Mr. Shyam Saran. Dr. Tobias Engelmeier Ms. Nehmat Kaur BRIDGE TO INDIA. Interview with

Transcription

1 Interview with Mr. Shyam Saran Chairman, Research & Information System for Developing Countries New Delhi, Dr. Tobias Engelmeier Ms. Nehmat Kaur BRIDGE TO INDIA India s climate change strategy Role of renewable energy in India Illustration by Dwarka Nath Sinha

2 Mr. Shyam Saran is member of the National Security Advisory Board under the National Security Council. He was recently appointed Chairman, Research and Information System for Developing Countries, which is an autonomous think tank specializing in studies on economic and trade related issues. He is also Senior Fellow with the Centre for Policy Research, a think tank which covers a wide range of political, social and economic issues. After a career spanning 34 years in the Indian Foreign Service, was appointed India s Foreign Secretary in 2004 and held that position till his retirement. Subsequent to his retirement, he was appointed as the Prime Minister s Special Envoy for Indo-US civil nuclear issues and later as Special Envoy and Chief Negotiator on Climate Change. During his last two assignments, served as the Prime Minister s personal representative or Sherpa at the Gleneagles and St. Petersburg G8 and G5 summits and was present at the Toyako and L Aquila Summits as an advisor on climate change issues. He also attended the Pittsburg G-20 summit as a member of the Indian delegation. BRIDGE TO INDIA spoke with him about India s position on climate change and the role of renewable energy in India. India will do whatever it can, both in terms of mitigation as well as adaptation, within the limitations of its resources. The INTERVIEW BRIDGE TO INDIA thank you very much for taking the time to discuss climate change and the role of renewable energy in India with us. Could you, to begin with, comment on India s changed stance at the Cancun Summit, where Mr. Jairam Ramesh said that India would, under certain circumstances, be willing to take on binding emissions. The Indian position has been fairly clear. We must respect and observe all the principles and provisions of the UN Framework Convention on Climate Change (UNFCCC) under which there is a principle of historical responsibility. Thereby, the lead in climate change action must be taken by developed, industrialized countries. This is not to say that therefore developing countries like India have no responsibility or that they reserve the right to spew as much carbon as they wish. That is a caricature of the developing countries position including India s position. India will do whatever it can, both in terms of mitigation as well as adaptation, within the limitations of its resources and taking into account the fact that economic and social development is recognized in the UNFCCC as the overriding priority for developing countries. What are the resources available to India to take action? We are a developing country and there is a huge difference between living standards in India and in the developed countries. For instance, there are 400 million Indians who do not have any access to commercial energy. There is energy poverty. For us, energy is 01

3 There is energy poverty in India. For us, energy is necessary for survival. It is not for affluence. necessary for survival. It is not for affluence. It must be understood that there are certain economic and social development imperatives that we face as a developing country which must be taken into account while expecting responsibilities from a country like India or any other developing country. Further, it is also true, that the developing countries are the countries that are going to be most impacted by climate change. So, to say that India is not interested in climate change action or that developing countries are trying to avoid taking action on climate change is simply not true. The UNFCCC has recognized that while climate change is a global phenomenon and it needs a collaborative global response, the responsibilities of developing countries and developed countries need to be differentiated. There must be some principle of equitable burden sharing. If India and developing countries are required to do more, then the UNFCCC recognizes that the developed countries who have not only greater responsibility but also greater capability, in terms of financial and technological resources, need to assist developing countries with those resources so that we can expand our climate change action beyond what is possible with the limited resources that we have. Let me play the devil advocate: you have mentioned energy poverty with 400 million people without access to electricity. The straightforward argument that would flow from that would be that India needs to provide as much power as possible, as cheaply as possible, to as many people as possible and as quickly as possible. At the moment, in most cases, that is still coal-based power. Do the developmental needs for India dictate a massive scale-up of its coal-based power infrastructure? If climate relevant technology would be relatively an additional cost which would mean that less people get electricity at a higher cost, there shouldn t even be any consideration of the climate in that whole discussion. That is not the answer. It is true that given the energy poverty phenomenon that I mentioned earlier, India needs to expand the use of energy. It must not only depend upon coal-based power but it has to exploit every source of power that is available. It is also true that in the foreseeable future India will not be able to get away from its current dependence on fossil fuels. But there are things that India can try to do to reduce its emissions. Number one, energy sources should be used as efficiently as possible. That helps not only energy security, but also action on climate change. Therefore, the National Mission on Enhanced Energy Efficiency has been introduced and India is ready to make the investment that is required to achieve its goal of reducing energy intensity of GDP by 20-25% by Secondly, India also recognizes that the world is increasingly going to be resource constrained. The growth of continent-sized economies like India and China at the rate of 8 or 10 percent per annum will translate into huge demand for energy resources that are mostly fossil. Those resources will increasingly not be available. Therefore, the world will need to have a long term plan to change the strategy of development that it currently follows - a strategy of development that has for the last 200 years essentially been carbon-driven. The logical conclusion is that you have to make a strategic shift from the current reliance on fossil fuels to a strategy which increasingly and progressively uses more and more renewable sources of energy such as solar energy, wind energy, biomass energy as well as clean nuclear energy. In order to do that, decisions must be taken today even though they may not have a significant impact for the next twenty years. But India can ensure that while it uses existing resources as efficiently as possible, it puts in place investments which are required, infrastructure which is required so that it can make a strategic shift to fuel its growth to renewable sources of energy in the future. 02

4 In solar, our (India s) goals are the most ambitious in the world. When do you start such a strategic shift and with what intensity? India has already started and the National Solar Mission is a key example of that effort. In solar, our goals are the most ambitious in the world. We are exploring wind, biomass, hydro, nuclear. Even though nuclear is not a renewable source of energy, it is a clean source of energy. But is India s energy shift strong enough? A lot is happening as a result of the National Solar Mission, but, when you take India s size and needs into consideration, is it sufficient? One of the reasons that enough perhaps is not being done is because solar energy is expensive. Solar energy is expensive because there is a lack of scale. India s strategy is to achieve that scale through the National Solar Mission. Unless we scale, we won t achieve economies of scale and low cost manufacturing. If you look at the global prices for solar energy, they are falling on account of technical innovation. India is promoting this technical innovation further by attempting to achieve scale in the solar power industry. Also, the global prices for conventional power are going up. So the assumption is that, if according to the National Solar Mission targets, we can achieve 20GW of solar power by 2022, solar would be able to match the cost of conventional power. Once we reach parity, there is no reason not to subsidize further. In India there is also the issue of storage. But there is a research and development mission in place to find out how we can get about six to eight hours of storage of solar power. Three, solar energy is very space intensive. Very soon we will run out of wasteland or desert land where vacant space is available. So, unless you address space intensity we will run into a space constraint. One part of the research mission is to focus attention on whether we can use nano technology to reduce the space that is required for installing each megawatt of solar power. It is a fairly well thought out, comprehensive strategy which is in play. I agree with that completely. There is also a built-in trial-and-error-mechanism, to minimize the cost of achieving the solar targets. Yes, absolutely. This is very new for us. We work on making solar power commercially viable in India. We are currently looking at de-central applications. If India would like to increase its power supply, why not simply buy the components as cheaply as possible in the global market? If, on the other hand, India wants to set up a domestic industry, why not export to existing markets like China has done? Chinese manufacturers supply to the United States of America, Germany and Spain, because of huge subsidies that are being provided in those countries for solar energy. If a country develops a manufacturing capability which is dependent on very uncertain external demand, dependent upon subsidies, it is a huge risk. China may be a command economy and may suspend the laws of the market. However, India cannot. So instead we have said that we should start modestly, and it is a learning process, and perhaps we are not as spectacular in our growth as China has been but I think we will be far more sustainable in our model. India seems to have taken a strong bet on CSP technology, which has not been implemented globally on a significant scale. Why? No that s not true. In fact the solar mission has made a very conscious 03

5 We want to make certain that India becomes a manufacturing hub for solar power. effort not to make any technological choices. It is purely based on the market. But in the first batch of the first phase there have been allotments of 550MW of projects out of which 350MW is CSP technology. Out of the targeted 1,000MW under the entire first phase, the government will allow both solar PV and solar thermal. The government is merely trying to give enough scope for both to operate and determine which way is the best way forward. The reason why a large share has gone to thermal in the first batch of the first phase is because unlike in PV, which is very heavily dependent upon imported poly-silicon, solar thermal uses a lot of material that is readily available domestically. Materials such as mirrors, glass, turbines, tubing are all currently available in India. How important is the issue of energy security on the component side. Is it important that India has the capacity and the ability to produce solar technology domestically? Absolutely. We want to make certain that India becomes a manufacturing hub for solar power. So it is not just generating but also having the technological and manufacturing capability to have a substantial solar energy industry. Does India want that because it creates jobs or because of increased energy security? In terms of energy security, having that manufacturing capability, will enable us to better achieve the goals that we have set for solar. If you are dependent on external factors, in terms of components, in terms of technology, then the kind of scale up that we are looking for in India will not get achieved. And, of course, the global market is growing, so the industry will be able to export. Sure. But the first order of business is to meet India s energy security. There are two goals to the National Solar Mission. One is to build up the industry and the second is to generate power. These goals are in some way conflicting, because if you, for example, mandate a domestic content requirement, that ultimately increases the cost of solar power. Well, let s go by the evidence. The NSM had a goal of reaching 1,000MW for the first three years because given the high cost of solar, given the uncertainties involved, the government was not expecting many bids. That is also why the regulators set the initial high price of M17.91 per unit for PV. But, we ended up with 6,000MW of applications. The result was a competitive bidding process which has driven the price down to M12 per unit of PV. So there is no cause for worry because the domestic content requirement has not proved to be a disincentive. The question is could prices have come down further than 30 percent without the domestic content requirement? This is very new for India and therefore there is a need to focus on the major objectives. There is a need to scale up quickly and to make certain that there is a predictable investment environment for the developer. Once there are more players, let the market decide. It is pointless to talk about twenty different objectives with duty exemptions and tax exemptions. India has put in place an incentive system 04

6 In terms of energy security, having a manufacturing capability, will enable us to better achieve the goals that we have set for solar. that guarantees the higher rate for solar power for 25 years in a power purchase agreement. The risk for promoters is reduced. The response shows that it is working well. Do you think that in terms of its renewable energy strategy, India is on the right path at the moment or do you feel that there is anything that can be improved? There is always room for improvement (laughs). However, in my view, the basic strategy that I mentioned to you, about being conscious of the fact that there is a challenge, about recognizing the need to make a strategic shift and transform the energy infrastructure that has been put in place itself is a very important recognition. Can we do better? Of course, we can do better. Efficiency, for example, of energy use can be far better. There is still a problem of transmission losses in electricity distribution. Those are things we need to change. But, the basic direction which has been set is the right direction., thank you so much for your time. It was a pleasure to speak with you. 05

7 BRIDGE TO INDIA is a consulting company with an entrepreneurial approach based in New Delhi, Munich and Hamburg. Founded in 2008, the company focuses on renewable energy technologies in the Indian market. BRIDGE TO INDIA links offers market intelligence, strategic consulting and project development services to Indian and international investors, companies and institutions. Through customized solutions for its clients, BRIDGE TO INDIA contributes to a sustainable world by implementing the latest technological and systemic innovations where their impact is the highest. Contact nehmat.kaur@ bridgetoindia.com Follow us on facebook.com/ bridgetoindia