ENERGY SECURITY AND LEGAL ASPECTS

7/29/2019 ENERGY SECURITY AND LEGAL ASPECTS

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__________________________________________

ENERGY SECURITY

and

LEGAL ASPECTS__________________________________________

Co-Authors

Tanuj Aga rwa l and Shweta Sha rma(University of Petroleum & Leg a l Stud ies, Dehrad un a nd Guja ra t Na tiona l Law University, Guja ra t)

Pub lished by

Brus Chambers

Ad voc ate s & Solic itors

8, Ra jab ahadur Ma nsion, 3Prd P Floor, Ambalal Doshi Marg, Fort, Mumbai 400001, India

www.bruschambers.com

2013


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I N D E X

TOPIC Page

Introduction 3

Energy Sec urity an ove rview 4

Ensuring Ene rgy Security 5

R&D in the ene rgy sec to r 6

Histo rica l Bac kground 8

Sa lient Fea tures of the Ac t : An Ove rview

Salient fea tures of the Energy Co nservat ion Ac t 2001

Establishment of Bureau of Energy Efficiency

Func tions of Burea u o f Energy Efficienc y (BEE)

Ac tion p lan o f BEE

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10

11

12

12

Prob lem s fac ed by the Ame rica n po lic y on Energy Co nservation 14

Energy Interdep end enc e and Nationa l Sec urity 16

Interdep end enc e, Energy, and Sec urity 18

Coal 19

Oil and ga s 20

Nuc lear Energy 21

Conclusion 23

References 24

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Introduction

In this paper we a re a na lyzing the c onc ep t of Energy Sec urity in Ind ia and a llianc e w ith

wo rld sc ena rio. So a c c ording to our unde rsta nd ing the c onc ep t of Energy Sec urity is

that the energy security is strongly related to other policy issues which concern the

energy system such as affordable energy and climate change and environmentalpolicy, implies that it is important to consider the energy security consequences of

different pathways.

In India the concept of energy security can be defined as the availability of

c om merc ial energy a t co mp etitive p ric es to supp ort its ec onomic g row th and meet the

ene rgy nee ds of its c itizens. The wide ly ac c ep ted p rinc ip les of e nergy sec urity are

assurance of supply, diversity of sources and low price volatility. India faces formidable

c hallenges in mee ting its energy need s and p roviding a de qua te a nd va ried energy of

desired qua lity to users in a susta inab le ma nne r and a t reasonab le c osts. The keys to

Energy Sec urity a re assuranc e of sup p ly and d iversity of sourc es.

Ind ia see ks to sec ure he r energy sec urity need s, will see k to e xplore ne w op tions. The

wars in Iraq and Afghanistan have led to spiraling oil prices which have adversely

a ffec ted the Ind ian ec ono my. The ma jor imp ed ime nts to Ind ia s ab ility to sec ure

her energy are inad eq uate dom estic energy c ap ac ity, the conflic ting interests with

China and Indias geographic location. Overland trans-national energy pipelines are

one of the options being explored by India to meet her energy security requirements.

Overland trans-national energy pipelines by their very nature incorporate multiple

nations source nations, transit nations and destination nations and are affected by

reg iona l and ge o-stra teg ic interests of the na tions involved . Thus, they p rovide an

excellent platform for analysis of Indias energy and geo-strategic interests and its

sec urity.

In this paper we want to highlight few integrated policy framework for securing

Energy Sec urity in Ind ia a nd a c omp arative c ase stud y on India & USA Licensing Policy.

In this pa per we will try to enric h the new term c oined Energy Interdep end enc e to a

wider extent.

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Energy Sec urity an ove rview

"Sec ure energy is essential to imp roving sta nd ards of living and individua l sec urity as

we ll as imp roving ec ono mies a round the w orld ."

In India the concept of energy security can be defined as the availability of

c om merc ial energy a t co mp etitive p ric es to supp ort its ec onomic g row th and meet the

ene rgy nee ds of its c itizens. The wide ly ac c ep ted p rinc ip les of e nergy sec urity are

assurance of supply, diversity of sources and low price volatility. India faces formidable

c hallenges in mee ting its energy need s and p roviding a de qua te a nd va ried energy of

desired qua lity to users in a susta inab le ma nne r and a t reasonab le c osts. The keys to

Energy Sec urity a re assuranc e of sup p ly and d iversity of sourc es.

India has to overcome significant challenges, internal as well as external, to achieve

energy security. Regulatory uncertainty and opaque natural gas pricing policies have

resulted in vast unexp lored basins and inad eq ua te upstrea m ac tivities in the c ount ry. In

addition, the small pool between oil and gas discoveries and production. Given the

scarcity of hydrocarbon reserves across the globe amid the rising demand, India will

have to increasingly compete with other nations to secure energy supplies. Fossil-

based fuels will definitely remain the dominant source of energy in the near future.

Nonetheless, in the long term, India will have to explore alternative energy sources to

streng then its energy sec urity.

The approa c h o f Integ ra ted Energy Polic y is summ arized below:-

Till ma rket m atures in ind ep endent regulation a c ross the energy strea ms is a nec essity,

Pric ing a nd resource alloc ation to b e d etermined by market forces unde r an e ffectiveand c red ible reg ulatory ove rsight, transparent and ta rge ted subsid ies, improved

efficiencies across the energy chain, policies that reflect externalities of energy

c onsump tion, incentives / d isincentives to reg ulate ma rket and c onsume r beha vior,

ma nag em ent reforms to foster ac c ounta bility and ince ntives for effic ienc y.

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Ensuring Energy Sec urity

Indias energy security, at its broadest level, is primarily about ensuring the

c ontinuous ava ilab ility of c om mercial energy at c om pe titive p ric es to supp ort its

economic growth and meet the lifeline energy needs of its households with safe, clean

and convenient forms of energy even if that entails directed subsidies. Reducingenergy requirements and increasing efficiency are two very important measures to

increase energy security. However, it is also necessary to recognize that Indias growing

dependence on energy imports exposes its energy needs to external price shocks.

Hence, domestic energy resources must be expanded. For India it is not a question of

choosing among alternate domestic energy resources but exploiting all available

dom estic ene rgy resources to the ma ximum as long as they a re c om petitive.

Ensuring energy sec urity req uires dea ling w ith va rious risks. The threa t to energy sec urity

arises not just from supply risks and the uncertainty of availability of imported energy,

but a lso from p ossible d isrupt ions or sho rtfalls in domestic p rod uc tion . Sup p ly risks fromdomestic sources, such as from a strike in CIL or the Railways, also need to be

addressed. Even if there is no disruption of supply, there can be the market risk of a

sudden increase in energy price. Even when the country has adequate energy

resources, technical failures may disrupt the supply of energy to some people.

Generators could fail, transmission lines may trip or oil pipelines may spring a leak. One

need s to p rovide sec urity aga inst suc h tec hnic a l risks. Risks c an be red uc ed by low ering

the requirement of energy by increasing efficiency in production and use; by

sub stituting imp orted fue ls w ith do me stic fue ls; by d iversifying fue l cho ices (ga s, etha no l,

orimulsion tar sands etc.) and supply sources; and by expanding the domestic energy

resource base. Risks can also be dealt with by increasing the ability to withstand supplyshocks through creation of strategic reserves, the ability to import energy and face

ma rket risk by build ing hard c urrenc y reserves and by providing red undanc y to address

tec hnic a l risks.

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R&D in the energy sec tor

Ind ia s R&D efforts have often bee n c ritic ized for being sub -op timal and lac king in

goa l orienta tion. The situat ion in energy-relate d R&D is perhaps even mo re serious. The

challenge of the sector, as brought out in earlier pages, is too large for it to be

c ontinued to be trea ted as a vehicle o f soc ial largesse a nd d iffused c ap ac ity building.While India ma y not b e ab le to ma tc h the R&D resources of the de veloped wo rld , it is

a ll the mo re imp erative that its sc arc e financ ial resource s a re ta rgete d stra teg ica lly to

bring about c ost red uc tions, deve lop / exploit c onte xt spec ific resource s, and

develop relevant a pplic ations and w ith purpose. Som e tec hnologies that c ould b e o n

the verge of commercial deployment, with just an additional resource injection for

design improve me nts, which the go vernment c ould p lac e o n its p riority list, inc lude the

PP Biomass gasification systems several organizations in the country have related

biomass gasification systems that require critical innovations relating to gas clean-up

system s and eng ine d esign. Suc h system s c ould a lso be mo d ified for providing c lea ncooking energy solutions for school canteens, dhabas, and other establishments, with

approp ria te sa fety fea tures built in. PP Bio-fuels a sec ond ge neration bio-fue ls

program me nee ds to be d esigne d a nd implemented in a mission mod e. PP Solar

ene rgy R&D on solar PV and therma l tec hnolog ies, p er se, has advanc ed

significantly at the global level. India would do well to focus its R&D efforts on

deve lop ing c ontext-spec ific a pp lica tions and resea rc h on g rid interfac e issues.

PP Wind energy Resource mapping exercises have to be refined to be in line

with new tec hnolog y deve lopm ents g lob a lly, with a pa rticular em phasis on offshore

wind resourc es. PP SME sec tor Designing , develop ing, and dem onstrating energy-

effic ient tec hno log ies to suit spec ific c ond itions of SME c luste rs. PP Smart grids the

increasing sha re of rene wa b le ene rgy in Ind ia s ene rgy mix and the g rea ter

em phasis on ene rgy efficienc y c ould have serious implic a tions on and be limited

bythe na ture of elec tricity g rids. Ind ia needs to implement p ilot p rojec ts on the

c onc ep t o f sma rt grids tha t w ould p rep are us for suc h large-sc a le integration o f

non-firm and distributed energy sources into our energy systems and their

management.

South Asia- Ind ia is p rojec ted to p lay a ma jor role in glob a l energy ma rkets ove r the

next several decades, with India alone expected to become the worlds third largest

importer of p et roleum b y 2030. Sa tisfying the reg ion s g row ing d em and s will req uire a

heightened de gree o f energy interde pe nde nce among historic ally anta go nistic state s.

Consequently, like it or not, regional leaders will face a tradeoff between traditional

desires for energy self-sufficiency and the ambitious development targets that they

have set fo r them selves. Achieving suc h g row th, therefo re, req uires tha t Ind ia , and the

other co untries of South Asia first a ddress the persistent inte rna tiona l disputes tha t

hamper cross-border energy trade, establish effective control over presently

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ungove rned area s, reo rient the missions of m ilita ry force s to som e extent, a nd deve lop

a better understanding of the effects that energy interdependence will have on

broa der relations with ne ighbors.

In the times whe n the wo rld in on the ed ge o f fac ing energy c risis g iven the g ulf wa rs, it

be c om es even the more important to not o nly make law s which w ould p reserve energybut a lso ma ke sure tha t the app lica tion o f suc h law s is done as efficiently possible.

India in 2001, took a step further in preserving the energy laws by implementing a law

nam ed Energy Conversation Ac t, 2001 w here the m ere law ma king wa s not g iven the

imp ortanc e b ut also the e ffective ap plic ation wa s ma de a po int. To und erstand the

true nature of the Act, it becomes pertinent to understand the background and

c ond itions under which the law wa s passed .

In the times whe n the wo rld in on the ed ge o f fac ing energy c risis g iven the g ulf wa rs, it

be c om es even the more important to not o nly make law s which w ould p reserve energy

but a lso ma ke sure tha t the app lica tion o f suc h law s is done as efficiently possible.

India in 2001, took a step further in preserving the energy laws by implementing a law

nam ed Energy Conversation Ac t, 2001 w here the m ere law ma king wa s not g iven the

imp ortanc e b ut also the e ffective ap plic ation wa s ma de a po int. To und erstand the

true nature of the Act, it becomes pertinent to understand the background and

c ond itions under which the law wa s passed .

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Historical Background

Energy efficiency is not a new programme in India though its impact has been

somewhat limited. A number of industries have been quite successful in implementing

energy saving measures but these efforts were restricted to few industrial units, while

ma jority of t he industria l units lagge d behind .

In the wake of global oil crisis, the Government of India made several efforts to

prop agate c onservation o f petroleum p rod uc ts. This led to estab lishme nt o f Petroleum

Conservation Research Association (PCRA) in 1976, which has done commendable

wo rk to this end .

The Ministry of Powe r is c ha rged with ene rgy and energy c onserva tion. Ea rlier the

Department of Power under Ministry of Irrigation and Power had a concern for energy

c onservation in its gene ra ting p ow er sta tions right from incep tion. Howe ver, rea lizing the

potential of energy efficiency and conservation in end use of energy, a holistic and

systematic view was taken and an inter ministerial working group was constituted in

1981 that submitted its report in 1984, which provided the vision for instituting energy

effic ienc y in the c ountry.

Conseq uently, an energy c onservation w ing w as c rea ted in the Dep artment o f Pow er

way back in 1985, which formulated various policies, schemes and energy

ma nagem ent p rog ramm es. Subseq uently, the Energy Manage me nt Centre (EMC)-a

reg istered soc iety, wa s set up in 1989 by the erstwhile M inistry of Energy, Dep a rtment o f

Power, to promote energy conservation in various sectors of economy. In absence of

any legislation on conservation of energy, there were no legal powers available for

enforcem ent of energy effic ienc y and only p rom otional ac tivities we re b eing taken upin order to red uc e the ene rgy intensity of the Ind ian ec ono my. Therefore, the Govt. of

India felt the nee d to evolve a regulatory and p rom otional mec hanism to tha t end .

In 1994, the Ministry of Power constituted a Working Group consisting of representatives

from various Ministries for formulation of suitable proposal for a selective legislation on

energy conservation. Proposal of energy conservation legislation as formulated was

mo d ified in the ligh t o f the c om me nts of the Sta te go vernments and d isc ussions held in

the inter-ministeria l mee ting he ld in Janua ry 1997. The p rop osa l wa s review ed aga in by

Ministry of Power in July 1997 and it was decided to propose an enactment for energy

conservation, which inter alia wo uld p rovide setting up of a Burea u of Energy Effic iency(BEE) to perform various func tions rela ting to ene rgy c onserva tion. This revised p rop osa l

wa s c irc ulated to a ll the c onc erned ministries. The Union Minister of Sta te for Pow er held

a meeting with various industry associations. A Cabinet note was then prepared and

the same was approved by the Cabinet on 10Pth P Sep temb er, 1997. Subseq uently, the

Ministry constituted a one ma n Expert Comm ittee to review the various p rovisions ma de

in the p roposed Energy Conserva tion Bill.

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The ne w a c t was mo re o r less based on the report submitted by the Expert Com mittee

ca lled Integ ra ted Energy Polic y: Rep ort by the Expert Comm ittee . TPF1FPT After approval of

the Cabinet and thereafter following the due process the Bill was passed as an Act

which came into force on 1 Pst P Ma rc h, 2002. To a dhere to the law a Burea u of Energy

Effic iency (BEE) wa s set up for promo tion of e ffec tive app lic a tion of the so passed Ac t.

USom e fac ts:

India's energy intensity per unit of GDP is higher by 3.7 times of Japan, 1.4 times of Asia

and 1.5 times of USA, ind ica ting to very high ene rgy wa stage. In the g lob a lized

ec onomy, countries with high e nergy intensity may b ec om e unc om petitive d ue to high

ene rgy input c ost. Therefore, energy cost red uc tion bec om es one of the imp ortant

benchmarks for economic success. Efficiency in consumption of energy and its

c onservation c ould b e one of the m ost imp ortant means of energy c ost red uc tion a nd

also for mee ting future e nergy dema nd. TPF2FPT

India has a huge scope for energy saving. Various studies undertaken suggest

substantial energy saving potential in industrial, commercial and domestic sectors.

Efficient use of energy provides the least cost and environmentally friendly option for

capacity creation in the shortest time frame. Energy efficiency also assumes further

importance, as "one unit of energy saved at consumer end, avoids 3 units of fresh

ca pa city ad dition".TPF3FPT

With the bac kground of high energy saving p otential and its be nefits, bridging the ga p

between demand and supply, reducing environmental emissions through energy

saving, and to effectively overcome the barrier, in October 2001, the Government of

Ind ia had e nac ted the Energy Conservation Ac t - 2001. The Ac t p rovide s the m uc h-

needed legal framework and institutional arrangement for embarking on an energy

efficiency drive.

TP

1PT Can be accessed at HThttp://planningcommission.nic.in/reports/genrep/rep_intengy.pdfTH

TP

2PT Can be accessed at

HThttp://www.energymanagertraining.com/energy_management/Energy%20Management%20Policy%20-

%20Guideline%20-%20New.pdfTH

TP

3PT National Certification Examination for Energy Managers and Energy Auditiors (Under Energy Conservation

Act, 2001) by Bureau of Energy Efficiency and National Productivity Council, India. Can also be accessed at

www.energymanagertraining.com/overview/IIPEC_BEE-1.pdf

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SALIENTFEATURESOFTHEACT: AN OVERVIEW

A. Salient fea tures of the Energy Conservation Ac t 2001TPF4FPT

The Ac t em pow ers the C entral Government and , in som e instanc es, Sta te G ove rnme nts

to :

specify energy consumption standards for notified equipment andappliances;

d irec t manda tory display of labe l on notified eq uipm ent and ap p lianc es; prohibit manufacture, sale, purchase and import of notified equipment and

app lianc es not c onforming to e nergy c onsump tion stand a rds;

o notify energy intensive industries, other establishments, and commercialbuildings as designated consumers;

o and prescribe energy consumption norms and standards for designatedconsumers;

oprescribe energy conservation building codes for efficient use of energyand its conservation in new commercial buildings having a connected

loa d o f 500 kW or a c ontrac t dema nd o f 600 KVA and abo ve;

o d irec t de signa ted c onsume rs to - designate or appoint certified energy manager in charge of activities

for effic ient use o f ene rgy and its c onservation;

get an energy audit conducted by an accredited energy auditor inthe spec ified ma nner and interval of time ;

furnish information with reg ard to ene rgy c onsumed and ac tion ta kenon the recommendation of the accredited energy auditor to thede signed ag enc y;

c om ply with energy c onsump tion norms and standa rds; prepare and implement schemes for efficient use of energy and its

conservation if the prescribed energy consumption norms and

standards are not fulfilled;

get energy audit of the building conducted by anaccredited energy auditor in this specified manner and

interva ls of t ime;

Sta te Gove rnme nts ma y

o amend the energy conservation building codes prepared by the Central

Government to suit regional and loc al c lima tic c ond itions;

TP

4PT An article on Salient features on Energy Conservation Act, 2001; Can be accessed at

HThttp://www.energymanagertraining.com/announcements/AboutUs_attachment.pdfTH

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o d irec t eve ry owne rs or oc c upier of a ne w c om merc ial building o r building

complex being a designated consumer to comply with the provisions of

energy c onservation building c od es;

o direct, if considered necessary for efficient use of energy and its

conservation, any designated consumer to get energy audit conducted

by a n ac c red ited energy aud itor in such m anner and at suc h intervals of

time as ma y be spe c ified ;

B. Establishment of Burea u of Energy Efficienc y

Under the provisions of the Act, Bureau of Energy Efficiency has been established with

effect from 1Pst

PMarch, 2002 by merging the erstwhile Energy Management Centre, a

soc iety und er the M inistry of Power. The Burea u wo uld b e responsible for spea rhead ing

the improveme nt of energy e ffic ienc y of the e c onomy throug h va rious reg ulato ry and

promotional instruments.

The mission of the Bureau of Energy Effic ienc y is to develop policy a nd strate g ies with athrust on self-regulation and market principles, within the overall framework of the

Energy Conservation Act, 2001 with the primary objective of reducing energy intensity

of the Indian ec ono my. This will be a c hieved with ac tive pa rticipa tion of a ll stake

holders, resulting in accelerated and sustained adoption of energy efficiency in all

sec tors of the ec onom y.

The p rima ry ob jec tive of BEE is to red uc e energy intensity in the Ind ian ec onom y

throug h adop tion of result oriente d approa c h. The b roa d ob jec tives of the BEE a re:

to assume leadership and provide policy framework and direction to nationalenergy effic ienc y and c onservation e fforts and p rog ram mes;

to coordinate policies and programmes on efficient use of energy and itsc onservation w ith the involvement of sta keholde rs;

to establish systems and procedures to measure, monitor and verify energyeffic ienc y results in ind ividua l sec tors as we ll as a t na tiona l leve l;

to leverage multi-lateral, bi-lateral and private sector support in implementationof the Energy Conservation Act and programmes for efficient use of energy and

its c onservation;

to demonstrate energy efficiency delivery mechanisms, through private-publicpartnership,

to plan, manage and implement energy conservation programmes asenvisaged in the Energy Co nservation Ac t.

The Direc to r-General is the c hief exec utive o ffic er of the Bureau of Energy Effic ienc y.

The ge neral superintend enc e, d irec tion a nd ma nage ment o f the a ffairs of BEE is vested

in the Governing C ounc il having up to 26 mem bers. The G ove rning Counc il is hea ded

by Union Ministe r of Power and c onsists of Sec reta ries of va rious line Ministries, hea ds of

various technical agencies under the Ministries, members representing industry,

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equipment and appliance manufacturers, architects, and consumers, and members

from ea c h o f the five p ow er reg ions rep resenting the sta tes of the reg ion. The Direc tor

General of the Burea u is the e x-offic io memb er-sec reta ry of the Gove rning Counc il.

BEE has been given a corpus fund of Rs. 50 Crore for setting up of the Central Energy

Conservation Fund for meeting the expenses relating to the salaries, allowances and

other remuneration of the officers and employees of the Bureau and to meet the

expenses of the Bureau in discharge of its functions as well as on objects and for

purposes authorized by the Act. It has also been authorised to collect appropriate fees

in discharge of functions assigned to it and raise funds from other sources. Bee may

bec om e self-suffic ient in a period of 5-7 yea rs.

C. Func tions of Bureau of Energy Effic ienc y (BEE)

The func tions of BEE c an b e c lassified as reg ula tory func tions being rec om me ndatory

body to the Central Government in implementing the provisions of the Energy

Conservation Act and facilitation, market development and market transformation

func tions suc h a s:

arrange and organize training of personnel and specialists in the techniquesfor effic ient use o f ene rgy and its c onservation;

develop testing and c ertific ation p roc ed ures and promo te testing fac ilities; strengthen consultancy services; c rea te a wa reness and d issem inate information; promote resea rch and de velop ment; formulate and facilitate implementation of pilot projects and demonstration

projects; p rom ote use of ene rgy e ffic ient p roc esses, equipme nt, de vices and system s; take steps to encourage preferential treatment for use of energy efficient

eq uipm ent or ap pliance s;

p rom ote innova tive financ ing of energy e ffic ienc y projec ts; give financial assistance to institutions for promoting efficient use of energy

and its c onservation;

prepare educational curriculum on efficient use of energy and itsc onservation and

imp leme nt international c o-operation programm es relating to effic ient use ofene rgy and its c onservation.

D. Action plan of BEE

During the three yea r pe riod 4/2004 3/2007 BEE sha ll p rimarily foc us on 9 thrust a reas.

In a ddition, it shall also atte nd to ong oing p rog ram mes and suc h o ther programm es as

are considered essential for promoting the objectives of the Act. In the following

sec tions, the b ac kground , leg isla tive ma nda te, a pp roa c h, role o f BEE for 8 thrust a rea s

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are desc ribed . Furthermore three-year targe t indica tors as we ll as mo nitoring indica tors

have been set. Monitoring indicators were used in cases where BEE has little control

ove r c om plianc e o r in cases of d iffic ulties to q uantify a ta rget.

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Prob lems face d b y the Ame rican po licy on energy c onservation

The energy p lans p lac e d ifferent leve ls of impo rtanc e on ene rgy sec urity,

environm enta l protec tion, and ec ono mic revitalizat ion the Three Es. Som e o f these

differences are due simply to politics and others to the timing of the unfolding

ec ono mic c risis. Plans designed to address ec ono mic rec ove ry throug h g ree n jobs a rein asc end anc y, while those fo c using on energy sec urity are rec eiving less a tten tion due

to the c ollapse in energy p rices and dem and . Som e p lans reflec t the ir visions in

deta iled b lueprints of a c tion, while others offer sparse polic y d irec tion. The p lans

provide hundreds of spec ific rec om menda tions, som e c halleng ing to imp lem ent. TPF5FPT

Doubling wind power output by 2012 as recently called for by the Obama

administration would likely require repeating the installation of 8 gigawatts (GW) of

new wind capacity for each of the next three years. Recent changes in renewable

energy incentives in the American Recovery and Reinvestment Act could promote

significa nt new investme nts, desp ite the e c ono mic slow dow n. Othe r rec om me ndations,such as building 10 ca rbon c ap ture a nd seq uestration p lants, fac e greate r cha llenges

and unknow ns. Evaluating the imp leme ntation c halleng es in m ost reco mm end ations

often depends on policy design details that the plans do not address. One plan, for

exam ple, c a lls for 100% c lea n e lec tricity within 10 yea rs. Suc h a n a c hievement wo uld

require all coal- and gas-fired power plants to stop generating before their investment

c osts have be en reco vered . How ge nerato rs wo uld be c om pe nsa ted for their strande d

c osts is not c onside red in the p lan.

Many other recommendations have been proposed including a 25% renewable

portfolio standa rd (RPS) by 2025, rap id dep loym ent of p lug-in hybrid e lec tric vehicles

(PHEVs), and various cap-and-trade policies. Additional analysis is required in most

areas to evaluate implementation challenges under different policy design

assumptions. Integrating short-term economic recovery with longer-term priorities such

as c arbon mitiga tion is possible, but o ften not w ithout trade-o ffs. Som e short-te rm

measures may contradict longer-term objectives (highway reconstruction and

sustainability), while overlapping jurisdiction could lead to unintended consequences

from othe r polic y interac tions (a na tiona l RPS c om b ined with c ap-and -trade leg isla tion)

General Findings

Most energy plans evaluated here call for transformative change in energypolic y. They a rgue tha t inc onsistent na tiona l polic y has c ontributed to d ama g ing

cyclical changes in energy markets during the past 35 years. Most plans imply

that the nation c an no longe r esc ap e the c onseq uenc es of p etroleum insec urity

and clima te c hange . Fundam ental chang es are neede d to imp rove energy

TP

5PT An article on A Comparative Review of a Dozen National Energy Plans: Focus on Renewable and Efficient

Energy; Can be accessed at HThttp://www.nrel.gov/docs/fy09osti/45046.pdfTH

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end -use effic ienc y, low er em issions, and lessen relianc e on oil imp orts. The rec ent

collapse in oil prices has not helped the environment for political leadership in

this regard. However, some argue that the economic crisis opens the door of

opportunity to think big in addressing perennial energy and larger economic

problems.

Most p lans foc us on b roa d rec om menda tions for a new c om prehensive ene rgypolicy rather than detailed design issues necessary for implementation in any

one sector. Because of this, they lack detail on policy design issues that must be

known to evaluate strengths and weaknesses of plan recommendations.

Evaluating the challenges of a cap-and-trade recommendation, for example,

depends on factors such as which sectors are included, how allowances are

a lloc a ted or auc tioned , and w ha t role c arbon o ffsets p lay.7 Simila rly, a na tional

RPS must c onside r the trad e-offs o f inc luding c a rve-outs for spec ific tec hno log ies,

designing renewable energy certificate (REC) trading markets, and resolving

jurisd ic tiona l sta nd ing whe n sta te and federal req uirements c onflic t (Perera et a l.

2007). Add itiona l follow-on ana lysis c an help flesh out the p olicy d esign op tions in

ma ny of the p lans.

Rec ently introd uc ed p lans note tha t ec ono mic rec ove ry is the first p riority for thenew Congress and administration. Whether the recovery law can integrate

Keynesian spending with longer-term priorities such as carbon mitigation, oil

impo rt red uc tions, and a g ree ner ec ono my rema ins to b e seen. Som e short-term

measures may contradict longer-term objectives (highway reconstruction vs.

lower oil demand and emissions), while others may create unintended

c onseq uenc es (interac tion of a nationa l renew able portfolio stand ard w ith ca p-

and -trade leg islation) (Houser et a l. 2009).

The p lans illustrate the c om plexity of trying to p rioritize na tiona l ene rgy go a ls tha tfocus on long-term needs while providing enough flexibility to deal with short-

term req uirem ents. Politica l lea dership, as noted in som e of the p lans, co uld help

catalyze a national discussion resulting in a more strategic, consistent federal

role. Almost universa lly, plans c a ll for a n expa nsion o f c lean e nergy R&D, EERE

technology deployment, and climate change preparedness. But sharp

contradictions also exist regarding domestic drilling, nuclear subsidies, climate

mitigation targets, and the fundamental role of government. Unpredictable

political dynamics within Congress, and between Congress and the

administra tion, will influenc e the evo lution o f support for eleme nts of t he p lans.

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Energy Interdependenc e and Nationa l Sec urity

Finally, addressing South Asia s energy need s, particularly if the solution is a long the lines

c urrently envisioned by the develop ment com munity, will req uire a reorienta tion in the

wa y South Asian defense and foreign a ffa irs strateg ists have histo rica lly tho ught

ab out their respe c tive c ountries nationa l sec urity Willingly ac c ep ting d ep end enc e onforeign suppliers for such a vital resource as energy is something that goes against the

instinc ts of virtua lly every na tiona l sec urity strate g ist. The link betwe en energy sec urity

and nationa l sec urity has be c om e so strong that even c ountries rejec ting the idea of

wa r ove r othe r issues see m p rep ared to c on tem plate the use o f military force to ensure

energy supplies in extremis.

Energy interde pendenc e intertwines na tiona l ec onom ies in two ma jor wa ys. First, mo st

economies, including some of the biggest, depend on cross-border flows of energy

resources for impo rtant pa rts of their tota l ene rgy req uirem ents. Sec ond , this glob a l

ene rgy system is supported by and c ritica lly dep end ent on g lob a l flow s ofinforma tion, knowled ge , and investme nt c ap ita l. Muc h of the resource b ase, as we ll

as ma ny of the othe r resource s suc h as informa tion and c ap ital, is c ontrolled by (often

huge) transnational corporations with global reach, both private and public (such as

national oil companies). Flows of capital and technology are often also managed by

transnational energy corporations. Overall, energy related activities make up an

important part of the world economy, and international energy trade represents a

similarly impo rtant seg ment o f wo rld trade.

India is the sixth largest consumer of energy and the third largest consumer of oil and

gas in Asia only after Japan and China. Indias main domestic energy resources are

c oa l (68.3%), hyd ro (11.9%), gas (11.5%), o il (4.6%) a nd nuc lea r power (2.8%). The rest

a re renewa b le resource s like solar ene rgy and b ioma ss. All forec asts p red ict tha t India s

hunger for energy will increase as result of a growing population and rapid

industrialization. In 2010 India will be the fourth largest consumer of energy after the

United Sta tes, China , and Japan. The interesting a spec t is tha t Ind ia s dep end enc y will

increase in nearly all important fossil fuels except hydro. India is already importing 70

perc ent o f her oil supp lies and this sha re is going to increa se to 90 pe rc ent b y 2030. The

situation is on ly slightly bet te r in the gas sec to r.

India recently made some large discoveries of gas but all estimates show that Indias

import dependency will be around 40 percent in 2030. Although Indias coal reserves

are among the biggest in the world, the gap between supply and demand will also

make it necessary to import more coal in the years to come. Indias import

dep end enc e is mo st obvious in the nuc lear field. The sanc tions by the West fo llow ing

Ind ia s nuc lear tests in 1974 and 1998 have restricted the sha re of nuc lear p ow er to a

me ager 2.8 perce nt of tota l ene rgy p rod uc tion. The figures in ene rgy co nsump tion and

the long term scenario indicate that India will become more dependent on energy

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impo rts in the future. One of the c onseq uenc es of this sc ena rio is that Ind ia s

dependence from the international energy market will increase, making the

c ount ry mo re vulnerab le a ga inst externa l shoc ks. Another aspec t is tha t the ma in oil

reserves are concentrated in the Middle East, so that India is, like many other countries,

becoming more dependent on oil imports from this crisis ridden region. Part of the

gove rnme nt s stra teg y is to d iversify energy imp orts and to a c quire e quity oil by Ind ia s

sta te-ow ned oil c om panies tha t is Oil and Natural Gas Comp any (ONGC) and its expo rt

a rm the ONGC Videsh Limited (OVL). At p resent OVL is ac tive in 14 c ountries and ha s 23

projects.

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Interdep end enc e, Energy, and Sec urity

Economic interdependence reflects the average normal ground where states, state-

owned firms or multinational energy companies try to secure their share in a

competitive market. Depending on economic strength and negotiating skills

c om panies ma y win or lose in tha t c om petition. Ap art from this, it is a rgue d here, Ind ia isfac ed with anothe r d ilemm a of interde pe nde nc e w hic h results from the c lose linkage

betw een energy need s and sec urity c onc erns. This bec om es evide nt when the ma in

energy sources, i.e. coal, oil, gas, hydro and nuclear, are regarded in the context of

Ind ia s sec urity a nd foreign p olicy issues. Besides this, the sea rch for energy b rings new

indirec t sec urity a nd foreign p olicy issues.

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Coal

Coal has at least two advantages for India: First, the country has plenty of it, and

second, there are hardly any security concern connected with coal. As mentioned

before, Ind ia is p resently numb er three in the list o f coa l prod uc ing c ount ries wo rldwide .

India has proven reserves in coal for the next 200 years or more 60 to 70 percent ofIndia s po wer ge neration c om es from c oa l. The high a sh c ontent a nd the high

dep end enc e o n c oa l mea n that India has one of the highest levels of c arbon intensity

in Asia, i.e. c a rbon em issions per d ollar of GDP.

Foreca sts p red ic t tha t India will also fac e a dem and ga p in c oa l, so that it will bec om e

necessary to secure more imports and to improve the quality of the domestic coal.

Because of this India is already importing coal mainly from Australia, Indonesia, and

South Africa . Fortuna te ly Ind ia d oe s not ha ve any serious sec urity p rob lems with these

three countries so that coal imports should not pose a serious challenge in the future.

Ind ia ha s intensified c ollaboration w ith the se c ount ries not only on the bilateral but a lsoon the m ultilateral leve l for instanc e within the frame wo rk of the Ind ian Oc ea n Rim

Assoc iation for Reg iona l Coop eration (IORARC) wh ich wa s estab lished in 1997. The

improvement of Indias domestic coal to meet her energy needs and international

environmental standards will also intensify cooperation with developed countries. For

instanc e Ind ia and the U.S. have a lrea dy signed agreeme nts for coop eration in the

green co al tec hnology a nd India a nd G erma ny have started an e nergy d ialogue.

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Oil and g as

The inc rea se o f pub lic a nd p riva te t ranspo rt follow ing the liberalisa tion has led to an

enormous increase of oil and gas imports in the 1990s. Because of the lack of

indigenous resources it is the oil and gas sector where Indias dependence will be felt

mostly and where the linkage between energy and security issues is most obvious.Within the South Asian fram ew ork Ind ia s relations with Pakista n a nd Bang lad esh a re

affec ted . To overcome the d ec ad e o ld c onflicts with Pakistan Indian g overnments are

pursuing a strate gy of c loser ec onomic c ooperation tha t ma y help to p ush c ontentious

issues like Kashmir in the background. Pipeline projects that will link India with Iran and

Ce ntral Asia ha ve to p ass throug h Pakista n. The Pakista n government see ms to b e

willing to give guarantees for the pipelines. But there is still an inclination in Pakistan to

trade off security interest like in Kashmir against an extension of economic relations with

India. Moreover Pakistan is faced with attacks on already existing pipelines in

Ba luc histan which a re beyond the sc op e of Ind ia s foreign p olic y.

The ne w g as reserve in the Bay of Beng a l see med to sta rt a new area of Indo-

Bang ladeshi relations. With the help of U.S. com panies the gas should be explored and

pa rts of it exported to Ind ia. But the amb itions p lans of g as expo rts to Ind ia fall prey to

the d iffic ult Indo-Bangladeshi relationship . These p lans initiated a hea ted deb ate in

Bangladesh and both main parties the Awami League and the Bangladesh National

Party (BNP) we re relucta nt to find a c om prom ise w ith Ind ia. Afterwards Bang ladesh w as

seen as a transit country for gas from Myanmar to India but these plans again faced

va rious p rob lem s

After the plans for gas export with Bangladesh failed India was looking for a

trila teral agreement to expo rt gas from Myanma r via Bang ladesh to Ind ia. But

ag ain India and Bang lade sh c ould not rea c h an unde rstanding. As a co nseq uenc e

India is now promoting a pipeline from Myanmar through the North-East which will

c irc umve nt Bang ladesh to sec ure g as supp lies from Myanma r d irec tly to Ind ia .

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Nuclea r Energy

At present nuclear energy only has a share of hardly three per cent in Indias energy

p rod uc tion. This is one c onseq uenc e o f Ind ia s refusa l to sign the NPT tha t triggered off

a series o f sanctions after the countrys nuclear tests in 1974 and 1998. Because of the

link between civilian energy issues and strategic question, the nuclear issue hasc ertainly a spec ial sta tus in Ind ia s ene rgy dip lom ac y.

The rec ent Indo-U.S. dea l of Marc h 2006 foc uses on the c ivilian c oo peration in the

nuclear field in order to cope with Indias energy gaps. At the same time the whole

de ba te on the Indo -U.S. nuclear de al is c losely conne c ted with India s great po we r

amb itions and her nuc lear wea pons p rog ramm e. The possible repe rc ussions of t he

Ma rc h 2006 agreeme nt on the Non-Proliferation Trea ty (NPT) have triggered a deb a te

whether the Bush-Administration is going to undermine another multilateral regime or

whe ther the agree me nt ma y help to streng then the NPT by bring ing Ind ia c loser to it.

The NPT lobby is still critica l and dem and s further com mitments from Ind ia, wherea s thesupporters pointed to the positive effects if a country like India can be incorporated in

the framework. An interesting aspect in the debate was that even Muhammed Al-

Baradei the director of the International Atomic Energy Agency (IAEA) has welcomed

the a greement a s a creative b rea k with the pa st.

If the a gree me nt is ac c ep ted both b y the U.S. congress and the Nuc lea r Supp liers

Group (NSG) it will ope n new avenues for nuclea r coop eration not o nly be twee n India

and the U.S. bu t a lso for simila r ag reem ents with U.K. and Franc e. Even c ountries like

Germany may benefit from such an agreement because more sophisticated

technology can be exported to improve Indias civilian nuclear programme. Besides

the question of energy cooperation the agreement also has a far reaching symbolic

dimension. The a c c ep tanc e o f the nuc lea r po wers and the NSG to give India an

exce ptiona l position in an enlarged NPT frame wo rk wo uld c ertainly be interpreted tha t

Ind ia ha s ac hieved a sta tus as a ma jor po we r in the internationa l system . The glob a l

energy system, the base for all social development, represents one of the critical

infrastructures of the international system. It is marked by a high degree of

interdependence, and global manage ment of this interdependence will pose serious

challenges during the next decades. At the same time, the fact that world energy

dem and p resently is, and will c ontinue to be, largely met by fossil fuels links this system

closely to the worlds ecosphere: the burning of coal, oil, and natural gas is the mostimportant driver of global warming and climate change. Present trends of global

emissions of greenhouse gases (GHG) are unsustainable if potentially catastrophic risks

related to global warming are to be avoided. Yet national and international policies

with reg a rd to GHG and , spec ifica lly CO2 em issions, so far c lea rly have been

insufficient to de liver the de ep cha nge s need ed .

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In the light of growing energy demands, fluctuations in oil prices and a concert ed

effort by countries to manage their demands for oil acct cording to the changing

international scenario, research studies on the constantly evolving global energy

reg ime a re signific ant.

Energy interdependence did nothing more than place consuming countries at themercy of their suppliers, the strategists life would be comparatively simple. For

example, one might think at first glance that Pakistan would put itself in a strongly

advantageous position if a large share of Indian energy supplies flowed across

Pakistan s territory. But expe rience show s tha t the stra teg ic dynam ic c rea ted by

interde pe nde nt energy ma rkets c an be c om plex a nd hard to p red ic t. Fea rs that

the Soviet Union wo uld use na tura l gas shipments for po litic a l leve rage turned out to be

exagg erated bec ause the Kremlins need for ca sh for the a iling Soviet ec onomy

outweighed any possible value the pipeline may have had as a coercive instrument.

On the other hand, seen from Kyiv and Minsk 25 years later, Russias opportunity to

manipulate natural gas supplies for political purposes may be a much more seriousissue. Moreover, depending on the relative political and military power of the partners

in an interdependent energy relationship, supplying countries may find themselves the

ob jec t of g rea ter solic itude abo ut their foreign p olic y and do mestic po litic s than they

origina lly ba rga ined fo r.

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Conclusion

Tod ay Ind ia is indeed fac ing a huge p rob lem in the energy sec tor. What really need s to

be addressed now is the energy consumption at the source, so as to preserve and

ma ke the ene rgy co nsump tion more efficient. The p aper clea rly me ntions the

imp ortanc e o f Energy Sec urity and how , by taking sma ll step s ene rgy c an be sec uredand the c onsump tion c an b e ma de sustainab le in nature.

The p olic ies and laws gove rning the c onsump tion pa ttern in Ind ia a re still at the

developing stage and thereby, not able to meet out the requirements to optimize the

usage of energy. The law s add ress and gove rn the p a ttern of usage of energy a fter it is

supp lied to its respec tive p lac e b ut wha t the law fails to g ove rn is p reserving the e nergy

a t source .

With understanding the need of securing energy Indias national security can also be

preserved. Amidst the Irans war with America, India has been facing the problem of

p ric e hike in the field o f o il. This a larms for Ind ia to a lso exp lore its renew ab le sourc es of

ene rgy and not just rely on the exhaustible source s, as has a lso been und erstoo d in one

of the Americ an rep orts on the po lic ies go verning the e nergy law .

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References

A C om para tive Review of a Dozen Nationa l Energy Plans: Foc us on Renewa b leand Efficient Energy- Jeffrey Log an and Ted L. Jame s

Domestic energy consumption patterns in Uttara Kannada District, KarnatakaSta te , Ind ia T.V. Ramac ha nd ra*, D.K. Sub ram anian, N.V. Joshi, S.V.

Guna ga , R.B. Ha rikantra Centre for Ec olog ica l Sc ienc es, Ind ian Institute ,

Bang a lore, 560 012, Ind ia

Book review India, GCC and the Global Energy Regime ExploringInterde pend enc e and O utlook for Co llaboration Author: Samir Ranjan Pradhan

Understa nd ing the Use a nd Ad op tion of Home Energy Me ters , Charlotte F.Kelsey & Vic to r M. Gonzlez, University of Oxford , Oxford 2006.

The imp ortanc e o f ene rgy efficienc y in build ings , D.J. Harris, and R.Ma dom erc and y, Sc hool of the Built Environme nt, The Bulletin on Energy

Effic ienc y Vo l. 6 Issue 4-6.

The Oil Price Rise Fac tor in the Iraq War: A M ac roe c ono micAssessment, Mamdouh G. Salameh, International Politics, Vol. 2, No. III, Winter &

Spring 2009

A Com para tive Review of a Dozen Nationa l Energy Plans: Foc us on Renewa b leand Effic ient Energy , Jeffrey Logan and Ted L. James, Tec hnic a l Rep ort NREL/ TP-

6A2-45046 Ma rch 2009

INDIAS STRATEGY TOWARD ENERGY DEVELOPMENT AND ENERGY SECURITY ,R.V. Sha hi, Sec reta ry to the Go vernment o f Ind ia M inistry of Pow er.

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ENERGY SECURITY AND LEGAL ASPECTS