Money for the poor energises the rich

Published: Saturday 04 July 2015

THE ministry of non-conventional energy sources (MNES) is giving the rich city dweller in the country an optional source of electricity: rooftop photovoltaic cell units which convert sun rays into electricity.The proposal is commendable since, compared to CO2 emitting coal, it is cleaner, and ultimately cheaper, technology.

However, what is scandalous is the money used to subsidise this technology. To ensure commercial viability, the MNES project would have needed a loan from the World Bank. Instead, the MNES is utilising Global Environment Facility (GEF) funds, perpetrating a gigantic fraud.

GEF funding in the energy sector derives its mandate from the Climate Change Convention (CCC), in which a country is rated by its per capita emission level. This mandate says that developed country parties to the CCC shall provide financial resources to meet all the agreed costs incurred by developing country parties.

India becomes entitled to the GEF grant because of its low per capita emission of greenhouse gases, which is less than 1.05 metric tonnes per person per year, a mere 1/15th of the US average. But this average camouflages a vast inequity within the country. A majority of India's population -- abjectly poor -- is using sputteringly low amounts of energy. It cannot be implied from the low average that our urban rich uses significantly less energy than their peers in the industrialised world; which is why, ironically, the GEF funds have been made possible by the poor of the nation.Clearly, the MNES is misutilising funds to subsidise the energy needs of the rich by adding the GEF money to a commercial loan from the World Bank.

Equally clearly, one of the objectives of the MNES's spending GEF money, therefore, should have been to bring the per capita energy consumption of the underprivileged to a basic minimum level.

The rational approach for the MNES should be to push for the removal of subsidies in centralised electricity generation, so that environmentally benign technologies become viable on their own. Over the past decade, the prices of solar electricity systems have fallen by 66 per cent, emerging as the least expensive power source in some developing countries.

In fact, there are several other ways of enticing high energy-consuming citizens to opt for environmentally benign technologies. Energy economists recommend that each rupee invested in improving efficiency will lead to average saving of Rs 5. Such savings would also help retain money desperately needed for investing in renewable sources. Thailand's decision to invest US$ 183 million in augmenting electricity efficiency over the next 5 years, and to levy tax on petroleum to raise additional funds for efficiency projects, is noteworthy.

In a country like India, the demand for an ever-expanding energy supply for industrial consumption cannot be allowed to overwhelm the need for energy to bring the standards of living to a minimum level. Since 1960, our energy use has gone up 4 times. Roughly 1/4th of the country's debt payments in the '80s went to finance energy projects, mainly benefiting the "haves".

Efficiency improvement technologies are now within reach in industry, agriculture, construction and transportation. And by judicious leapfrogging to advanced technologies from industrialised countries today, India can surely avoid huge but fallible investments in economically and environmentally obsolete infrastructures of older energy technologies.

The techniques are already available and in use. China's experiment with energy efficiency in the '80s showed that it cost the country 1/3rd less than investments needed for coal supplies; further, but for the experiment, the country would have either consumed 50 per cent more power or it's output would have declined.

The MNES should make it clear that the GEF money in this country is part of the "development" bargain made in Rio. And "environment" -- read "conservation" -- should be restricted to the high-consumption minority. The World Bank, which has a dismal record in protecting the environment, should not be allowed to provide helmsmanship in this area by advising the mixing of the 2. Of the US $67 billion that the World Bank and other development banks loaned for energy between 1980 and 1990, less than 1 per cent was aimed at improving end-use energy efficiency. Private banks, which provide the bulk of loans, typically followed the lead of the multilateral lending institutions. And therein lies the problem.

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