India’s Approach To Climate

Change

Surya P. SethiPrincipal Adviser EnergyInfraline Energy Round

TableMay 7, 2008

The Structure Of The Presentation

A look at the Real India

Emission Reduction Targets – A Reality Check

India's Contribution To Mitigation To Date

Sustainability Concerns

India’s Current Energy & Climate Change Policy Framework

Key Messages

A Look At The Real India

Ground Zero

Total Primary Energy Supply in 2005-06: 510 MTOE

Energy Mix: Coal & Lignite – 37.9%, traditional biomass-28.6%, oil-23.9%, gas-6.9%, hydro-1.7% and nuclear-1.0%.

Primary Commercial Energy Consumption 365 MTOE in 2005-06

India’s share of global commercial energy supply in 2005 was 3.7%. Top 5 consume over 50% led by US at 22.2% and China at 14.7% followed by Russia, Japan and Germany.

India’s per capita commercial energy consumption is about 20% of the world average, 4% that of the US and 28% that of China

Source: IEA, BP and Planning Commission

The Energy Challenge

Some 600 million fellow Indians live without electricity.

Over 75% of household energy consumption is for the basic human need of cooking. Traditional biomass is the primary cooking fuel for over 700 million fellow Indians.

34.7% and 79.9% population below income level of $1 and $2 a day respectively

Lack of access to commercial energy leads to Illiteracy, Gender Inequality/Disempowerment, High IMR and MMR, Poor Health & and hence a low HDI.

Over the next 25 years India needs to lift the bottom 40% of her citizens to an acceptable level of economic & social well being – this will not happen without providing modern energy to these fellow Indians.

India’s Development Goals

1. Reduce the poverty ratio by 5 percentage points by 2007 and by 10 percentage points by 2012

2. Provide gainful and high-quality employment to the labor force

3. Ensure all children complete 5 years of schooling

4. Reduce dropout rates of children from elementary school from 52.2% in 2003-04 to 20% by2011-12

5. Increase literacy rate 75% by 2007 and to 85% by 2012

6. Reduce gender gaps in literacy and wage rates by at least 10% by 2012

7. Reduce the decadal rate of population growth between 2001-2011 to 16.2%

India’s Development Goals

7. Reduce the Infant Mortality Rate (IMR) to 45 per 1000 live births by 2007 and to 28 by 2012

8. Reduce the Maternal Mortality Ratio (MMR) to 2 per 1000 live births by 2007 and to 1 by 2012

9. Increase the forest and tree cover to 25% by 2007 and 33% by 2012

10. Provide clean drinking water for all by 2009

11. Electricity for all by 2012

12. Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012

Development—The Best Adaptation Tool

Health10.8%

Forest conservation0.5%

Risk financing4.8%

Disaster management3.5% Poverty alleviation and

livelihood preservation44.7%

Crop improvement and research

5.9%Draught proofing and

flood control3.0%

Rural education and infrastructure

26.9%

Key Components Of Adaptation Outlays In 2006-07

Share Of Adaptation In Total Govt. Expenditure:

1997-98: 7%; 2006-07: 13%

Adaptation Outlays As A Percentage Of GDP:

1997-98: 1.6%; 2006-07: 2.6%

India’s Energy Imperatives To Support 8% + Growth

India’s primary energy supply to grow by 4.3-5.1% to reach 1536 to 1887 MTOE by 2031-32 for GDP growth of 8%+.

India’s share of world fossil fuel supply in 2005 was 3.7%. This could become 7.6 to 10.9% by 2031-32.

India’s incremental requirement could account for 13-21% of the world’s incremental supply by 2031-32.

India would need to tap all available energy supplies and pursue all available and emerging energy technologies.

Above all India must lower energy demand through energy conservation and higher energy efficiency

Emission Reduction Targets – A Reality

Check

CO2 Emissions - 2005

2005 CO2

emission (million tons)

2005 populatio

n (million)

2005CO2

emission/Capita (tons)

I. OECD 13548 1166 11.62

II. Countries with emission > 3 tons/capita/annum

11515 2064 5.58

Sub-total (I+II) 25063 3230 7.76

III. Low emitters 3130 3215 0.97

Total 28193 6445 4.37Assuming zero emissions from low emitters, 57.2 % reduction would be required from I & II to deliver 50 % of 1990 CO2 emission. Source: EIA, UN data base.

Per Capita Convergence In 2050 With

Total CO2 Emissions At 50 % of 1990 level @2050

CO2 emission (million tons)

Reduction over 2005 CO2

emission (%)

2050populatio

n(million)

I. OECD 1539 88.64 1327

II. Countries with emission > 3 tons/ capita/annum

2721 76.37 2346

Sub-total (I+II) 4260 83.00 3673

III. Low emitters 6462 -106.49 5571

Total 10722 61.97 9244

@ This translates to 1.16 tons/capita in 2050. Source: EIA, UN data base.

Per Capita Convergence In 2050 With

Total CO2 Emissions At 2005 Level @

2050 CO2

emission (million tons)

Reduction over 2005

CO2 emission

(%)

2050populatio

n(million)

I. OECD 4046 70.13 1327II. Countries with emission > 3 tons/ capita/annum

7154 37.87 2346

Sub-total (I+II) 11200 55.31 3673III. Low emitters 16992 -442.93 5571Total 28192 0 9244@ This translates to 3.05 tons/capita in 2050. Source: EIA, UN data base.

India's Contribution To Mitigation To Date

Sustainable Lifestyles

Sustainable Production

CO2 emission from food sector- - from Field (production) to Table

(processed food)- excluding cooking

0.12

1.70 1.801.90

2.012.20

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

I ndia United Kingdom Germany Netherlands Australia United Stateston

CO

2/m

kca

l of

foo

d e

nerg

y

Production related CO2 emission (tonne CO2/ million kcal of f ood energy)

Processing related CO2 emissions (tonne CO2/ million kcal of f ood energy)Total CO2 emissions (tonne CO2/ million kcal of f ood energy)

Source: TERI analysis (various data sources)

CO2 Emissions From Food Production & Food Processing

Estimated CO2 Emissions From Passenger Transport (gm/passenger-km)

16

118

193

050

100150200250

I ndia EU (15

countries)

USA

Source: TERI Analysis, various data sources

Municipal Solid Waste

3047.3 53

70

0

50

100

US Germany J apan I ndia

Average rate of recycling (%) (excl. re-use)

4810

23

0

10

20

30

USA UK Germany I ndia

GHG emissions from waste (gm/’000$GDPppp)

Source: TERI Analysis, based on National Communications of different countries

Per-capita Consumption Levels Per-unit Of Inhabited

Land Area

1 43 451794

1599

1907

74 220.4

630

456

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Aluminium Cement Steel

(thousa

nd t

onnes/

capit

a/sq

. kilom

etr

es)

I ndia J apan EU- 15 USA

India ranks the lowest

CO2 Emissions from Key Material Inputs for Infrastructure

Development CO2 emissions in Cement, I ron and Steel and

Aluminum

0

500

1000

1500

2000

2500

3000

3500

2001 2006 2011 2016 2021 2026 2031

Year

(million m

etric

tonnes)

BAU S1

1771

S1 Scenario assumes India matches consumption levels of EU 15 on a per capita per square kilometer bases for Aluminum, Cement & Steel by 2031-32.

Co2 emissions increase from 1251 million tons (BAU) to 3022 million tons (S1) in 2031 Increase of 1771 million tons in S1 relative to BAU in 2031

G Cal / tcs

9.3

9.08.9

8.88.7 8.7

8.48.3

8.18.0 7.9

7.77.6 7.5

7.3

7

7.5

8

8.5

9

9.5

10

199

0-9

1

199

1-9

2

199

2-9

3

199

3-9

4

199

4-9

5

199

5-9

6

199

6-9

7

199

7-9

8

199

8-9

9

199

9-0

0

20

00

-01

20

01-

02

20

02

-03

20

03

-04

20

04

-05

Specific Energy Consumption in Integrated Steel Plants

Source: Steel Authority of India Ltd.

22% reduction in

SEC from 1990-91 to

2004-05

Actual impact

higher as share of

D/R rising

SEC Trend Of The Aluminum Sector

(Source: BEE, 2007)

111 112 110

104 105102

97

91 8984 83 82

63 65

117120 122

60

80

100

120

91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05

Energy Consumption Profile(Dry Process - Wtd. Avg.)

650663

723

876857 846

816 815801

780 779 771 763 750742 734 729

600

650

700

750

800

850

900

91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05

TH

ER

MA

L

EN

ER

GY

KC

AL/K

G C

L.

ELEC

TR

ICA

LEN

ER

GY

KW

H/T

CEM

EN

T

BEST IN INDIA

BEST IN WORLD

Source: CMA

WET KILNS: INDIA 5% US 18%

SHARE OF BLENDED CEMENT OVER 60%

Trends in Energy Consumption of Ammonia & Urea Plants

12.48

8.87

9.3

6.59

6

7

8

9

10

11

12

13

Gca

l/to

n

AMMONIA UREA

25% REDUCTION

26% REDUCTION

World’s Best: 7.0 Gcal/ton of Ammonia

India’s Best: 7.2 Gcal/ton of Ammonia

FAI Target: 6.5 Gcal/ton of Ammonia

Already average of top 25% ammonia plants more efficient then world’s top 25% plants

Source: Fertiliser Association of India (FAI)

Process-wise Share Of Installed Capacity Of Caustic

Soda In IndiaMEMBARANE CELL PROCESS HAS LOWEST SEC

WESTERN EUROPE: MERCURY CELL SHARE 55%

USA: DIPHRAGM PROCESS SHARE 75%,

INDIA: CURRENT MEMBARANE CELL SHARE 75%

SEC OF INDIAN CAUSTIC SODA PRODUCTION IS 36% BELOW USA (Source: LBNL, 2005)

Global Benchmarking Of Refineries-Shell

Source: Shell Global benchmarking study in ‘Energy & Loss’ performance

India’s Energy Intensity Falling

Energy intensity of GDP (kgoe/$ 2000 PPP)

based on IEA data

0.15

0.2

0.25

0.3

0.3519

71

198

0

199

0

199

9

2001

2003

2005

TPE

S (

kgoe

)/G

DP

($2000

PPP)

India Is NOT Following The Fuelish Path of Industrialized

Countries

India’s Emission’s Performance

Source: EIA &UNDP HDR

  1999 2005CAGR (%)

GDP US$ Billion PPP 2242.0 3779.0 9.1

Emissions MT of CO2 934.8 1165.7 3.7

Kg of CO2/US$GDP PPP 0.42 0.31 -4.9

Kg of CO2/Capita 0.95 1.07 2.0

World Bank Assessment Of India’s Relative Emission’s

Performance India is a relatively low carbon economy

India has been offsetting its CO2 emissions growth resulting from growth in population and high GDP growth by lowering energy intensity and improving the carbon intensity of its fuel mix

India has achieved these offsets despite a low initial emission level and against a backdrop of increasing CO2 intensity world wide between 1999-2004

Most independent projections indicate that India’s CO2 intensity is likely to continue to decline through 2030-2050

Sectoral CDM Potential During 2012-17

(Power, Iron & Steel, Cement)

63

179

309

0

50

100

150

200

250

300

350

Cement Steel Power

Mill

ion

tonn

es o

f CO

2

CO 2 Emissions reduction potential of about 550 million tonnes during 2012-17

Highest emissions reduction potential is in the power sector (309 MT)

Additional Investment Requirements For Mitigation In the Selected Sectors, Vis-a-Vis

Select Development Outlays Of GOI For Tenth Plan

Additional investment requirements of US$ 25.1 Billion (at 2001 Prices) including $ 22.3 billion of positive mitigation cost options

17.0

5.7

2.4

0

4

8

12

16

20

24

28

Billi

on $ Cement

Steel

Power

13.0

6.9

1.4

3.2

0

4

8

12

16

20

24

28

Billi

on $

Ministry ofEnvironment andForests

Department ofWomen and ChildDevelopment

Department ofElementaryEducation andLiteracy

Department ofRural Development

similar order of magnitude as plan support for meeting social and environmental development targets

Marginal Abatement Cost Curve for Power, Steel and Cement

Sectors (All options) [For 2012-17]

Total additional investment requirement : 25.1 billion US$ For options with positive mitigation cost total additional investment

requirement : 22.3 billion US$ Mitigation cost is highest for SPV: 925.8 $/tonne . This has not been plotted

No. Technology Mitigation cost

($/ tonne) 1 Renovation and modernization - ve

2 Blended cement production - ve 3 Retrofi t-EAF - ve 4 Retrofi t of 4 stage to 6 stage - ve 5 Retrofi t of 5 stage to 6 stage - ve

6 Retrofi t- BF-BOF Effi cient 1.7 7 Coal ultra supercritical 17.4 8 BF-BOF Best available technology 19.6

9 Cogeneration (cement plant) 20.8 10 Small hydro 29.1 11 I GCC based on I mported Coal 45.0 12 H-f rame CCGT 45.4

13 I GCC based on I ndigenous Coal 52.9 14 Biomass gasifi er 60.0 15 Wind turbine 63.2

0

10

20

30

40

50

60

70

0 100 200 300 400 500 600

Million tonnes of CO2 reduced

$/t

onne

No-regret Options Under Capital Constraints

In respect of GHG mitigation, refers to options that are of economic benefit even without GHG mitigation considerations.

Implies both reduced cost of energy service, and zero incremental investment cost.

Depends upon specific project situation, and cannot be generalized to an entire sector/economy!

Sustainability Concerns

Different CGE Models run with same scenarios give widely varying results

(e.g. Indian share of global emissions)

0

2

4

6

8

10

12

14

16

18

20

%

2000 2050 2100

Different CGE Models Reference Scenario

GTEM

merge-hc

merge-lc

DNE21

IMAGE2.2

MARIA

EPPA

AIM

MiniCam

SGM

0

5

10

15

20

25

%

2000 2050 2100

Different CGE Models 550 ppmv Scenario

GTEM

merge-hc

merge-lc

DNE21

IMAGE2.2

MARIA

EPPA

AIM

MiniCam

SGM

Source: Weyant & Parikh, 2004

Qualitative Result: Carbon Intensity of GDP for India

Source: Weyant & Parikh, 2004

Impact Of Some Of India’s Energy Policies (2001-31)

Baseline (BAU): Base year 2001, GDP growth 8%, Official demographic projections, IPCC emissions factors, 8% discount rate

Policy Initiatives Over Baseline Assumptions: S1: Cleaner fuels for power generation S2: Electricity for all by 2012, decentralized

renewable options and efficient cook stoves S3: 20% increase in share of public road transport

Greater use of CNG in buses, taxis, 3-W vehicles S4: S1+S2+S3

S5: Same as Baseline but annual GDP growth rate 6.7%

Comparison of Energy Supply Intensity

0

5

10

15

20

25

30

35

40

2001 2006 2011 2016 2021 2026 2031

PJ

/Bil

lio

n U

S$

Baseline S1 S2 S3 S4 S5

Change in India’s CO2 intensity as a result of Government policy

initiatives

CO2 Intensity

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2001 2006 2011 2016 2021 2026 2031

Years

MM

T/B

illi

on

US

$

Baseline S1 S2 S3 S4 S5

TERI analysis

CO2 intensity (MMT/Billion US $)

2001 2006 2011 2016 2021 2026 2031

Baseline 2.71 2.62 2.23 1.90 1.62 1.38 1.20

S1 2.71 2.24 1.88 1.61 1.36 1.18 1.06

S2 2.71 2.13 1.84 1.68 1.55 1.38 1.20

S3 2.71 2.61 2.20 1.86 1.57 1.31 1.13

S4 2.71 2.05 1.57 1.47 1.30 1.11 0.99

S5 2.71 2.61 2.19 1.84 1.58 1.36 1.18

TERI analysis

India’s Current Energy & Climate Change Policy Framework

Decoupling Energy Growth From GDP Growth & Managing

Energy MixPolicies to limit TPE growth to 4.3-5.1% for 8%+ GDP

growth (2005/6: 510 MTOE; 2031/32: 1536-1887 MTOE)

Fuel mix ranges under 11 scenarios 2031-32 2005-06

MTOE % MTOE %Coal 632-

102241.1-54.1 193 37.9

Oil 350-486 22.8-28.7 122 23.9Non-Commercial

185-185 9.8-12.0 145 28.6

Gas 104-197 5.5-11.0 35 6.9Nuclear 76-98 4.0-6.4 5 0.9Hydro 13-35 0.7-2.2 9 1.7Renewables 2-87 0.1-5.6 <2 0.1

India’s Approach In The Global Context

Country TPES Per Capita (Kgoe)-

2005

TPES /GDP (Kgoe/$-2000 PPP)-

2005Russia 4520 0.47China 1320 0.22US 7890 0.21Germany 4180 0.16Japan 4150 0.15Brazil 1120 0.15

India 468 0.15UK 3880 0.14Denmark 3620 0.12World 1780 0.21

INDIA 2031-32 1065-1279 At Par With Best

Source : IEA. For India: actual for 2005-06; IEP estimates for 31-32

Reforming Energy Markets Remove entry barriers and raise competition in

exploration, extraction, conversion, transmission & distribution of primary and secondary energy

Institute price reform. Full competition at point of sale. Net back pricing for non-traded energy if domestic market not competitive

Tax reform to promote optimal fuel choices.

Augment and diversify energy options, sources and energy infrastructure

Strengthen or introduce independent regulation

Instituting Energy Policies That Support

Mitigation/Efficiency Force conservation & restrict demand growth through

high energy taxes

Energy/Power sector reforms to raise energy extraction, conversion transmission & distribution efficiency

Promote hydro, nuclear and renewable energy

Promote clean coal technologies

Improve highways, build mass transit & freight corridors

Promote less carbon intensive fuel for transport

Standards, labeling & bench marking for energy efficiency

Enforce environmental quality management

Specific Initiatives To Further Mitigation /

Efficiency Sector Options Issues

Power IGCC, Ultra super-critical, Nuclear

Technology for high ash coal; Performance risk perceptions; Closed Nuclear Fuel Cycle

Renewables Solar PV, Wind, Solar thermal, and Biomass

High capital cost/ intermittent power availability, Technology

Transport Higher rail haulage, Mass Transit, Track Electrification, Water ways, Vehicle efficiency standards, Biofuels

Infrastructural requirements; High capital investments; Food security, Livelihood concerns

Residential/Commercial

Green buildings, DSM, efficient appliances, cogeneration

Technology, Diffusion of knowledge & information, Higher capital cost

Industry Energy audits, Energy efficient processes

Lack of technology, capital and knowledge in SMEs, Replicating success stories

Policy Focus On R&D And Science Of Climate Change

Advanced coal technologies: IGCC, Ultra critical, In-situ gasification, CBM, CCS & Zero emissions & Combustion Research Initiative. Gas hydrates & Hydrogen

Nuclear: closed fuel cycle & breeder/thorium reactors

Solar Thermal, Solar PV, Biomass gasifiers & Bio-fuels

Energy storage systems

Energy efficient technologies across sectors

Climate modeling, super computing & researching current & future adaptation practices/technologies

Policy Focus On Adaptation

Enhance resource conservation through improved management of watersheds, forests, Coastal Zones etc.

R&D and technological innovation for development of tolerant cultivars

Innovative demand-driven technology delivery systems for stakeholders

Better risk management strategies including involvement of insurance industry, esp. for crops

Promoting alternative livelihood options

Key Messages

Key Messages

India, the world’s fourth largest economy, is also home to a third of the world’s poor without access to modern commercial energy

India’s development goals are closely aligned with the MDGs. Delivering these goals requires more energy

India’s patterns of production and consumption are sustainable.

India’s energy intensity and emissions intensity is comparable to the best in the world

India has put in place a policy framework that supports sustainable development, mitigation and adaptation

Key Messages (Contd…)

Current responses to climate variability entail significant public expenditure & personal cost to individuals

Further diversion of limited national resources from development and poverty alleviation to mitigation & Adaptation will impact GDP growth & poverty alleviation

Even low or negative economic cost options impose large incremental investments under severe capital constraints

India is delivering upon all obligations seen for developing countries under the UNFCC framework.

Additional resources & technologies required to be made available by industrialized countries as per UNFCCC, Article 4.7 are essential for further deployment of low carbon technologies and for adaptation

Key Messages (Contd…)

India seeks a regime that permits access to available low carbon technologies and IPRs on concessional terms

India seeks collaborative research to leverage its own efforts in future low carbon technologies with a sharing of IPRs

India seeks long-term convergence of per capita emissions. The honourable Prime Minister of India has confirmed India’s determination to never exceed the emissions of industrialised countries under such a trajectory.

Be The Change You Want To See In

The World

Be The Change You Want To See In

The World