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Resource war India after 2020

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Apr 30, 2010 | From the print edition

If the developing world today is the locus of climate change  mitigation, including reduction in emissions, then there surely must exist a picture of how Indian industry does and will perform. Analysing the six most energy- and emissions-intensive sectors of Indian industry, CHANDRA BHUSHAN  finds that after 2020 efficiency plateaus. Growth also poses formidable challenges of sourcing minerals, water and land

imageWhat is the shape our climate-challenged world is in? Rich developed countries have made it clear they are not interested in any talk about their past emissions.

They point to emissions emerging economies such as India and China will spew in the future. That, they say, is the real problem. That’s the real mess. The rich countries also want their economies to be left alone. They want the onus of mitigation to pass on to the developing world. Thus, over the last two years, India, along with Brazil, South Africa and China, has come under severe pressure from developed country governments as well as the intelligentsia to commit to emission reduction, even when there is no financial support or technology transfer.

On January 30 this year, India committed to reduce the emissions intensity of its gross domestic product (gdp) to 20-25 per cent below the 2005 level by 2020. Such mitigation will not apply to the agriculture sector. In other words, for every unit of gdp recorded, Indian economy will target to spew 25 per cent less of greenhouse gases (ghg). The declaration has triggered a flurry, with international development and technology consultants priming for a kill: hardsell low carbon growth in India. The country, too, is honing its low carbon growth strategies.

Growth and low-carbon?
In 2009, the Centre for Science and Environment’s Green Rating Project decided to study the most energy- and emissions-intensive sectors of Indian industry. Five sectors fitted the bill: paper and pulp, cement, aluminium, steel and fertilizer (urea). So did the power sector, responsible for a lion’s share of the country’s greenhouse gas emissions.

In 2008-09, these six sectors accounted for an estimated 61.5 per cent of total greenhouse gas (ghg) emissions in India, excluding emissions from agriculture and waste. Their energy profile is no less intensive.

But there are other reasons for the focus on just these sectors. Today there exists a reactionary consensus in climate change chatter that India’s rising ghg emissions are in no small part due to the fact that industry here is inefficient. Is that true? How exactly do the country’s most energy- and emissions-intensive sectors fare in this respect? One honest reply is there is a dearth of data on energy consumption and greenhouse gas emission trends in the sectors that comprise industry in India. Another is there’s such a glut of analyses on low carbon growth in India—wider-angle, macroeconomic, regional-global, non-Annex I, polemical-ethical—and on how India, like other developing countries, can and should achieve it; it’s a shame India has not already achieved it.

The study uses data sourced from industry itself and then verifies it. Such data allows for a realistic picture. Using this data, the study shows how the sectors perform. But it does more.

At one level, it identifies technology options these sectors could go for to reduce their energy and emissions intensities. At another, it projects the trajectory these sectors will take up to 2030-31, under two scenarios—a business as usual (bau) scenario and a low carbon (lc) scenario (see: Glossary,).

imageFull steam ahead
Since liberalization, the Indian eco-nomy has grown at 6.8 per cent. Obviously, India’s commercial energy consumption (see: Glossary,) has been growing at a consistent rate. In 2007-08, out of India’s total primary energy supply of 23.9 Exa Joule (EJ, or 10 18 Joules), only 26.2 per cent was non commercial and consisted of mainly biomass, used by poor people, mostly women, outside the net of the market, to cook food. The rest of energy, commercial energy, was highly dominated by coal, lignite, oil, natural and liquefied natural gas. Nuclear, hydel and wind contributed only 2.9 per cent of total primary energy (see: Mostly fossil).

From 2004-05 to 2006-07, commercial energy consumption increased annually by 5 per cent. The commercial energy consumption was an estimated 15.6 EJ in 2008-09.

Industry guzzles
How much of this commercial energy does industry, as a whole, consume?

In 2006-07, industry consumed 7.3 EJ of commercial energy, including non-energy use of natural gas and petroleum products. This has grown annually at 6.3 per cent between 2004-05 and 2006-07. Commercial energy consumption in industry was an estimated 7.8 EJ in 2008-09.

Indian industry, therefore, consumed about 50 per cent of India’s total commercial energy and contributed 18.5 per cent of India’s gdp in 2008-09. This means in 2008-09 the energy intensity of industry, defined as energy consumed per Rs crore of gdp, was 4.4 times that of the rest of the economy, that is agriculture and services combined.

Six sectors seriously guzzle
Within industry as a whole the sectors selected are the most energy-intensive.

In 2008-09, five sectors—steel, cement, urea, aluminium and pulp and paper—consumed about 3.34 EJ energy, thus cornering about 43 per cent of all the commercial energy industry as a whole consumed that year.

The power sector is the most emissions-intensive. India’s power sector is coal-dominated. Of the 2007-08 gross power generation of 722.63 Terawatt-hour (TWh, 109 watt-hour), 67.8 per cent was generated by coal-fired units and 9.6 per cent by gas-fired units. In totality, 77.4 per cent of total power generated was from fossil fuels. This is why the power sector is the single largest contributor of ghg emissions in India.

Performance and prospects
The question is how these sectors in poor India fare in terms of emissions and energy efficiency. In general, our benchmarking of the specific energy consumption and ghg emissions for the six sectors indicates a mixed performance. Some sectors already perform at the global best level, some possess huge potential to improve and, in some, the potential to improve cannot be realized because of the unique characteristics they possess.

imageIn terms of prospects, the study shows that in both scenarios, business as usual and low carbon, the sectors’ performance will peak by 2020. Thereafter, the emissions reduction options stagnate. This is the real, even nasty, surprise. Or should we term it a wake-up call?

Consider, for instance, the question of emissions intensity of gdp, as of now the stated core of India’s approach to mitigation. We find even in business as usual, the emissions intensity from these six sectors will reduce by about 20 per cent below 2008-09 levels by 2020. With respect to the 2005 level, the base year the Indian government used when announcing its mitigation plan, emissions intensity will reduce even more. Moreover, in an ambitious low carbon scenario, emissions intensity can reduce by 30 per cent below 2008-09 levels by 2020.

But after 2020, this study shows, emissions intensity in many of these sectors reduces only marginally or even stagnates in both business as usual and low carbon scenarios, even after deploying all available technologies.

A nasty surprise: a real wake-up call.

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