The main question addresses by integrated Energy Policy Committee within a 25-year perspective:

Dr Kirit Parikh’s speech at the Inaugural Session,

What are our energy requirements? What are our recourses? What are our options?

And above all what policies do we need to follow?

2. As far as our energy requirement and recourses are concerned some things emerge starkly clear:

If the economy is grow at 8 percent over the next 25 year our primary energy supply would have to increase three or four fold. The electricity generation capacity would have to be rise five to six times to 800000 to 900000 MW from its current level of 160000 MW these pose formidable challenges particularly when seen in the context of our energy resources.

We are not richly endowed with primary energy sources that are economic today. At current level of consumption we will run out of know extractable reserves of oil in 23 years, gas in 38nyears and coal in 86 years. However with a growth rate of coal consumption of 5 per cent per annum we will run out of extractable coal in 45 years.

Full exploitation of wind power and hydro power potential and full development of nuclear power, if US-India nuclear understanding does not go through, can provide no more that 15 to 20 per cent electricity needs in 2031-31.

Biomass based renewables compete for land and that limits their potential.

Solar has high potential but cost Rs .20/KWhr today.

Coal shall remain India’s most important energy source till 2031-32 and possible beyond.

Our dependence on imported energy will increase.

3. With this background and boards vision of reliability meet the demand for energy services for all sectors including the lifeline energy needs of vulnerable household in all parts of the country with safe, clean and convenient energy at least –cost the Integrated Energy Policy at our options.

(i) We must expand our domestic resources through exploration and new coal extraction technologies such as in –situ coal gasification to tap our vast energy resources that are difficult to extract economically today.

(ii) We have to develop our energy resources including renewables as wind and Biofuels. Appropriate policies to encourage development of all resources are needed.

(iii) Appropriate relative prices provide the right incentives for optimal choices. Competitive markets help determine appropriate prices. However competition is not always easy to realize in energy markets. Effective and credible regulatory oversight is necessary for pricing, resources allocation and even ensuring competition.

(v) Energy efficiency and energy conservation are our most important options .A unit of energy saved at the consumer’s end is more than a unit of energy produced. Thus a Negawatt produced by negative energy consumption is more than a Mega watt. We can save 20 to 25 per cent of energy by perusing efficiency and conservation.

Pursuit of these options poses important challenges even for economy where the energy sector is working well. But we have many lacunae in functioning of our energy economy that increases costs, reduce production and deter investors. These needed to be addressed.

(i) The persistent shortage of power lowers the growth rate of economy. We need to cut down technical and commercial losses, expand our transmission network, strengthen distribution system and create new generating capacity.

(ii) Coal production need to increase dramatically and quickly. Producers other than coal India Limited need to be encouraged to provide competition and bring in new technology.

(iii) Central mine Planning and design Institute Limited (CMPDIL), which is only organization, empowered to do coal exploration has a limited capacity. Exploration capacity needs to be enlarged by g\brining in new players.

(iv) Pricing of oil and gas are still "administered" and not transparent. We need to introduce competitive pricing at the refinery gate and retail level. A well-defined mechanism for the gas pricing needs to be articulated. States and Centers roles in making this happen have t o be identified.

(v) A clear policy for gas pipelines and distribution network needs to be formulated. An independent regulator should be appointed.

5. As our dependence on energy import grows. The global energy scene becomes important for us. The risk of supply disruption, and of sudden increase in prices needs to be factors in our strategy. Oil product pricing under a volatile global market poses its own challenges.

To minimize risk of supply disruption we need to diversify the sources of imports as well as diversify the fuel that we import.

To guard against market risk of sudden price increase as also against risk of supply disruption .we should maintain a security cum buffer stock of 90 days oil consumption. The effective ness of stock can be increased if it operated corporately with other countries who maintain stocks.

Redundancy in pipeline networks and transmission grids help reduce technical risks failures and outage.

Since our presently known resources will not last much as beyond 25 years we need to plan for future. R & D can help increase energy efficiency there by stretching our resources. R & D can develop and reduce costs of new technologies thus expanding our resource base. Our present expenditure on energy R & D, except for nuclear energy, is miniscule compared to that government and industry spend in developed countries. Thus the Integrated Energy Policy suggests that.:

A National Energy Fund (NEF) be set up to finance and coordinate energy R & D.much of R & D can be considered a public good. Government thus better finances it. Initially an allocation of Rs 1000 crores should be made for energy R & D excluding atomic energy.

A number of technology missions should be mounted for developing technologies of vital importance for India, near-commercial technologies and rolling out new technologies in a time bound manner. These include-

Coal technologies (where India should focus) for efficiency improvement;

In-situ gasification;

IGCC and carbon sequestration;

Solar technologies covering solar thermal and photovoltaic;

Bio fuels such as bio and ethanol;

Bio mass plantation and wood gasification and community based biogas plants.

Coordinated research and development in all stages of the innovation chain to reach target goal (such as that in place in the departments of atomic energy and space research) should be used to develop more energy efficient industrial plants, machinery & processes efficient appliances, hybrid cars, super batteries , nuclear technologies related to thorium and fusion , gas hydrated , and hydrogen production storage , transport and distribution .

The NEF should provide R & D funding in support of applications, innovative new ideas, and fundamental research etc.to researchers in different institutions, universities, organizations and even individuals working independently.

7. Providing electricity and clean cooking fuels to all are very important for improving human well-being. Lifeline energy needs of all households should be met. This would require targeted subsidies.

The best way for providing subsidy for electricity and cleaner fuels, kerosene or LPG, is to entitle targeted households to 30 units of electricity per months and LPG, kerosene or biogas purchase from a local community size plants equivalent to 6 kg of LPG per month.

A system debit card must be introduced to deliver such a subsidy. The entitlements can only be used for purchase of these products. With modern ICT, debit card readers operated on battery and feeding data using mobile technology, can work in rural areas of the country as well.

To reduce drudgery of those who still need to gather fuel develop woodlots within one kilometers of the village. Provide finance through self-help groups to transform women., Who, today are only energy gatherers ,into micro entrepreneurs engaged in rural energy markets and energy management.

Women’s groups can form co-operatives for developing and managing fuel wood or oil seed plantations with the same effort they put towards searching and gathering fuel wood today.

For setting up off –grid generation facilities in rural areas, encourage the organized sector to adopt rural community/communities in their areas of operations.

8. Environmental consequences of energy use can be contained as done in many industrialized countries. An application of polluter pays principles or set of implementable and consistent standards are recommendations by the report .

9. Concern vis-à-vis the threat of climate change has been an important issue in formulating the energy policy. Even though India is not required to contain its GHG emissions, as a signatory to the UN framework Convention on Climate Change and a country, which has accepted to the Kyoto Protocol, India has been very active Proposing Clean Development Mechanism (CDM) projects.

10. Since the impact on the country’s poor, due to climate change, could be serious, the report has suggested a number of initiatives that will reduces the green house intensity of the economy by as much as one third.

11.the board policy framework and the thrust of development suggested here need to be made more specific. To this end once the policy framework is accepted, details roadmaps of developments should be chalked out and specific policy measures for implications drafted.

12. I hope this conclave will provide us guidance on the way forward.