Energy Efficiency & Sustainable Development

Mallika Roy    

Energy has played a crucial role in accelerating the development of a nation. Increasing electricity generation has, however, been extremely capital intensive and technologically difficult for the Third World countries. Even in the case of India, while electrification has taken place on a massive scale, growth in demand for energy has far outstripped the growth in installed capacities. While one of the reasons for this has been the population explosion, another is the enormous increase in energy intensive economic activities. As the conventional sources of energy are fast depleting and the renewable sources have not matured to an economically viable level, several economic analyses have revealed that improving energy efficiency at all levels of the energy system is the most cost-effective and quick remedy to solve this problem as well as limit the emissions of greenhouse gases. The growing concern about global warming, resulting from emissions due to power generation, could be effectively addressed by reducing the need for power by promoting energy efficient technologies on a large scale.

Considering the growing gap between the demand and supply for electric power, improving energy efficiency on both the demand and supply sides could be an effective strategy to meet the needs of the people. India has an assessed potential of saving about 25,000 MW energy, which is sufficient for bridging the demand and supply gap. As per the Strategy of Ministry of Power, one of the instruments for achieving the target of making power available to all by 2012 is the promotion of energy efficiency and conservation. Energy conservation potential for the economy as a whole is estimated to be about 23%. While on one hand, one unit of energy saved avoids 2.5 to 3 times of fresh capacity addition, on the other hand it is known to be extremely cost effective with a capital investment of less than even Rs. 10 million per megawatt savings as against that of Rs. 40-70 million for capacity addition.

The barriers that are needed to be identified in this regard are as follows:

l In India, till now, since the industries were not subjected to any competition from global firms, increased energy costs could still be recovered from the product price and hence the unwillingness to invest in energy efficiency measures.
l Many producers of end-use equipment have little knowledge of ways to make their products energy efficient and little or no access to the technology for producing the improved products. End-use providers are not often acquainted with energy-efficient technologies.
l Financial institutions have been hesitant to take risks in promoting any new technology. The government itself, till very recently, was little involved in providing the essential information necessary for consumers to make intelligent choices in terms of energy efficient technologies.
l In case of commercial enterprises, many investors use instruments such as simple payback period, rate of return, or net present value to evaluate energy efficiency projects. When energy prices do not reflect the real costs of energy, consumers under-invest in energy efficiency.
l In addition to the problems identified above, other important barriers include: (1) the "invisibility" of energy efficiency measures and the difficulty of demonstrating and quantifying their impacts and (2) slow diffusion of innovative technologies into markets.

The energy intensity of India is almost four times higher than that of a country like Japan. This means to produce one unit of GDP, Indian industry is consuming four times more energy. There is significant wastage in the energy consumption and therefore, it poses a challenging task and also presents an opportunity to reduce the energy intensity through energy efficient practices.

There is a need to develop grassroots policies associated with grassroots financing for meeting the needs of energy efficiency. Some of the possible solutions to address the above problems/constraints/barriers could be:

l evolving a good blend of top down and bottoms up approach for developing EE policy framework;
l carrying out a thorough "need assessment" for estimating the market potential and then matching the need assessment with the technology;
l developing a suitable capacity building mechanism for creating awareness; among the end users about the use of EE; and
l developing innovative financing schemes (like co-operative bank for the rural enterprises) for financing EE products/projects.

Efficient use of energy is also the cornerstone of a more sustainable energy system. In order to retain carbon emissions to the current level till 2025 and then cut them substantially, the world will need to double the current level of global energy productivity over the next four to five decades. Rapidly advancing technologies in areas such as lighting, glazing, refrigeration, electronic controls, and synthetic materials will help speed the pace of efficiency improvements.

Table 1 : Potential to reduce emissions from power sector by 2020,
by energy efficiency options relative to business-as-usual scenario

Energy Efficiency Practices

Reduction in 2020 GHG Emissions
(% relative to BAU)

  China India

End use efficiency improvement

43 45

Efficiency improvement in power plant

9 11

Reduction of losses during transmission and distribution

7 6
Source: "An Asian Dilemma" by J Gupta et all. February 2001

Energy efficiency can play a decisive role where supply and demand constraints are integrated into a sustainable pattern. To promote sustainable development, energy systems should be environmentally, economically and socially sustainable. The indicators of sustainable energy practices need to be identified in a more effective manner. Some of the crucial indicators are application of the end-use energy efficiency practices in the different economic sectors, income classes and regions and whether Government emphasising more on R&D or commercialization subsidies to promote efficient technologies. The major barriers those have been identified, in this regard, are as follows:

l The major impediments are basically the supply-driven approach to energy and a lack of an integrated approach, in conjunction with all the other components of sustainable development.
l Subsidies to energy production and consumption, especially to fossil fuels and nuclear energy are a serious impediment to the sustainable energy path.
l Sustainable energy scenarios emphasise more on issues like the promotion of those technologies that are already sufficiently developed to mitigate the impact of fossil fuel combustion on the environment and promote the renewable energy sources. The end-use efficiency improvement of energy should be taken as a key-factor to achieve sustainable economic growth in a more effective manner.

The new approach should be based more on improving the efficiency at the demand side. Hence, it would lessen the economic and financial burden of energy; reduce the dependency on imports; limit the geo-strategic threats to peace; favour energy equity for women and the poor; promote empowerment of citizens and communities; provide a healthier environment; and hence, contribute towards the sustainable development of the country. q

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