Energy and energy services play a central role in any economic development. As a developing economy industrializes, the consumption of energy per unit of GDP increases steeply, before flattening out similar to those in the post-industrial service economies. Energy usage and environmental pollution are closely linked to each other. The global warming and climate change due to greenhouse gas emissions (Carbon Dioxide, Methane, Nitrous Oxide etc.) from different economic activities are major concerns and need immediate attention & action. Energy utilization using fossil fuels contributes to the tune of 65% of the total Greenhouse Gas (GHG) emissions from developing countries like India. Though the per capita energy consumption (0.8 toe) and per capita GHG emissions in India are much lower than that of the world average, it has very significant cumulative contribution in GHG emissions due to its huge population which is increasing at the rate of ~2.1% per year. Due to the rapid growth of population and economy, a steep rise in energy consumption is estimated in the business-as-usual scenario. Such a scenario depicts unsustainable usage of energy resources, leading the society to a grave crisis. But on the other hand, the developing world cannot slow down its development activities. So, to bring out a sustainable solution to the problem Energy Conservation is considered as one of the vital tools to restrict the steep rise in energy utilization and redirect the situation towards the sustainable utilization of resources and mitigation of global warming.

The concept of Energy Conservation first evolved as a cost minimization tool in United Kingdom after the Second World War. For oil importing developing countries like India, high import bills due to the sudden rise in the world oil price (in 70s) has triggered the first policy-level action for energy conservation. Energy efficiency improvement is considered as one of the major tools for Energy Conservation. Energy efficiency measures are the improvement of the energy conversion efficiency to maximize the output and minimize waste. Energy efficiency measures include improved ‘housekeeping’ procedures, maintenance, process control and automation, the replacement of outdated plant and equipment with the modern energy-efficient equivalent. In many developing and transition economy countries like India, co-generation of power and process heat/steam based on natural gas is a commercially attractive option. Biomass-based co-generation, employing modern, efficient technology can be a cost-effective and low greenhouse gas-emitting option where biomass is available either as an agro-industry by-product or an energy-plantation produce.

Electricity, being the most flexible form of energy, is extensively used throughout the world. In India, electricity generation is expected to grow very rapidly. Present generation capacity in India (~ 98,000 MW, 75% of which is Thermal, mainly form Coal, has major contribution in GHG emission) have increased near about ten fold in last 5 decades. Still the power sector is having 15% deficit (another ~ 75,000 MW to be added by 2007) and is expected to grow very rapidly (10 – 12% yearly). The sector is facing many problems like old and inefficient plants, outdated technologies, technologies not synchronized with the available resources, high transmission and distribution (T&D) losses (~23%) and theft losses. Conservation can be achieved in the sector through improved efficient management of the sector and operation (a sample project outline is given in BOX – 1); new generation technologies like combined-cycle and co-generation; selection of technologies keeping in mind the raw material available and reducing losses in transmission and distribution by redesigning the transmission system from the very concept stage. The question of its effectiveness, however, needs to be examined.

Rapid development in the industrial and agricultural sectors has created an exponential demand for energy consumption. Therefore, there is an urgent need to improve energy conservation measures in these sectors. Potent energy conservation can be achieved through improved ‘housekeeping’ methods with investment, having a payback period of less than two years in major energy intensive industries like iron & steel, chemicals, cement, aluminium, etc. Much greater savings could be achieved with larger investment in retrofitting and replacing of inefficient equipment and process. In this context, while dealing with technology transfer, one point always should be taken into consideration in developing countries like India, that technological development in industrialized (developed) countries towards energy efficiency may not be effective as a long-term sustainable technological input for the developing world.

Transport sector is a major consumer of petroleum products and developing countries account for around half of the total oil consumed. Possibilities of fuel substitution in the transportation sector are quite limited. Road to rail shift is costlier and due to low flexibility in rail transportation, it is not always favoured by passengers. Integrated citywide traffic flow in the public transport system is an option for substantial energy savings without any major capital investment and is also preferred by the public in general. (A prospective project outline is given in BOX – 2)

The opportunity for conservation in the household sector is enormous. Firewood provides the largest share of household energy in developing world. The efficiency with which firewood is used in cooking is low (typically between 5 and 10%). The stove design has been improved and efficiency of those are less than 20 percent, leading to a 50 percent saving in fuel wood. Kerosene is the pivotal household fuel used for both lighting and cooking in rural areas. Despite recent increases in price, kerosene is heavily subsidized. Target of this subsidy is the poorer section, while in practice affluent households also use this widely.

In developing market the consumption pattern of any commodity is highly driven by its pricing. Energy consumption pattern has also been motivated highly towards its pricing and reliability. In India, Energy not being in the open market, its consumption has always been governed by Govt. policies. Correct policies on energy pricing providing incentives to undertake industrial energy conservation and improvement of technology for substitution of more abundant and locally available energy resources are the very need of the hour. Various subsidies prevailing in the market not due to policies towards the long term overall development of the countries but due to policies influenced by the socio-political structure and practices in a developing country like India, need immediate attention. Developing countries often have market imperfection that requires other policy interventions to promote energy conservation. Industrial consumers may not be fully aware of the potential of energy savings towards the increase in profitability and competitiveness in the market. Good management skills towards energy conservation are also important and incentives to deploy these skills may be a better approach, especially in industries where energy cost is less. In energy intensive industries where energy costs are having a higher share of the total production-cost, energy conservation will effect automatically as a tool for cost minimization.

The data in the Table-1 depicts that there is a tremendous potential for energy savings through measures with moderate investment (that suits developing world’s economy). But a meager percentage has really been implemented and some are in the pipeline. The data indicates that a substantial amount of potential is still lying untapped due to various reasons. In the context of COP – 6B at Bonn Germany, Ratification of UNFCCC protocol by 178 nations (Except USA) to mitigate ‘Climate Change’ by reducing the GHG emissions, projects under ‘Energy Conservation’ by improvement of operational efficiency of present systems have sufficient potential to attract funds. Table-2 shows a rough estimation of India’s potential under Clean Development Mechanism (CDM) through the ‘Energy Efficiency’ improvement project, which is quite encouraging.

To develop energy efficiency as a new mitigation strategy for greenhouse gases and other pollutants, enabling framework and policy initiatives will have to be created at national and international levels. This will encourage the transfer and deployment of energy efficient technologies/measures at the enterprise level, which would then enable the industry to deliver energy efficient products and services to consumers.

Energy efficiency measures not only mitigate climate change, but also generate a wide array of socio-economic benefits towards sustainable development, including reduced energy costs, increased productivity and greater market competitiveness. Meanwhile, other indirect economic benefits ripple through the economy as reduced energy bills release more disposable income for other needs and services, which leads any development process towards sustainability. In the context of good business perspective in CDM, developing nations like India should have major emphasis on Energy Efficiency, as a tool towards Energy Conservation & Management, and thus contributing to GHG mitigation and sustainable development. q

* Source: Presentation "Industrial Energy Efficiency, Co-generation & Climate Change, An Indian Perspective" by Mr. S.C. Natu, Vice President, MITCON Consultancy

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 Services Ltd. at COP 6, ICA/UNIDO Side Event, The Hauge, Netherlands, November 22,2000.