Context:

The Government had tasked NITI Aayog to draft the National Energy Policy (NEP) which would reflect the priorities of the Government and also capture the opportunities that have emerged both in energy technologies and markets across the globe

Introduction:

  • The National Energy Policy (NEP) aims to chart the way forward to meet the Government’s recent bold announcements in the energy domain
  • The above policy would replace the Integrated Energy Policy framed by the erstwhile Planning Commission in 2008.
  • There are some of the projections made by India’s new draft National Energy Policy, released Niti Aayog, in June. The policy closed for public comments on July 14
  • The NITI Aayog’s draft national energy policy seeks to keep India’s economy heavily reliant on fossil fuels even in 2040.
  • There are four key objectives of our energy policy: Access at affordable prices, Improved security and Independence, Greater Sustainability and Economic Growth.
  • The NEP aims at achieving 100% electrification by 2022, and will take this to be the main plank of the overall energy.

What are the features of Draft National Energy Policy?

  • It aims to create independence in the energy sector and to provide 24×7 hours power to all
  • It Focus on energy independence through rationalisation of costs, subsidy & boost to renewable sector
  • It aims to produce 175 GW energy from the renewable sector till 2022
  • Emphasis on transition from the coal to clean energy for domestic use
  • Focus on the infrastructure development ie. The projects like TAPI to development the gas pipelines
  • The overarching policy recommendations are based on India’s energy ambitions for the year 2040
  • The NEP anticipates major transformations on the energy demand and supply sides arising out of fast evolving technology, consumer behaviour and air quality consideration
  • It provides for a flexible energy system which would quickly respond to the market cu
  • The broad objectives of the policy are: enhanced energy independence, increased access at affordable prices, greater sustainability and higher economic growt
  • Focus areas:
  1. The aim to produce 175 GW energy from the renewable sector till 2022
  2. Emphasis on transition from the coal to clean energy for domestic use
  3. Focus on the infrastructure development ie. the projects like TAPI to development the gas pipeline
  4. Issues involved in DNEP:

Strategies to achieve policy objectives:

  • Strategies to achieve these include privatising coal production and letting the market set prices for coal,
  • removing subsidies on electricity
  • providing direct benefits to people vulnerable to price rise
  • Letting competition among different resources (both fossil fuel and renewables) decide the energy mix of the country, not policy interventions.

Need for draft policy:

  • India’s electricity or energy demand elasticity to gross domestic product (GDP) has shown a declining trend, owing to the rise of services and improved energy efficiency.
  • Manufacturing output is assumed to almost double its share by 2040,
  • Industrial energy grows under 5% compound annual growth rate (CAGR) in the same period as per the NEP.
  • NEP reports 2022 and 2040 results for its BAU (business as usual) and ambitious scenarios. It must also provide 2030 projections.
  • India’s nationally determined contributions (NDCs) for the Paris Climate Accord are tied to 2030, and most domain research focuses on likely 2030 energy and emissions portfolios, so NEP could serve as valuable feedback to and from the policymakers.
  • National Energy Policy also focus on challenges and how to recovers from challenge and also upcoming/ongoing policies of Govt. regarding rural electrification, Clean Cooking Access, Grid Integration of Renewable Electricity and More Efficient Grid Operation
  • NEP also shows the pathways of Fossil fuel based energy and also makes their marketing strategy. It also shows the base demand of coal and oil till 2040. NEP also discuss transparency for every Sector.

Related statistics:

  • By the year 2040, India’s electricity demand will rise 4.5 times over 2012 levels.
  • clean energy (like renewables, nuclear and hydro) may account for 13.5% of electricity produced by 2040 (from 3.7% in 2012),
  • Greater efficiency and technology can cut energy demand in 2040 by 16.6%;
  • Up to 90% of this reduction is possible in transport, industry and construction.
  • New buildings codes could cut energy use by 50% in new construction.
  • If most Indian vehicles were electric by 2030, pollution levels in cities could drop 80%-90%, and India could save $100 billion, a sum over two times larger than the current defence budget
  • By 2040, India’s population is predicted to increase to 1.6 billion, and the rate of urbanisation (projected average rate of change of the size of the urban population over a given period of time) of this population will be 47%.
  • The share of manufacturing in the country’s gross domestic product will double from its current levels to 30%.
  • As of 2017, nearly 25% of the population is still without access to electricity and 40% without access to clean cooking fuel.

How the issues can be addressed?

  • Coal, oil and gas are the drivers of Indian economy and, Nation must do utmost to secure its supplies.
  • Energy policy must focus on increasing the share of renewables (solar, wind, bio) in the energy basket and on greening fossil fuels (oil and coal).
  • India should access clean technologies like carbon capture and sequestration, cellulosic biofuels and hydrogen fuel cells in a fast track.
  • India must leverage technology and innovation to render renewable affordable and accessible.
  • Niti Aayog should extend its mandate unilaterally and map each of its policy recommendations against existing institutions of governance.

Criticisms of draft policy:

  • It encapsulates well the problems and the solutions, but lacks the implementation procedure
  • It does not define roles, responsibilities and accountability
  • It does not provide a timeline for delivery and there is no discussion on financing
  • There is no institutional platform for mediating vested interests and stakeholders engaged with different aspects of the energy sector.

Demerits of draft policy:

(i) Though DNEP sets ambitious goals but the main demerit is that it envisages to achieve too many goals instead of setting roadmap to achieve some critical ones.

(ii) It does not provide the ways to encourage the use of public transportation services like railways & buses when the market of railways is already under stress.

(iii) The projects like TAPI & Iran-Pakistan-India gas pipeline projects need to be completed soon.

(iv) Liberation of gas sector is needed to enhance investment in this sector.

(v) Electric vehicles need to be boosted more.

(vi) Energy subsidy is diverted & misused many times. This loopholes is to be plugged.

The corruption free initiatives & efficient implementation of the schemes like UDAY & UJJAWALA & National Hydrocarbon Exploration Policy can help fulfil the aims of DNEP.

Challenges

  • India extracts one-seventh of its Central budget from petrol and diesel, through taxes, cesses, etc. (totalling almost 3% of GDP, including state levies).
  • Targets for domestic coal production significantly affect the revenue stream for railways and its ability to cross-subsidize passenger rail.
  • Capital crunch in the energy sector is the biggest challenge before the country

Conclusion:

  • The NEP aims at supporting the Indian ambition to emerge as a well-developed and resilient economy with high level of human development. It helps prepare the nation to anticipate the technological and market related changes in the energy sector
  • A realistic energy policy cannot be purely top-down or “national” but must also incorporate multiple smaller policies, e.g., one meant to stimulate domestic oil and gas production, which the ambitious scenario represents. Such coordination is the need of the hour and NITI Aayog is in a great position to play that role

 

 

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