Energyin India’s Future: Insights GOUVERNANCE EUROPÉENNE ET GÉOPOLITIQUE DE L’ÉNERGIE 7 EditedbyJacques LESOURNE andWilliamC.RAMSAY les études Energyin India’s Future:Insights Ifri, 2009 © Ifri, 2009 © Energyin India’s Future:Insights GOUVERNANCE EUROPÉENNE ET GÉOPOLITIQUE DE L’ÉNERGIE T OME 7 EditedbyJacques LESOURNE andWilliamC.RAMSAY les études Ifri, 2009 © The InstitutFrançais des Relations Internationales (IFRI)isaresearchcenter and afo rumfor debate on major internationalpoliticalandeconomicissues.Headed byThierrydeMontbrialsinceits founding in 1979,IFRI is anon-governmental andnon-profit organization. Asanindependent think tank,IFRI sets its Ownresearchagenda, publishing its findings regularlyforaninternationalaudience. Using aninterdisciplinary approach,IFRI brings together politicalandeconomicdecision-makers, researchers,andinternationallyrenownedexperts to animate its debate and researchactivities. With offices in Paris andBrussels,IFRI standsOutasOne of the rare Frenchthink tanks to havepositioneditself atthe veryheart of Europeandebate. ڊ The Objectiveofthe “EuropeanGOvernanceandthe GeopoliticsOfEnergy” programistopromote acoherent andsustainable Europeanenergypolicythrough seminars,debates,andpublications.This series cOvers the main aspects of the energytopic. Tome 1: Abatement of CO2 Emissions in the EuropeanUnion (2007) Tome 2: L’énergie nucléaire et les opinions publiques européennes (2008) Tome 3: The ExternalEnergyPolicyof the EuropeanUnion (2008) Tome 4: Gazet pétroleversl’Europe.Perspectives pourles infrastructures (2008) Tome 5: La gouvernancemondiale del’énergie :enjeux et perspectives (2009) Tome 6: GOvernanceofOil in Africa: UnfinishedBusiness (2009) CopyEditor :Charles BOsdet ©ALL RIGHTS RESERVED –IFRI –P ARIS,2009 ISSN 1962-610X ISBN 978-2-86592-371-7 IFRI IFRI B RUXELLES 27, RUE DE LA P ROCESSION RUE M ARIE-T HÉRÈSE,21 75740P ARIS C EDEX 15 –F RANCE B-1000 B RUXELLES –B ELGIQUE P H .:33 (0)1 4061 6000P H .:32(2)238 51 10 F AX:33 (0)1 4061 6060F AX:32(2)238 51 15 E MAIL:[email protected] E MAIL:[email protected] W EBSITE: Ifri.org Ifri, 2009 © Contents Introduction ............................................... 7 Afirst look atIndiaand energy ............................. 11 Jacques Lesourne andMaïté Jauréguy-Naudin Introduction .............................................. 11 Elements of India’s growth ................................. 12 Prospects forGDP andthe Indianeconomy’s placeinthe world . 16 EnergyOutlooks ........................................... 19 India’s uniqueness:The ingenuitydividend? .................. 27 Energyand environmentalissues: India’senergymodel by2030 .............................. 29 Jean-Joseph Boillot andNicolasAutheman Introduction .............................................. 29 CharacteristicsOfIndia’s energysystem ...................... 31 Analysis of the different energyscenarios andevaluating needs,2005-2030 .......................................... 43 Shakti’savatars:WhichenergyforIndia? .................... 59 Joël Ruet andZakariaSiddiqui Introduction .............................................. 59 The importanceofbeing India: Diversityenlarging the usualenergyframework ................................ 60 Sectoralandinternationalissues ............................ 95 Identifyingnewtrendsandpotentials ....................... 118 Ifri, 2009 © 6 Energyin India’s Future:Insights Nuclearpowerin India ..................................... 141 C.Pierre Zaleski andMichel Cruciani Historicalbackground: The three-stage strategy ............... 141 Main achievements within the first stage ..................... 143 Prospects forthe secondandthirdstages ..................... 145 Newconsiderations on the nuclearstrategy ................... 146 Turning point:India-USA andIndia-NSG agreements .......... 147 Starting point forfurther development ....................... 149 Anewera ................................................ 151 Economicuncertainties .................................... 153 Other uncertainties ........................................ 155 Technicalcrossroad ........................................ 156 Conclusion ............................................... 158 AppendixA – Supplementary dataforChapter2.............. 161 Annex1Installedcapacityof power stations Annex2 India’s demandon nature approaching criticallimits Annex3POwer shortages forecast 2008–09 Annex4POwer generation Annex5Noncommercialenergy AppendixB – Supplementary dataforChapter3 ............. 169 AppendixC – Glossary,acronymsand abbreviations ......... 178 Table of illustrations ....................................... 185 Ifri, 2009 © Introduction Inthe decades following India’s independencefrom British rule in 1947,the West’simage of Indiawassumma- rizedin three simple clichés:the world’s largest democracy,an impoverishedcontinent,andeconomicgrowth hamperedby afussybureaucracyandthe caste system,all in the contextof aparticularreligion. These clichés are perhaps one of the reasons thatthe success of India’s green revolution wasrecognizedsO late,a revolution thatallowedthe cOuntryto develop its agricultural sector andfeedits population. Sincethe 1990s,the easing of planning constraints have liberatedthe Indianeconomyandallowedit to embark on a more significant path of growth. Newclichés havebeguntO replacethe old: Indiawill become asecondChinaand, lagging by10to 20 years,will followthe same trajectory,with its development markedmore byservices andthe use of renew- able energy. HOwever,these trendswill not prevent primaryenergy demandfrom exploding.Inits referencescenario,the InternationalEnergyAgencyestimatedthis demandwOuld reach566 Mtoe in 2006and1280Mtoe in 2030.Indianoffi- cials estimate demandin 2030will reach1700 Mtoe. Inthis context,the IFRI EuropeanGOvernanceand GeopoliticsOfEnergyProjectdecidedto devote amonograph to the energydimension of the future India.Before presenting the chapters,it is necessaryto summarizethe main questions. Ifri, 2009 © 8 Energyin India’s Future:Insights 1. Whatwill the average growth rate of the Indian economybeover the long term? NObOdydisagrees thatin certain years it hasreached8%,butone must not confuse an average Over severalyears andapeakrate.Fluctuations in the economy,the vagaries andvicissitudes of agriculturalproduc- tion,andsOcialresistancecanreduceaverage performance. The differences in prognosis are large between those who assume anaverage growth rate of 5–6%,aconsiderable performance,andthose who think thatitispossible to main- tain continuOusgrowth of 6%. 2.Going from economicgrowth to primaryenergy demandgrowth raises twoquestions.HOwis noncommercial energy(essentiallytraditionalbiomass),whose volume is significant,dealt with? Whatisanappropriate estimation, which,depending on the sOurce,is or is not includedin the estimates? Whatfigure shouldbeusedto calculate the elas- ticityof energyconsumption comparedto GDP,asthe number wavers between .8 and.5 andmayfall in the next30years? 3. These projections are linkedto the image one might holdof the future of India’s economyandsOciety:Some think Indiawill beable to maintain its ruralpopulation,asthe spread of industrialandservices activities will diminish the attractiveness of greaturbancenters.Others believethatin India, ashashappenedin everyother cOuntry,economic growth will becOupledwith migrations from the cOuntryside to cities. 4. Interms of energysOurces,twOuncertainties remain: First,Indiahasastrong desire to vastlydevelop civil nuclearenergy.Italreadyhassolidtechnologicalexperiencein this fieldandrecentlysignedaciviliannuclearcooperation agreement with the UnitedStates,whichgives Indiaaccess to necessarytechnologies andresources from the UnitedStates andpaves the wayforexchanges with RussiaandFranceas well. HOwever,it is not certain thatIndiawill beable to financeprojects andcarrythem Outassoon asitwOuldlike. Second, Indiais home to numerousrenewable energy initiatives.Some see the cOuntryasalaboratoryon this issue. Ifri, 2009 © Introduction 9 Butwhatrole will this type of energyplayin India’s future energylandscape? 5. Lastly,it is important to remember thatIndiais one of the cOuntries thathavethe furthest to go in improving its energyefficiency.Its losses in electricitydistribution are major andcOuldno dOubtbereducedatamoderate cost. Variousaspects of the seriousenergyproblems are studied throughoutthis monograph. The authors havewritten freely on these matters withoutattempting to reconcile their different viewpoints. The first chapter,byMaïté Jaureguy-Naudin andJacques Lesourne,presents anoverviewof India’s present andfuture energysystem.The authorsfollowaprudent butrealisticview of India’s future. The secondchapter,byJean-Joseph Boillot,aFrenchexpert on Indiawho haspublishedseveralbooks andarticles on this subject,andNicolasAutheman,researchfellow,describes in greater detail the specificsOfIndia’s economyandthe actors who are nowpresent in the energysector. The thirdchapter,byJoël Ruet andZakariaSiddiqui,who liveinIndia, presents aviewthatismore inclusiveofrealities on the groundin India.Itisinteresting to compare the areas in whichthe secondandthirdchapters share opinions and those in whichdisagreements appear. The finalchapter,byC.Pierre Zaleski andMichel Cruciani, is dedicatedto India’s nuclearprojects andexperiences after the signing of the Indo-Americannucleartreaty. Indiahaseverychanceofbecoming the most populous cOuntryin the worldin severaldecades,butwhile it forecasts tremendOusgrowth,Indiais still apoor cOuntrywhose economyis not yet asdevelopedasChina’s. Inpublishing