of our country has been decreasing steadily, but as the projected estimation indicates, the use of non – commercial sources of energy will not go down below 10% of the net consumption, even by the year 2030 – 31.

Projected increase in the demand for energy sources in India:

There is a consistent demand for energy in our country, especially, fossil fuel and the power sector is one of the major consumers of this energy resource. The transport sector of our country has also expanded, and 90% of the energy consumed by the transport sector is based on oil. The present energy demand of less than 700 million tons of oil will increase steadily, and by 2030, the demand is going to touch over 1500 million tons of oil, recording a CAGR of 3.1%, almost triple the predicted global CAGR of 1.3%. In fact, our country will witness an energy demand from all sectors. While coal and oil demands will increase at a CAGR of 3.1%, the demands for natural gas, nuclear energy and renewable energy is expected to be much higher.

Because of the heavy dependence of our country on fossil fuel, India ranks as the third largest emitter of Carbon dioxide in the world, after USA and China, as a direct consequence of the consumption of fossil fuel, the major byproduct of which is carbon dioxide. Hence, a point will definitely come, when India will be pressurized globally to reduce Carbon dioxide emissions. Under such circumstances, India will be compelled to reduce fossil fuel consumption, or resort to expensive pollution control measures. Emphasis needs to be given on natural gases and nuclear power as an alternative and less polluting source of energy, but their availability poses a question, since such alternative sources of energy in our country, are heavily underutilized. India’s stake in the world energy demand is predicted to increase from the present 5.5% to 8.6% by 2030.

India’s dependence on resources of energy import:  

Domestic energy productions in our country fall far below the growing demand of energy. As a consequence, our country is heavily dependent on import of energy resources with 80% of the crude oil demand and about 20% of the natural gas demand being imported. Even a low production of coal necessitates an import of coal, to meet 20% of the demand of the country.

Crude oil, however, tops the import bill of the country, seconded by gold. In 2012 – 13 India’s import of crude oil was 185 million tons and 16 million tons of products at a cost of Rs 8, 53, 949 crores. Due to the existence of some international category refineries in our country, and their enhanced capacity for refining an export of 63 million tons of product was possible, with the consequent realization of Rs 3, 20, 042 crores. But the big import drain of the balance of Rs 5, 33, 907 crores, took a heavy toll on the economy of our country, and was partially responsible for the Current Account Deficit and the slump of the rupee against dollar.

Due to the Government policies of subsidizing diesel, kerosene and LPG, the under recovery of Rs 1,61, 029 crores in 2012 – 13, had to be met between the budget resources of the Center from the exchequers, subsidy expropriated from the upstream companies like ONGC, OIL and GAIL, and the balance left for the refineries and the marketing companies to meet. This has resulted in a skewed balance of the Central Government’s budget, and has heavily curbed the ability of the upstream companies to invest more, in both domestic and overseas exploration and production. The heavy oil imports took a toll on the refineries and the marketing agencies, which, even with a Gross Turnover of more than Rs 8 lakh crores, are unable to implement modernization and diversification. Unless the State and the Central Governments are able to diversify their tax basket, and decrease dependence on petroleum products, the prices of these products will continue to be high, given the circumstances of the weak rupee and the high oil prices.

Coal – an important source of energy severely underutilized by our country:    

While India has only 1% of the global hydrocarbon resource, it is the third largest resource base of coal. In spite of large estimated coal resources, they remain seriously underutilized.  All this puts the technical abilities of Coal India Limited, which has the monopoly in developing energy resources from coal, in question. Other than using coal as a source of energy, Coal Bed Methane, Underground Coal Gasification, are all technologies, to utilize coal for the production of natural gas, and are frequently implemented in coal rich countries like China, but sadly enough, India lags behind in such technological aspects. We desperately need to conserve use of oil and gas in areas where coal can suffice equally well. Also in my personal opinion, I find the Government initiatives of extending their invitation to the best companies with the most modern technical resources, in the weak hydrocarbon sector of our country, to be highly anomalous, when the Government doesn’t even allow the technologically sound State companies in the coal sector, where we have a really strong resource base.

Conclusion – some suggestions to increase the Energy Security of our country:      

India has multifaceted energy problems, some of which are being currently addressed. India must pursue technologies that maximize energy efficiency, management of demand and effective energy conservation. The long term perspective, as envisaged by the Integrated Energy Policy Committee (IEPC), is still valid. The answer to Energy Security lies in greater exploration, production and utilization of domestic resources, which indicates that coal as a source of energy and thorium based nuclear power, will play a pivotal role in ensuring the Energy Security of our country. in future. Petroleum and Natural Gas Regulatory Board (PNGRB) should be vested with the responsibility of pricing and distribution of hydrocarbon based fuel by the Government. We must be able to produce more natural gas and coal base methane. to substitute use of LPG as domestic fuel.

Renewable energy programs should be accelerated. However, fact remains, that in the absence of any major technological breakthrough, such programs cannot make a contribution of more than 5% to the total energy requirement of our country, even by the year 2030 – 31. Nuclear energy programs should be given a boost, so that it can meet at least 4 to 5% of the net energy demand of our country, by this period. In order to achieve this, nuclear civil corporation agreements have to be used for improving the supply. There is also an imperative need to intensify our domestic efforts in three stage thorium based nuclear plants.

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