Bulletin

India’s journey to double its energy productivity by 2040

13 Nov 2019


Promoting the energy productivity paradigm in India

India’s high rate of population growth, urbanisation, and economic development has historically translated to rapidly increasing energy demand and greenhouse gas emissions. With India’s energy consumption expected to grow by 129% between 2015 and 2035[1], managing the relationship between energy consumption and economic growth will be crucial for the country’s sustainable development. To accomplish this, India has started looking towards using energy productivity (EP) as an important indicator and policy framework to help inform stakeholders as to where and how the most value can be achieved from energy use. To support the needed GDP growth while at the same time limiting the growth in energy consumption, India must dramatically improve its energy productivity – the amount of economic output per unit of energy input.

Recent international developments—such as the adoption of the Sustainable Development Goals (SDGs) and the Paris Agreement—have increasingly prioritised supporting low-carbon growth, and the productive and efficient use of energy remains a crucial component to achieving these goals. The International Energy Agency (IEA) states that targeting EP measures could unlock energy savings through energy efficiency on the demand side and decarbonise the supply side through renewable energy.

The International Institute for Energy Conservation (IIEC) along with the Alliance to Save Energy (ASE) is working with India’s Bureau of Energy Efficiency (BEE) for the preparation of a Roadmap for the implementation of energy productivity. The adopted process prioritises public and private sector collaboration in building policy support for the technologies and practices that improve national energy productivity. The key stakeholders in India are convened to focus on the benefits of deploying energy efficient technologies and practices, with the goal of improving overall economic prosperity—including boosting economic growth, creating jobs, improving energy security, and reducing greenhouse gas emissions. This Roadmap details economy-wide policy and market shifts that are needed to improve energy productivity across every sector.

Defining India’s energy productivity roadmap

Analysis in India observed that energy productivity has been gradually rising, reaching 77 US Dollars (USD)/Gigajoule (GJ) in 2013, with significant differences between sectors of the economy: the Industry Sector energy productivity for 2013 was around 18 USD/GJ compared to the Services Sector energy productivity at just under 800USD/GJ.

The Roadmap exercise assessed a range of existing future energy pathways for India and selected the New Policies Scenario (NPS) and Energy Revolution Scenario for conducting the analysis. The analysis found that depending upon the measures and approaches applied, India could double its 2013 Energy Productivity anywhere from 2031 to 2040. See figure-1 below.




Figure 1
India’s National Energy Productivity under New policy & Energy Revolution Scenarios

To determine India’s sectoral energy productivity, the sectoral economic output was compared with the sector’s primary energy use. Definition of the sectors and the economic activities covered by each sector was determined using the Reserve Bank of India’s definitions resulting in a total of three major sectors: Industry, Services and Agriculture. The energy productivity values of the three sectors are shown in the figure-2 below.

  

Figure 2 India’s Energy Productivity Values for Three Key Sectors

It was observed that the energy productivity for all the sectors has risen since 2013 but there is a wide difference in the values between the sectors. The energy productivity for the Agriculture sector is the highest at 24,600 USD/GJ but considering the energy consumption for the sector in 2013 was only 0.013 EJ it is likely that this high-energy productivity value is due to the sector having a very low energy consumption relative to its Gross Value Added (GVA). Similarly, the Services sector has a high-energy productivity of 772 USD/GJ due to a very high GVA value of around 1.2 billion USD for 2013 but only 1.5 EJ of energy consumption. It is important to note that this effect is due to the fact the analysis looks at primary energy and hence the final electricity consumption in the Services end use sector is captured in the power generation sector which is considered to be part of the Industry sector by the Reserve Bank of India. This resulted in the low energy productivity value of just over 18 USD/GJ for the industry sector, which includes the primary energy intensive processes such as fertiliser production and power generation which produces the secondary energy and materials consumed by the other sectors. 

Way forward

The Roadmap will challenge conventional mind-sets that energy efficiency means “using less,” and will instead bring about reduced energy use through a focus on the transformative concept of energy productivity – a positive economic message that has been demonstrated to mobilise governments and businesses to invest in energy efficiency improvements. Similar efforts have succeeded in the U.S. and Australia and have begun in some of the leading G20 countries.

Presently, sectoral primary energy consumption and GDP data are not available and this acts as one of the major limitation in enabling India to double its energy productivity. The current roadmap focuses on developing frameworks and matrices for the regulatory bodies to adopt and collect required data thus helping them to develop policy implementation mechanisms and scenarios. This in-turn will support India to establish the much required link between energy consumption and GDP growth. 

About the Authors



Disha Sharma
is currently working as a Project Manager with International Institute for Energy Conservation (IIEC) based in New Delhi, India and is currently managing a team of professionals working in the area of energy and air quality. She has an experience of working in the areas of low carbon growth, energy security, climate change and has keen interest of working on policy mapping and research. Previous to joining IIEC, she has worked with The Energy and Resources Institute (TERI) also based in New Delhi, India. Her responsibilities at TERI involved managing the building energy efficiency portfolio and conducting research in the area specifically on building energy efficiency, GHG mitigation, and energy base line. She has completed her Master’s degree in the field of Energy and Environment Studies from the Indian Institute of Technology (IIT) and is an Electrical Engineer by graduation.

 

Kartik Dube
, a Mechanical Engineer by background is an Energy, Environment and Climate Change professional with strong interpersonal, team building and leadership skills and result-oriented approach towards bringing a change for a more sustainable world. An effective communicator with more than 3 years of experience in managing client portfolio ranging from Government organizations, Ministries, Bilateral and Multilateral organizations, MNCs to corporate. Has worked on project development and policy/regulatory aspects across sectors such as low carbon growth strategies/technologies, climate change, air quality, sustainable development and development and implementation clean/renewable energy access projects for rural communities in India.

 

[1] Economic Times, 27 January 2017