Energy security is the term made familiar now by all protagonists of the nuclear deal, be they our nuclear experts, media commentators or budding politicians. They claim the deal confers ���energy security��� and in turn it gets extended to the likes of Shashikalas and Kalavatys of this country. This term has become a new incantation to propagate the deal as a panacea for all the ills of the country. But it is easy to see that it is used to mean nothing more than mere energy supply.
But energy security is more comprehensive than mere supply. In simple terms, apart from physical safety of supplies, it implies securing all forms and sources of energy, be they conventional, non-conventional including bio sources and unconventionals like shale oil, tar sands, etc, and ensuring its uninterrupted supply at affordable and economic prices to the needy in a clean and safe manner.
As most of the energy comes today from non-renewable sources, it is imperative that it is used most efficiently for its conservation and sustained development. This brings us to the heart of energy security of a country, which is the energy intensity in its GDP, measured as a ratio of the number of energy units required to produce one unit of GDP and expressed as an absolute number. The lower the energy intensity, more efficient is its use and less its requirement. The critical factor for any country to achieve energy security is to strive to reduce its intensity in the GDP.
The poor attention paid to this aspect is evident from the absence of reliable and authentic data on our energy security or its periodic updates. Plan document has just a cursory reference to this. There are no concerted efforts or schemes to focus attention on this aspect. By all accounts, our energy intensity is unacceptably high and is hovering around unity. A recent editorial in an economic daily assumes it to be around 1.1. This will not be far from the truth.
Official estimates tend to show this in better light as they depend only on figures available with government-controlled units. In the case of petroleum products, oil companies just report what they supply to their dealers. But the volume of sales by dealers inflated by adulteration are not reflected in these numbers. For example, large amount of fuels other than petrol and diesel are available in the market as misbranded fuels or clandestinely sold for direct use or adulteration. They do go into use in GDP but do not get captured by official statistics.
Such fuels are flooding the market especially after the private refiners started operating, owing to poor control and scrutiny of the material balance of those refineries. Products misbranding for lower duties help petrol pumps share the evaded duty. It is shocking that the Bureau of Indian Standards (BIS) is dragging its feet in finalising specifications for these fuels, making adulteration with them not only legal, but also difficult to detect. It is not therefore surprising that the energy intensity numbers occasionally referred to by official agencies look lower and present a rosier picture.
So how does the addition of nuclear energy enhance our energy security as claimed by its protagonists? Today the share of nuclear energy in our energy mix is 3% and this is expected to increase to 6% by 2020 or so with this deal. But if our energy intensity is reduced, say to Malaysian levels (which is 0.5), the share of nuclear energy goes up to 6% even without this deal. If we reach the levels (0.2) of OECD countries, the share easily rises to about 15%, without adding a single megawatt of nuclear power!
Seen in terms of oil, we currently use around 110 MMT of petroleum products, which can be reduced to 55 MMT if we halve our energy intensity and further to below 27 MMT if as an upcoming superpower we reach OECD standards of efficiency. With our current oil production at 27 MMT, we would be more than self-sufficient in crude oil. It is therefore obvious that mere diversification of the portfolio of energy sources per se does not confer energy security.
They may be necessary to augment quantity but not sufficient to achieve energy security. Whatever its other merits, the deal actually makes us dependent both for fuel and technology to use it, an unfailing prescription for energy insecurity, if it becomes a significant portion of our total energy. We should forget about ���energy independence��� forcefully articulated by Dr Abdul Kalam in his tract of the same title. Mercifully the share of nuclear power even after the deal remains low and therefore should not make an adverse impact on our energy security.
In spite of high energy prices, economies of the world have adjusted to combining high economic growth with lower energy intensity. After the oil shocks, globally energy intensity levels have fallen by a third but some countries like ours remain untouched by such a development and therefore it is necessary for us to pay serious attention to the economy���s energy elasticity, deal or no deal. In developing countries, growth of energy consumption goes up with economic growth. The pace of such demand will easily outstrip all additions we can make to energy supplies and could threaten to create fuel poverty in the economy, if no immediate attention is paid to reducing our energy intensity.
China, for example, has set for itself a target of reducing its energy intensity by 20% over a period of five years or at the rate of 4% per year. The immediate need is to formulate a time-bound plan and execute it in a mission mode as there is not much time left for continuing to indulge in the luxury of its profligate use. A drop of 0.1 or 10% in our energy intensity will save us 11 MT of oil, much more than the quantity of oil we have acquired as equity oil abroad in a decade after pouring in billions of dollars. The essential measures to achieve this would involve a switchover to upgraded capital stock, appliances, equipment and practices, a total ban on non-standard equipment with strict enforcement and statutory application of efficiency standards.
Conservation of energy should become a way of life. Rational energy pricing and fuel substitution policies should be kept in place. And a really competitive market with an independent regulator and anti-trust laws must be created. Finally, governance and delivery of subsidies to targeted groups should be streamlined and the beneficiaries like Shashikalas and Kalavatys should be empowered with subsidy vouchers or direct cash transfer to enable them to choose their fuel or its source of supply.
The next five year plan should have this as its central theme. The next CMP should similarly adopt this as national programme. Otherwise, much before the first electron comes out of the nuclear deal, we could be staring at fuel poverty in stead of enjoying energy security.
But energy security is more comprehensive than mere supply. In simple terms, apart from physical safety of supplies, it implies securing all forms and sources of energy, be they conventional, non-conventional including bio sources and unconventionals like shale oil, tar sands, etc, and ensuring its uninterrupted supply at affordable and economic prices to the needy in a clean and safe manner.
As most of the energy comes today from non-renewable sources, it is imperative that it is used most efficiently for its conservation and sustained development. This brings us to the heart of energy security of a country, which is the energy intensity in its GDP, measured as a ratio of the number of energy units required to produce one unit of GDP and expressed as an absolute number. The lower the energy intensity, more efficient is its use and less its requirement. The critical factor for any country to achieve energy security is to strive to reduce its intensity in the GDP.
The poor attention paid to this aspect is evident from the absence of reliable and authentic data on our energy security or its periodic updates. Plan document has just a cursory reference to this. There are no concerted efforts or schemes to focus attention on this aspect. By all accounts, our energy intensity is unacceptably high and is hovering around unity. A recent editorial in an economic daily assumes it to be around 1.1. This will not be far from the truth.
Official estimates tend to show this in better light as they depend only on figures available with government-controlled units. In the case of petroleum products, oil companies just report what they supply to their dealers. But the volume of sales by dealers inflated by adulteration are not reflected in these numbers. For example, large amount of fuels other than petrol and diesel are available in the market as misbranded fuels or clandestinely sold for direct use or adulteration. They do go into use in GDP but do not get captured by official statistics.
Such fuels are flooding the market especially after the private refiners started operating, owing to poor control and scrutiny of the material balance of those refineries. Products misbranding for lower duties help petrol pumps share the evaded duty. It is shocking that the Bureau of Indian Standards (BIS) is dragging its feet in finalising specifications for these fuels, making adulteration with them not only legal, but also difficult to detect. It is not therefore surprising that the energy intensity numbers occasionally referred to by official agencies look lower and present a rosier picture.
So how does the addition of nuclear energy enhance our energy security as claimed by its protagonists? Today the share of nuclear energy in our energy mix is 3% and this is expected to increase to 6% by 2020 or so with this deal. But if our energy intensity is reduced, say to Malaysian levels (which is 0.5), the share of nuclear energy goes up to 6% even without this deal. If we reach the levels (0.2) of OECD countries, the share easily rises to about 15%, without adding a single megawatt of nuclear power!
Seen in terms of oil, we currently use around 110 MMT of petroleum products, which can be reduced to 55 MMT if we halve our energy intensity and further to below 27 MMT if as an upcoming superpower we reach OECD standards of efficiency. With our current oil production at 27 MMT, we would be more than self-sufficient in crude oil. It is therefore obvious that mere diversification of the portfolio of energy sources per se does not confer energy security.
They may be necessary to augment quantity but not sufficient to achieve energy security. Whatever its other merits, the deal actually makes us dependent both for fuel and technology to use it, an unfailing prescription for energy insecurity, if it becomes a significant portion of our total energy. We should forget about ���energy independence��� forcefully articulated by Dr Abdul Kalam in his tract of the same title. Mercifully the share of nuclear power even after the deal remains low and therefore should not make an adverse impact on our energy security.
In spite of high energy prices, economies of the world have adjusted to combining high economic growth with lower energy intensity. After the oil shocks, globally energy intensity levels have fallen by a third but some countries like ours remain untouched by such a development and therefore it is necessary for us to pay serious attention to the economy���s energy elasticity, deal or no deal. In developing countries, growth of energy consumption goes up with economic growth. The pace of such demand will easily outstrip all additions we can make to energy supplies and could threaten to create fuel poverty in the economy, if no immediate attention is paid to reducing our energy intensity.
China, for example, has set for itself a target of reducing its energy intensity by 20% over a period of five years or at the rate of 4% per year. The immediate need is to formulate a time-bound plan and execute it in a mission mode as there is not much time left for continuing to indulge in the luxury of its profligate use. A drop of 0.1 or 10% in our energy intensity will save us 11 MT of oil, much more than the quantity of oil we have acquired as equity oil abroad in a decade after pouring in billions of dollars. The essential measures to achieve this would involve a switchover to upgraded capital stock, appliances, equipment and practices, a total ban on non-standard equipment with strict enforcement and statutory application of efficiency standards.
Conservation of energy should become a way of life. Rational energy pricing and fuel substitution policies should be kept in place. And a really competitive market with an independent regulator and anti-trust laws must be created. Finally, governance and delivery of subsidies to targeted groups should be streamlined and the beneficiaries like Shashikalas and Kalavatys should be empowered with subsidy vouchers or direct cash transfer to enable them to choose their fuel or its source of supply.
The next five year plan should have this as its central theme. The next CMP should similarly adopt this as national programme. Otherwise, much before the first electron comes out of the nuclear deal, we could be staring at fuel poverty in stead of enjoying energy security.
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