The Financial Express

Friday, November 27, 1998

Policy changes needed to make India global energy consumer 

R Senthilnathan  
VIENNA, NOV 26: Significant policy changes are imperative if India is to attract the huge foreign capital it needs in the coming century to make it one of the most powerful energy markets of the world, say two international organisations.

The organisations say de-regulating energy prices, increasing the purchasing power of the population to make such de-regulation workable and increased cooperation with other Asian countries, particularly China, are vital to exploit the changing world energy scenario which will see a shift in the global energy market from the Atlantic to Asia.

The Austria-based International Institute for Applied Systems Analysis (IIASA) and the Britain-based World Energy Council (WEC) say in their report "Global Energy Perspectives" that as it becomes the world's most populous country with the status of a large energy consumer, India can profit from the shift caused by population increase and the growing affluence of Asia. But the policy changes, they say, are necessary to attractforeign -- mostly private -- capital to modernise the energy systems.

IIASA is sponsored mainly by national academies of sciences of 24 mostly industrialised countries. WEC calls itself an energy policy forum.

The report, result of a five-year study, analyses the global energy situation, particularly the scenario after the year 2020 -- a period seen by the authors as holding the potential for change. The study outlines six different scenarios, divided into three cases.

Case A presents a future of impressive technological progress and resultant high economic growth. Case B presents less ambitious technological improvements and intermediate economic growth. The third case is an ecologically driven future which will be highlighted by unprecedented international cooperation centred explicitly on environmental protection and international equity.

It is case C which is ideal for countries like India, but the authors say most probably Case B would be realised. Asia's growing affluence, which is a key playerin the global energy market shift, would be caused by the Southeast, Centrally Planned Asia (CPA - comprising Cambodia, China, North Korea, Laos, Mongolia and Vietnam) and South Asia.

The South Asian region, which for the IIASA constitutes the SAARC (South Asian Association for Regional Cooperation) seven plus Afghanistan, has seen impressive economic growth with an annual rate of 5.3 per cent through the nineties.

This would see a decline to annual rates above four per cent up to the year 2020 and this will also level off after the year 2050 as the region becomes affluent, the study says. By the year 2020, India, which accounts for three quarters of the regional population and 80 per cent of its gross domestic product (GDP), is set to become the world's most populated country and there will be changes in the energy mix.

According to the study, while at present about half the energy consumed in India comes from traditional renewable sources such as cow dung, that share is set to decrease to 35 per centby the year 2020 and to a quarter three decades later as commercial energy like fossil fuels, nuclear power and efficient forms of renewables like wind power take their hold.

The South Asian region, India in particular, would most benefit from the Case C scenario which foresees it catapulting from the seventh to the second, or even the first, position in terms of world energy consumption. The only other region which would compete with South Asia is the CPA. However, under Case B, the most realistic, the region would move just one step ahead, to sixth position by the year 2050.

Depending on the various scenarios, the South Asian region will need between $540 and 700 billion until the year 2020 and then another $1.5-2.5 trillion for the next three decades to meet energy demands and modernise energy systems, the report says.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.