India's Drive for Energy Efficiency
Updated: Jul 17
As of 2019, India stood fifth among the world's largest economies and aspires to climb up to being third by 2025. Along its path towards becoming a USD 5 trillion economy, India will need to ensure that it advances its global commitments to environmental and climate action. Besides, the Government is also working towards realizing its ambitious vision of secure, affordable and sustainable energy for all citizens. Here, Energy efficiency will be a key driving force in accomplishing these priorities.
With a fast-growing economy and population rapidly approaching 1.4 billion, India's energy demand continues to expand at a swift pace. It is expected to grow the fastest among global economies and accounts for 11% of global energy demand by 2040, in the face of China's declining energy demand. Structural factors- increased appliance ownership, strong sales growth across passenger and commercial vehicles, and a spurt in building floor areas- will contribute to this trend. However, having made significant progress in the realm of energy-saving and efficiency, India is now in a position to enforce robust energy efficiency measures, leading to de-carbonization, improved energy access, better resource management, and enhanced energy security.
India has a strong policy and institutional framework for energy efficiency. Long before renewable energy became all the rage, India had realized that efficient use of energy and its conservation was the most profitable option to meet the increasing energy demand. The country's transition to clean energy has been faster and cheaper with the Bureau of Energy Efficiency (BEE) implementing and regulating energy efficiency policies under the Energy Conservation Act, 2001. With national efforts to reduce energy consumption and greenhouse emissions active for over a decade, India could declare one of the boldest environmental goals among the G20 nations in the Paris Agreement (2016). Now, what needs to be determined is where India stands in its drive for energy efficiency and how it can navigate its path in the coming years.
According to the Ministry of Power, India has already reduced its energy intensity (units of energy used per unit of GDP) by 20% compared to 2005 levels. Efficiency gains since 2000 resulted in the avoidance of 15% more energy use in 2018, with the major source of savings being in the industrial establishments. Industrial energy efficiency policies in India are coordinated through the National Mission for Enhanced Energy Efficiency (NMEEE) which aims to reduce energy footprint and catalyze investments in this sector. The most successful of all policies is the Perform, Achieve and Trade (PAT) scheme, a domestic market mechanism that allows large energy-intensive industries to trade Energy Savings Certificates (ESCs) once they achieve their assigned energy saving targets. In the residential and commercial sector, standards and labelling programmes have encouraged consumers to opt for energy-efficient appliances and, thereby, reduced electricity bills across the country. The increase in demand due to rural electrification and infrastructure development has been extensively mitigated by installing LED lights and star-labelled appliances nationwide. Through the BEE's Super-Efficient Equipment Programme, these standards are regularly updated, and appliances with efficiency beyond even the 5-star level are identified and promoted.
However, there is still a vast untapped opportunity to expand energy efficiency measures in the agriculture, transport, buildings, and power sectors.
Buildings in India are the second-highest consumers of energy after industry, but they lag in energy efficiency levels. Most of today's building stock is poorly designed, with unsuitable materials and sluggish architecture, pointlessly increasing the need for space cooling and lighting. Going by recent estimates, two-thirds of the buildings that will exist in India by 2030 are yet to be built. This raises grave concerns over energy security and emissions targets. But this also means there is a huge potential to save energy by intelligent use of materials and design. The state governments need to prioritize the uptake of Energy Conservation Building Codes (ECBC) for both commercial and residential buildings and make them mandatory in new building construction. Several challenges need to be addressed in terms of knowledge gap among stakeholders, lack of sufficient buildings energy data, inadequate research, resistance to technology, and flawed consumer practices.
Looking at the Indian agricultural sector is deeply affected by high subsidization which has led to wasteful use of resources like water and energy, hurting the chances of any efficiency gains. Utility companies find it non-profitable to bear the cost of installing super-efficient pumps due to the low paying capacity of the farmers in India. Similarly, cold-chain infrastructure in the country suffers from serious inefficiencies. Cold-chain infrastructure includes processing units, cold storage, and refrigerated vans for managing, storing and transporting agricultural produce. While there is sufficient cold storage capacity, the agriculture sector still faces losses as high as USD 8 to 15 billion per annum due to a huge shortfall of refrigerated transport and associated logistics. The cold chain also forms the storage backbone of the pharmaceutical industry, which is highly susceptible to temperature and time requirements. So it has assumed even greater importance for fighting back during this time of viral upheaval.
Private vehicular ownership in India is on the rise, which means that the transport sector will continue to be one of the largest emitters of CO2 and local air pollutants. In addition to the enforcement of fuel economy standards for passenger cars and heavy-duty vehicles, the adoption of electric vehicles (EVs) will allow India to unlock additional efficiency gains. This will also bring down tailpipe emissions and alleviate the poor air quality situation in many Indian cities.
And finally, there is an urgent need to revamp India's current power distribution and transmission system. Digital technology will again be instrumental in realizing the government's plan for smart grids, enabling detection of issues and control over the flow of power. The installation of smart meters is another step forward in energy efficiency interventions. By solving billing inefficiencies, tracking the quality of power supply, and monitoring electricity consumption in real-time, will help in predictive maintenance and infrastructure planning.
Therefore, a green economic recovery that encompasses investment of funds in the construction of energy-efficient buildings, rolling out of EVs, the transformation of the power sector along with limited subsidization and the energy-efficient cold chain for the agriculture sector, fares well on multiple indicators. As India progresses into a new decade, it must sustain this momentum and demonstrate leadership and commitment to energy efficiency as a means to boost energy security and sustainability, while keeping its economy on track.