India is the fastest growing economy in the world. But how has it performed on green growth and energy efficiency? Electricity usage is an important indicator of energy efficiency, and, all else being equal, using less electricity to achieve a given level of output is more efficient.
Green Growth | Achievements
- India’s energy intensity of gross domestic product (GDP) has declined from 1.09 kg unit of oil equivalent (KOE) in the 1980s to 0.66 in recent times. China’s energy intensity is roughly 1.5 times that of India.
- Energy efficiency has improved in urban areas as urban settings have reduced the cost of electricity use per output level.
- The energy-intensive industries (e.g. iron and steel, fertilizer, petroleum refining, cement, aluminium, and pulp and paper) account for the bulk of the energy consumed. They have recorded greater energy efficiency improvement.
Green Growth | Grey areas that need attention
- Large urban manufacturing enterprises are now de-urbanizing and moving into rural areas in search of lower land costs. These enterprises are locating in rural sites along major transport corridors, like the Golden Quadrilateral transport highway network.
- Energy efficiency has not improved in rural regions when compared with urban regions. This would suggest that urbanization as a potential driver of green growth may have a limited role to play.
- Spatial disparities in terms of usage of electricity per unit output is remarkably high in states such as Madhya Pradesh and Odisha. By contrast, states like Delhi and Haryana display electricity consumption levels that are consistently lower than the national average.
- There remains huge heterogeneity in energy usage across industries. Textiles, paper and paper products, basic metals, and non-metallic mineral products display the largest consumption of energy per unit output. Industries that display lowest usage include tobacco products and office, accounting and computing machinery.
Green Growth | What can India do?
- The green growth agenda may need to extend beyond urban areas and also include rural areas. Lack of access to energy and unreliable energy supply forces firms to invest in self-generation capacity at the expense of more productive capital, outsource part of the production process, or expand firm size.
- Although the installed capacity of India’s power system is the fifth-largest system in the world (after China, the US, Japan, and Russia), it is still insufficient to meet India’s rapidly increasing demand. Policymakers need to review the incentives and regulations that govern self-production of electricity, when unreliable energy supply forces firms to invest in self-generation capacity at the expense of more productive capital, outsource part of the production process, or expand firm size.
Green Growth | Way forward
Policymakers need to move on three fronts to reduce greenhouse gas emissions –
- First, increase energy efficiency.
- Second, improve access to technology.
- Third, promote renewable fuel.
Green Growth | Conclusion
India has forwarded an ambitious green growth agenda in its Intended Nationally Determined Contributions (INDC’s) for the Paris Climate Change Agreement. To materialise the ambitious agenda into reality, India needs to perform consistently above the previous benchmarks set out by itself by incorporating a clean energy agenda in flagship schemes like UDAY and DDUGJY. Electricity production standards and pollution emissions are homogeneous, performance on energy efficiency (positive and negative) can be mostly translated into green growth.