India's Energy and Climate Policy
Total Page:16
File Type:pdf, Size:1020Kb
India’s Energy and Climate Policy Can India Meet the Challenge of Industrialization and Climate Change? Charles K. Ebinger June 2016 Policy Brief 16-01 ABOUT THE BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE he Energy Security and Climate Initiative (ESCI) at the Brookings Institution encourages the devel- Topment, discussion, and dissemination of high-caliber energy security and climate research. ESCI, through its research and convening efforts, seeks to examine three key substantive aspects of energy se- curity: the geopolitics of energy; the economics of energy; and the growing environmental imperative of balancing increasing global economic prosperity in a carbon-constrained context. Contact for the ESCI: Jennifer Potvin Project Coordinator (202) 797-4389 [email protected] Cover photos © Reuters INDIA’S ENERGY AND CLIMATE POLICY: Can India Meet the Challenges of Industrialization and Climate Change? BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE ii ABOUT THE AUTHOR Charles K. Ebinger is a senior fellow in the En- Bank, and the European Bank for Reconstruction ergy Security and Climate Initiative at Brookings. and Development. These projects addressed the He served as the Initiative’s director from 2008 to restructuring of electricity, natural gas, and pe- October of 2014. Previously, Ebinger served as a troleum state-owned companies; the creation of senior corporate officer at Conant and Associates, regulatory regimes; energy pricing reforms; insti- Putnam Hayes and Bartlett, Stone and Webster tutional strengthening of energy ministries and Management Consultants and Nexant (Bechtel) state-owned utilities; and enactment of energy where he advised governments on restructuring efficiency programs. and privatizing their state-owned energy sectors. Ebinger has nearly 40 years’ experience in India Ebinger has extensive teaching experience hav- having advised 10 states on restructuring their ing served as an adjunct faculty member at the energy sectors. Ebinger was also involved in the Georgetown University School of Foreign Service formation of the Central Electricity Regulatory from 1979-2001 and the Paul Nitze School of Ad- Commission and in the drafting of the Electrici- vanced International Studies at Johns Hopkins for ty Act of 2003. He served as an energy advisor to over a decade. He has also been a visiting profes- the India Interest Group, a consortium of Amer- sor at Case Western Reserve University. Ebinger ican Companies doing business in India, headed serves as a member of the Board of Directors at by General Electric. In addition to India, Ebinger the Jackson Hole Center for Global Affairs, on the has special expertise in the rest of South Asia, North American Board of the Energy Research the Middle East, and Africa, but has also worked Institute of India and the Howard Baker Japan in the Far East, Southeast Asia, Eastern Europe, Forum. He has also served as the President of Central Asia, and Latin America. the National Capital Chapter of the Internation- al Association for Energy Economics and as Vice Ebinger is widely published both in the field of Chairman of the Innovative Energy Group, a re- conventional energy and on nuclear energy and newable energy development company based in nonproliferation. His most recent books Energy Dubai. and Security in South Asia: Cooperation or Con- flict was published by the Brookings Press in Ebinger received his bachelor’s degree, cum 2012. Ebinger has 40 years of experience advis- laude, and Phi Beta Kappa from Williams College ing the highest levels of governments on a variety and his master’s and doctorate degrees from the of projects funded by the U.S. Agency for Inter- Fletcher School of International Law and Diplo- national Development, World Bank, Asian De- macy at Tufts University, where he graduated first velopment Bank, Inter-American Development in his class. INDIA’S ENERGY AND CLIMATE POLICY: Can India Meet the Challenges of Industrialization and Climate Change? BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE iii AUTHOR ACKNOWLEDGEMENTS I wish to thank my intern Ankita Narain for her Ambassador Shayam Saran of the Center for Poli- insights and ability to ferret out relatively obscure cy Research in Delhi and former foreign secretary government and other reports from the internet and prime ministerial special envoy for nuclear on India’s energy, environment and climate poli- affairs and climate change. cy. A note of thanks also goes to Jennifer Potvin, project coordinator of ESCI for her careful read- Finally I would like to thank my Brooking’s India ing of the manuscript and suggestions on restruc- colleague, Rahul Tongia, for his insights into both turing the paper. Special thanks also go to Heath- Indian energy and environmental policy and Tim er Greenley, ESCI’s senior research assistant for Boersma, acting director of ESCI for his steadfast her pain-staking fact checking and rationalization support throughout the preparation of the man- of footnotes and overall editing of the document. uscript. Notes of very special thanks for serving as ex- While I thank all of the above people for their in- ternal and internal reviewers go to John Banks, sights, in the final analysis the views represented a nonresident senior fellow in ESCI, and in In- are my own for which I assume full responsibility. dia, to Ashok Sreenivas at Prayas in Pune and to Brookings recognizes that the value it provides to any supporter is in its abso- lute commitment to quality, independence and impact. Activities supported by its donors reflect this commitment, and the analysis and recommendations of the Institution’s scholars are not determined by any donation. INDIA’S ENERGY AND CLIMATE POLICY: Can India Meet the Challenges of Industrialization and Climate Change? BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE iv TABLE OF CONTENTS Acronyms and Abbreviations ....................................................... vi Summary for Policymakers ........................................................ viii 1. Introduction .................................................................... 1 2. The Indian Energy Landscape ...................................................5 3. India’s Energy and Climate Policies .............................................. 21 4. The Future of India’s Power Sector .............................................. 30 5. Conclusions .................................................................. 50 Appendix A...................................................................... 53 Appendix B ...................................................................... 55 INDIA’S ENERGY AND CLIMATE POLICY: Can India Meet the Challenges of Industrialization and Climate Change? BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE v ACRONYMS AND ABBREVIATIONS Bbl barrel Bcm billion cubic meters BHEL Bharat Heavy Electrical BJP Bharatiya Janata Party Btu British thermal unit CAG Comptroller and Auditor General of India CBI Central Bureau of Investigation CCEA Cabinet Committee on Economic Affairs CEA Central Electric Authority CERC Central Electricity Regulatory Commission CIL Coal India Limited CNG compressed natural gas COP21 21st session of the Conference of Parties (of the UN Framework Convention on Climate Change) CSO Central Statistics Office DFC dedicated freight corridor Discoms distribution companies E&P exploration & production EIA U.S. Energy Information Administration FRP Financial Restructuring Proposal GHG greenhouse gases GoI Government of India GST Goods and Services Tax GW gigawatts IEA International Energy Agency IEEFA Institute for Energy Economics & Financial Analysis INDC Intended Nationally Determined Contribution JNNSM Jawaharlal Nehru National Solar Mission kWh kilowatt hour LNG liquefied natural gas LPG liquefied petroleum gas mmbd million barrels per day MNRE Ministry of New and Renewable Energy MT million tons INDIA’S ENERGY AND CLIMATE POLICY: Can India Meet the Challenges of Industrialization and Climate Change? BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE vi Mtce Insert: MtCO2 million tons of carbon dioxide MW megawatt NAPCC National Action Plan on Climate Change NITI National Institution for Transformation India NMEEE National Mission for Enhanced Energy Efficiency NTPC National Thermal Power Corporation OECD Organization for Economic Cooperation and Development ONGC Oil and Natural Gas Corp PAT perform, achieve and trade RPO renewable purchase obligations SEB State Electricity Board SECI Solar Energy Corporation of India T&D transmission and distribution UDAY Ujwal Discom Assurance Yojana UNFCCC United Nations Framework Convention on Climate Change WRI World Resources Institute INDIA’S ENERGY AND CLIMATE POLICY: Can India Meet the Challenges of Industrialization and Climate Change? BROOKINGS ENERGY SECURITY AND CLIMATE INITIATIVE vii SUMMARY FOR POLICYMAKERS Within the energy and climate debate perhaps ed Nations Framework Convention on Climate no issue is more contentious than the degree to Change (UNFCCC) in Paris and in many other which emerging economies should rely only on forums that India will not be able to achieve its non-fossil fuel resources and energy efficiency Intended Nationally Determined Contribution to meet their growing energy demand. Perhaps (INDC) without huge infusions of financial as- the greatest example of this debate can be illus- sistance. Additionally, although India put forth trated by the degree to which India confronts the ambitious targets at Paris, it was with great res- dilemma of committing to