Assessing the Impacts of Stringent Climate Change Mitigation Commitments on India s Energy Access Targets

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1 Assessing the Impacts of Stringent Climate Change Mitigation Commitments on India s Energy Access Targets Omkar S Patange Indian Institute of Management, Ahmedabad July 4, 2017

2 Content 1. Background 2. NDCs Context: Indian Circumstances 3. India s Residential Energy Sector 4. Defining Energy Access 5. Key Indicators and Trends 6. Climate Change Energy Access Nexus 7. India s Residential Energy Sector Policies so far 8. NDCs policies in the Climate Change Energy Access context 9. Modelling the Policy-trade-offs Key Indicators 10. Modelling the Policy-trade-offs Possible Scenarios 11. Findings from Recent Relevant Studies 12. Addressing other key issues 2

3 Background Clean energy access is driving forces for development and poverty eradication (Sovacool, 2012, Sreenivas, 2014) But around the world, 2.7 billion people still depend on traditional biomass fuels for cooking and 1.2 billion people lack access to electricity (IEA, 2015) Household Air Pollution (HAP) resulting from inefficient burning of fuels caused 4 million premature deaths in 2012 (Bruce, 2015) In India, around 840 million people (more than the combined population of USA and EU) rely on traditional solid fuels and 240 million people do not have access to electricity (IEA, 2015) The lack of access to modern energy services (energy poverty) has adverse effects on income generation, health of women and children and the environment (Sovacool, 2012) SE4All & SDG7: Access to clean, reliable and affordable energy for all by 2030 Paris Agreement (NDCs): Restricting the global temperature rise well below 2 Degree Celsius by 2100 as compared to pre-industrial levels IPCC AR5 (2014): Low confidence in our understanding of impacts of climate policy on modern energy access; medium confidence in policies needed to simultaneously tackle climate risks and energy poverty 3

4 Personal Health Quality of Education Clean Drinking Water Sanitation and Public Heath Health and Human Development Mitigation Adaptation Climate Change Energy Access Economic Development Livelihood and employment Poverty Alleviation Local Pollution Household Air Pollution Outdoor pollution 4

5 The NDC Context: Indian Circumstances Fastest growing economy, large population but people living in poverty Third largest economy housing 1.3 billion people Largest proportion of global poor (30%), 1.77 million houseless, 5% unemployed GNI per capita in 2015 (PPP Int. $) = 6030; (World average = 15,659) Average Annual energy consumption in India = 0.6 toe per capita (World average = 1.88 toe) Human Development Index (HDI) of India = (HDI of 0.9 or more -> at least 4 toe energy consumption per capita) GDP growth rate: ~7% Source: IEA, 2015; World Bank data 5

6 The NDC Context: Indian Circumstances Energy situation (Access, Security and Emissions) 18% of world s population consumes just 6% of the world s primary energy (IEA, 2015) Electricity consumption per capita (917 kwh/capita) is one-third of world average Energy demand is expected to double by 2040, contributing to a quarter of total world energy demand, but India s per-capita energy consumption may still remain 40% below the world average (IEA, 2015) Around 240 million people in India still lack access to electricity and 840 million cook with traditional biomass fuels (IEA, 2015) Coal is primary fuel for electricity generation (~60% of installed capacity). As per 2012 IEA data, India was net importer of oil (80%) and natural gas (22%) Fourth largest emitter of carbon dioxide in the world where its energy related emissions grew at an average rate of 5.7% between 2010 and 2015 one of the highest growth rate among leading economies (European Commission, 2016) 6

7 The NDC Context: Indian Circumstances Relevant Policy Goals India s climate policies have followed a development-centric approach to strike balance between development and environmental protection (Shukla et. al., 2015) Nationally Determined Contributions (NDCs) include targets to reduce the emissions intensity of GDP by 33 to 35 percent by 2030 (India s NDCs, 2015) It also aims to achieve 40% cumulative electric power installed capacity from non-fossil fuel based resources (India s NDCs, 2015) India also wants to achieve affordable and clean energy access for all its citizens by 2030 as part of United Nations sustainable energy for all (SE4All) initiative and the aligning sustainable development goals (SDGs) Achieving energy security and reducing fuel (oil and gas) imports is also an important policy goal 7

8 India s Residential Energy Sector 45% of India s primary energy use is attributed to residential consumption (TERI, 2014) Residential sector accounted for 22% of total electricity consumed in 2013/14 (TERI, 2016) Household Electricity Expenses: 50% of household fuel expenditure in Urban, 22% in Rural (NSSO, 68 th round) Energy Consumption (TWh) 13% Cooking 87% Lignting and other electric appliances Share of Energy Services in Residential Energy Sector (%) RURAL Cooking Source: IESS, 2014 Source: Chaturvedi, URBAN Lighting + Appliances 8

9 Defining Energy Access: Is it a binary measure? The term Energy Access used in context of energy use pattern of the poor International Energy Agency: Household having reliable and affordable access to clean cooking facilities, a first connection to electricity, and then an increasing level of electricity consumption over time to reach the regional average (250 kwh/year for rural, 500 kwh/year for urban) Balachandran, 2011: Modern energy services are physically accessible, adequately available with acceptable quality and are affordable Electricity Access as per Govt. of India s rural electrification programme (DDUGJY): Village is deemed electrified if basic infrastructure (transformer and distribution lines) is provided, public buildings or at least 10% households are electrified Cameron et. al., 2016 define clean cooking access as cooking with all nonsolid fuels such as LPG, electricity, piped gas (PNG) and kerosene As per NITI Aayog (Govt. of India think tank), average household requires 1022 kwh or 8-10 LPG cylinders (14.2 kg) for cooking. Electricity required for lighting, space conditioning and other appliances 9

10 % of HH % of HH Temporal Variation and Urban-Rural Divide % of HH % of HH 120 Source of Cooking Fuels - Rural 120 Source of Cooking Fuels - Urban Survey Period Survey Period Solid Biomass fuels Coke/coal LPG Kerosene Others Solid Biomass fuels Coke/coal LPG Kerosene Others 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source of Lighting Fuels - Rural Survey Period 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source of Lighting Fuels - Urban Survey Period Kerosene Electricity Others Source: NSSO, 68 th round Kerosene Electricity Others 10

11 Effect of Population Growth Number of Households 1800,00,000 Households by Primary Cooking Fuel Type - Urban versus Rural 1600,00, ,00, ,00, ,00, ,00, ,00, ,00,000 No cooking Any other Biogas Electricity LPG/PNG Kerosene Coal,Lignite,Charcoal Cowdung cake Crop residue Fire-wood 200,00,000 Source: Census of India, U 2011U 2001R 2011R Census Year; U: Urban, R: Rural 11

12 Effect of Population Growth Number of Households 1800,00,000 Households by Primary Cooking Fuel Type - Urban versus Rural 1600,00, ,00, ,00, ,00, ,00,000 Increase in absolute numbers between 2001 & 2011 LPG/PNG: 25 million (Urban), 11 million (Rural) Solid Fuels: 3.7 million (Urban), 19 million (Rural) No cooking Any other Biogas Electricity LPG/PNG Kerosene 600,00,000 Coal,Lignite,Charcoal Cowdung cake 400,00,000 Crop residue Fire-wood 200,00,000 Source: Census of India, U 2011U 2001R 2011R Census Year; U: Urban, R: Rural 12

13 Number of HH/1000 Number of HH/1000 Number of HH/ 1000 Number of HH/1000 Variation by Income (MPCE) Accessibility versus Affordability Cooking fuel based on Expenditure Class - Rural Cooking fuel based on Expenditure Class - Urban MPCE Class MPCE Class Coke/coal Solid Biomass fuels LPG Kerosene Others Lighting fuel based on Expenditure Class - Rural Coke/coal Solid Biomass fuels LPG Kerosene Others Lighting fuel based on Expenditure Class - Urban MPCE Class MPCE Class Source: NSSO, 68 th round Kerosene Electricity Others Kerosene Electricity Others MPCE: Monthly Per Capita Expenditure 13

14 Cooking Fuels - State wise mix Name of the State Statewise mix of fuel used for cooking SIKKIM GOA HIMACHAL PRADESH UTTARAKHAND JAMMU & KASHMIR UTs HARYANA PUNJAB CHATTISGARH JHARKHAND KERALA NORTH EASTERN STATES ODISHA GUJARAT RAJASTHAN KARNATAKA MADHYA PRADESH TAMIL NADU BIHAR WEST BENGAL ANDHRA PRADESH MAHARASHTRA UTTAR PRADESH Number of Households (in lakhs) Fire-wood Crop residue Cowdung cake Coal,Lignite,Charcoal Kerosene LPG/PNG Electricity, Biogas, others Source: Census of India,

15 Lighting Fuels - State wise mix Name of States SIKKIM GOA HIMACHAL PRADESH UTTARAKHAND JAMMU & KASHMIR UTs HARYANA PUNJAB CHATTISGARH JHARKHAND KERALA North-Eastern States ODISHA GUJARAT RAJASTHAN KARNATAKA MADHYA PRADESH TAMIL NADU BIHAR WEST BENGAL ANDHRA PRADESH MAHARASHTRA UTTAR PRADESH Statewise mix of fuel used for cooking - 50,00, ,00, ,00, ,00, ,00, ,00, ,00,000 Number of Households Source: Census of India, 2011 Electricity Kerosene Solar energy Others 15

16 Variation in Climate Zones within India Source: National Building Code,

17 Performance of Power Sector Net Electricity Generation (Billion Units) CAGR 5.8% Fuel Mix of India's Installed Capacity (MW) 17% % 14% 59% Transmission and Distribution Losses One of the highest in the world 0% 8% In 2001 nearly one-third of all the electricity generated by the utilities did not reach the intended customers After government efforts, the losses are still at around 20% Coal Oil Hydro Gas Nuclear Renewables 17 Source: Ministry of Power, Govt. of India

18 CO2 emissions (Gigatonnes) Energy related CO2 emissions of India in the context of top emitters Year-wise CO 2 emissions of top 6 emitters of the world between 1990 & Year China United States of America EU28 India Russian Federation Japan Source: Data from EDGAR v4.3.2,

19 Climate Change - Energy Access Nexus Universal energy access for all likely to increase global energy demand only by 1% and CO 2 emissions by 0.6% in 2030 Co-costs of Clean Energy Access (IEA assessment) Cooking of the poor does not threaten the climate (Kirk R Smith, In Praise of Power, Science, 2014) However, adaptation challenges due to growing climate vulnerability may increase the energy demand (Eg. Heat waves and rising demand for space cooling) Black carbon or Short Lived Climate Pollutants (SLCPs) emissions resulting from biomass cooking fuels and kerosene lamps cause household air pollution (HAP) and can be addressed through clean fuels Co-benefits of Clean Energy Access Investments of US$ 1 trillion required till 2030 for universal energy access for all in the world how it will change with climate scenarios? - Initial capital investments versus long term benefits 19

20 Residential Energy Sector Policies so far Cooking Lighting 1970 s commercial energy crisis Focus on policies driven by energy security Rural Electrification Corporation (1969): Villages and agripumps PM Gramodaya Yojana (2000); Accelerated Rural Electrification Programme (2003) National Programme for Improved Cook stoves (1986) National Programme for Biogas Development (1980) Rural Electrification Programme (2005); Rural Electrification Policy (2006) Electricity Act (2003); National Electricity Policy (2005) - 1kWh/household/day by 2012 New WHO Guidelines, recent research pointed towards making clean available PM Ujjwala Scheme: LPG to 50 million poor households by 2019; Direct Benefit Transfer (DBT) National Smart Grid Mission, Off-Grid Solar Programmes Appliances and Buildings Standards & Labelling LED Distribution Energy Conservation Building Code 20

21 S. N. NDC Policies in the Climate - Energy Access context Key Policy initiative (Ministry responsible) 1 RE Expansion 175 GW by 2030 (MNRE) 2 Nuclear 63 GW by 2032 (Science & Technology Ministry) 3 Clean Coal Policies Stringent emissions standards (Ministry of Power) 4 National Smart Grid Mission bring efficiency, RE evacuation, reduce losses, UDAY Scheme (Ministry of Power) 5 Standards & Labelling (Bureau of Energy Efficiency or BEE) Energy Access dimension Expand electricity access; Offgrid access through roof-top solar, mini & micro-grids Improve access to grid electricity May increase the cost of electricity access to energy poor Enhance reliability and quality of energy access Options like LED and super efficient fans are suitable for off-grid electricity systems Climate Change dimension Reduced share of fossil fuels- Reduced carbon emissions Reduced share of fossil fuels- Reduced carbon emissions Reduction in power plant emissions Efficient transmissions and distribution may reduce electricity losses, reduce emissions Energy savings, reduced emissions Co-benefits/ Cocosts Reduced household air pollution, Enhances energy security Security Concerns, Nuclear Waste costs, Community acceptance Reduced local pollution, public health benefits Reduced losses may help reduce imports of fossil fuels enhances energy security Reduced Household Air Pollution 6 Energy Conservation Building Code (BEE) Savings in electricity bills but may require higher capital costs Reduced residential energy consumption and emissions in long term 7 UJJWALA, Direct Benefit Transfer LPG access to poor (Ministry of Petroleum and Natural Gas) Free LPG connection to 50 million Households by 2019 (stacking adoption behaviour) Reduced harvesting of firewood but added fossil fuel emissions Energy savings due to efficient devices, Increase in gas imports 8 Rural Electrification Programme (Ministry of Power) Enhance electricity access to rural households May lead to increased emissions due to higher electricity consumption Reduced Household Air Pollution. Better 21 health, education, safety

22 Modelling the policy trade-offs Selecting Indicators Socio-economic Population GDP Urbanization Household Expenditure Household size (rural and urban) Environment Temperature Frequency of adverse events (e.g. heat waves, floods) Rainfall patterns Carbon tax Residential Sector Energy expenditure Floor Space End use technologies (efficiencies, costs) Fuels (prices, availability) Energy carriers (electrification rate) Country specific Income distribution Rural-Urban divide Climatic zones Traditional fuels (proportion of renewable to non-renewable biomass) Electricity Transmission & Distribution losses Cost of investments in energy sector Subsidies on fuels Off-grid versus On-grid electrification 22

23 Modelling the policy trade-offs Possible Scenarios Baseline (BAU) GDP 8% CAGR CO2 > 3.6 deg C NDC Scenario GDP - 8% CAGR CO2 3 deg C Stringent Climate Policy Scenario GDP - 8% CAGR CO2 < 2 deg C Stringent Climate Policy + SE4All Scenario GDP - 8% CAGR CO2 < 2 deg C SE4All/SDG7 fulfilled Unconditional policies proposed under NDCs met : 33-35% reduction in emissions intensity; 40% non-fossil fuel electricity In addition to NDC policies, a carbon tax to be imposed for restricting the use of fossil fuels NDC policies + Carbon Tax + Additional policy/ budget allocation for ensuring SE4All. Additional policy measures to promote electricity as cooking fuel, off-grid electricity systems End-use energy services: Cooking, Lighting, Space heating/cooling, Other electric appliances Source: Adapted from Shukla, 2016 Fuels: Fossil fuels (coal, oil, natural gas), Traditional biomass, Kerosene, LPG/PNG, Nuclear, Renewables Energy carriers: Electricity (grid and off-grid), LPG/PNG pipelines 23

24 Findings from recent energy - climate modelling studies conducted for India S.N. Study (Coverage) Model Timeline Scenarios Main Findings 1 Cameron et. al., 2016 MESSAGE (Residential cooking energy Access 2050 sector in South Asia) 2 Chaturvedi et. al., 2014 (Buildings urban, rural and commercial energy sector in India) Building energy model nested in GCAM Reference-NNP: Global Energy Assessment s Mix Scenario (GEA- M) Policy: C10 to C40 (Carbon price of US$10 to US$40 per ton CO 2eq in 2020 (C40 has 66% probability of achieving the target) Reference: Without carbon tax (with and without climate change) Policy: Carbon tax starting at US$20/tC (2005 prices) increasing to US$100/tC by 2050 (SRES B2 pathway resulting in 550 ppmv CO 2 by 2100) In C40, clean fuel costs increase 38% in 2030 compared to NNP depriving 21% more south Asians of clean cooking OR increases cost of universal clean cooking access by 44% Carbon tax policy may not reduce energy consumption in Indian building sector. India s building energy use will converge with that of developed countries by 2050 but determined by its climatic conditions, urban-rural divide and fuel preferences 3 Vliet et. al., 2012 (Universal Energy Access clean cooking and lighting in South Asia) MESSAGE- Access Reference: NNP for GHG emissions reduction but stringent air quality legislation. Policy: A 2.6W/m 2 overshoot (OS) scenario with additional policies (50% fuel price support on base year LPG prices and easy stove loan at 15% interest rate ) to attain universal access to modern cooking fuels and electricity (UAP scenario) In NNP, if only 2.6W/m 2 OS is considered, only half rural and almost all urban population switch to modern cooking fuels. With addition of UAP, the entire south Asian population can get access to modern cooking fuels (850,000 premature deaths averted in 2030). Also, the total energy use goes down by 43% but fossil fuel use increases by 3.9%. Additional 9.8 GW required to ensure grid electricity access for all in south Asia. 24

25 Addressing other key issues Lessons from energy modelling studies conducted in run up to Paris Agreement (Dubash et. al., 2015) Broad range of reference cases, divergent assumptions make it difficult to formulate new policies based on these studies Limited information available on cost of policy options Modelling capacity should be extended to analyse social and environmental outcomes (co-benefits, co-costs, future climate-energy dynamics) Modelling for developed versus developing countries (Urban et. al., 2007; Shukla, 1995) High share of traditional fuels (proportion of renewable biomass in fuels) Rural Urban divide Share of Informal economy, assumptions about transition from traditional to modern economies Carbon Tax 25

26 References Bruce, N., Pope, D., Rehfuess, E., Balakrishnan, K., Adair-rohani, H., & Dora, C. (2015). WHO indoor air quality guidelines on household fuel combustion : Strategy implications of new evidence on interventions and exposure e risk functions. Atmospheric Environment, 106, Cameron, C., Pachauri, S., Rao, N., McCollum, D., Rogelj, J., & Riahi, K. (2016). Policy trade-offs between climate mitigation and clean cook-stove access in South Asia. Nature Energy, 1, e Chaturvedi, V., Eom, J., Clarke, L. E., & Shukla, P. R. (2014). Long term building energy demand for India: Disaggregating end use energy services in an integrated assessment modeling framework. Energy Policy, 64, Dubash, N. K., Khosla, R., Rao, N. D., & Sharma, K. R. (2015). Informing India's energy and climate debate: policy lessons from modelling studies. Government of India. (2013). Census of India: Houselisting and Housing Census Data Retrieved December 17, 2016, from IESS. (2015). User Guide for India s 2047 Energy Calculator Cooking Sector. New Delhi. Retrieved from International Energy Agency. (2015). India Energy Outlook. International Energy Agency. (2015). World Energy Outlook. MoSPI. (2015). Energy Sources of Indian Households for Cooking and Lighting, (Vol. 567). Shukla, P., Dhar, S., Pathak, M., Mahadevia, D., & Garg, A. (2015). Pathways to deep decarbonization in India. SDSN-IDDRI. Shukla, P. R. (1995). Greenhouse gas models and abatement costs for developing nations: A critical assessment. Energy Policy, 23(8), Sovacool, B. K. (2012). Deploying off-grid technology to eradicate energy poverty. Science, 338(6103), Sreenivas, A. (2014). India s energy policy future : Here be dragons. Futures, 56, Urban, F. R. M. J., Benders, R. M. J., & Moll, H. C. (2007). Modelling energy systems for developing countries. Energy Policy, 35(6), van Vliet, O., Krey, V., McCollum, D., Pachauri, S., Nagai, Y., Rao, S., & Riahi, K. (2012). Synergies in the Asian energy system: Climate change, energy security, energy access and air pollution. Energy Economics, 34, S470-S480. WHO. (2014). WHO indoor air quality guidelines: household fuel combustion. Geneva. Retrieved from 26

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