Working Towards Energy Efficiency in India and Worldwide

Next week in Washington, DC, India could assert its global leadership on promoting energy efficiency.  Top Indian energy officials, including Director-General of the Bureau of Energy Efficiency (BEE) Dr. Ajay Mathur and Planning Commissioner Montek Singh Ahluwalia will join the first Clean Energy Ministerial hosted by the U.S. Department of Energy Secretary of Energy Dr. Steven Chu.  The meeting will bring together ministers and stakeholders from more than 20 countries to collaborate on policies and programs that accelerate the world’s transition to clean energy technologies to fight climate change.   

Further signally its commitment to low carbon development and energy efficiency, the Indian Cabinet recently approved the National Mission on Enhanced Energy Efficiency.  The Mission, one of eight under the country’s National Action Plan on Climate Change, seeks to establish policies and regulations to strengthen energy efficiency for smart grids, industries, buildings and appliances.  It is predicted that the Mission will help achieve total avoided capacity addition of 19,598 MW, attain fuel savings of 23 million tons per year, and reduce greenhouse gases by 98.55 million tons per year.  The four new programs under the Mission are:

  • “Perform Achieve and Trade Scheme” (PAT) - creates a market-based mechanism for large industries to stimulate efficiency investments. This program is one of the first of its kind and involves trading energy saving certificates in India.
  • “Market Transformation for Energy Efficiency” (MTEE) - focuses on shifting the appliance market (air-conditioners, televisions, ceiling fans, refrigerators, lights) to energy efficient products through incentives to make the products more affordable.
  • “Energy Efficiency Financing Platform” (EEFP) - creates financing mechanisms for demand side management programs in sectors by capturing future energy savings.
  • “Framework for Energy Efficient Economic Development” (FEEED) - develops two funds to promote energy efficiency - the Partial Risk Guarantee Fund (PRGF) and Venture Capital Fund for Energy Efficiency (VCFEE).

An important component of the Mission is to accelerate the market shift to energy efficient products and appliances in India’s rapidly growing market.  For appliances, India is already engaged in an important global initiative.  BEE is working with DOE’s program on the Super-efficient Equipment and Appliance Deployment (SEAD), which seeks to promote highly efficient products through market mechanisms on a global level, including in India. 

DOE’s new SEAD program, with technical assistance from Lawrence Berkeley National Laboratory, aims to improve efficiency in lighting and household appliances by providing at least $15 million for SEAD over its first five years. 

The SEAD program could result in significant energy savings and reduced carbon emissions, as highlighted in a recent report from the Berkeley Lab, “Eliminating Electricity Deficit through Energy Efficiency in India: An Evaluation of Aggregate Economic and Carbon Benefits.”  For example, the report finds that energy efficiency measures can eliminate India’s electricity deficit as early as 2013.  The timing is especially significant considering that air conditioners alone are growing at 25 percent per year in India.  This growing market is an opportunity to capture the new sales and sell efficient products, which result in energy savings.  Similarly, efficient ceiling fans, one of the most common appliances in India, can offer more than 27 percent energy savings.  According to BEE, energy demand in India will increase by a factor of two over the next 20 years and possibly by three.

From a financial perspective, implementing these efficiency measures will add $505 billion to India’s gross domestic product (GDP) between 2009 and 2017 (compared to India’s total GDP of $911 billion in 2007-2008), according to the Berkeley Lab report findings.  The Berkeley Lab report concludes that full implementation of energy efficient measures would “prevent 65 million tons of carbon dioxide emissions by 2017. By 2020, the cumulative benefits increase to $608 billion added to the GDP and 333 million tons of CO2 emissions avoided.”

The International Energy Agency’s “Energy Technology Perspectives 2010: Scenarios & Strategies to 2050” released earlier this month emphasizes the importance of energy efficiency in curbing global carbon emissions:

For India, the challenge will be to achieve rapid economic development — which implies a significant increase in energy demand for a growing population — with only a very small increase in CO2 emissions. Electricity demand will grow strongly and the need for huge additional capacity creates a unique opportunity to build a low-carbon electricity system. While India has some of the most efficient industrial plants in the world, it also has a large share of small-scale and inefficient plants. Thus, improving overall industrial efficiency will be a significant challenge. Rising incomes and increased industrial production will spur greater demand for transport in India, making it imperative to promote public transport and new, low-carbon vehicle technologies. The buildings sector will also see strong growth in energy demand: efficiency improvements in space cooling and appliances will be critical to restraining growth in energy consumption and emissions. 

The Clean Energy Ministerial next week could be a meaningful opportunity to advance efficiency cooperation worldwide.  It is also an opportunity for both the US and India to lead in accelerating the global innovation in clean energy technologies to save energy and fight dangerous climate change.