Development, energy and climate security


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IT is well understood that access to cheap, clean and copious energy sources is essential for modern technological societies. Over the last century, fossil fuels did provide the world with unprecedented development, there was, however, insufficient clarity about the criteria for ‘clean’ and ‘sustainable’ energy systems. Only of late, as the impact of unbridled energy production and use on human health and environment has begun to be better understood, that attention has been focused on this problem.

Investigating the energy security and climate change challenge faced by India, the inescapable conclusion is that hard resource constraints place serious limits on the size of the fossil fuel powered economy that India can ultimately build. As India has to import increasing amounts of oil, gas and coal, its demand and supply balance will be tested in the coming years, both in terms of affordability of fossil fuels as well as the carbon space available to burn them. This paper explores options for India’s energy security assuming that the country is able to maintain a 8-10 per cent growth rate.

Three overarching issues – energy security, development with poverty alleviation, and reduction in emissions of pollutants and GHG – are critical, given the long-term goal (post 2050) of building carbon-neutral energy systems and a sustainable energy economy. The end of India’s 15th five year plan in 2032 is here assumed as a plausible intermediate point when India’s CO2 emissions could peak as indicated in Figure 1.

Figure 1: All countries CO2 emissions have/will peak at some point in time. The year 2032 is assumed to be the peak year for India. Since the lifetime of CO2 in the atmosphere is hundreds of years, the area under the curve is a country’s contribution of to climate change.

The goal of any climate change mitigation strategy would be to minimize the area under the curve by: (i) reducing the magnitude of the CO2 emissions peak; (ii) reaching the transition point (peak) as early in the growth cycle as possible; and (iii) increasing the rate at which carbon neutral systems substitute and replace fossil-fuel fired ones. India’s position vis-à-vis development and climate change will eventually depend on its ability to buy fossil fuels in the world market. This is going to be uncertain and highly market dependent, given the size of India’s needs and international competition.

India’s population of 1.17 billion is projected to grow to 1.5 billion by 2032 and peak at 1.7 billion people around 2050.1 To provide this population with 21st century opportunities, India should optimally generate 0.5 kw per person of electric power, i.e., 6500 tw (terawatt) hours per year by 2032 (assuming a population of 1.5 billion). The total generation in 2008 being an eighth of this (about 0.07 kw per person), a more modest goal of removing poverty by 2032 would be 0.25 kw per person or 3250 tw hours per year. Assuming that appropriate policies that assure sufficient distributive justice are in place, the paper explores what would constitute a realizable scenario under which India can attain this increase in capacity so necessary to alleviate poverty.


Coal-fired plants today provide about 65% of the electricity generated in India and will continue to dominate well past our plausible target year, 2032.2 Most of the 80 gw of utility coal-fired capacity is government owned and in 2008 generated about 500 tw hours with an average plant load factor (PLF) of 72%.3, 4 An average growth rate of 10 gw per year over the next 23 years would result in 300 gw of coal-fired capacity by 2032. Historic trends in demand and capacity addition suggest that such growth is feasible, being only twice the average rate achieved during 2007-2009. This would require an investment of about $15 billion (2009 dollars) per year, assuming an average cost of $1.5 per kw.

Indian public and private sector companies have demonstrated they can develop and operate plants at high PLF, and the country has an adequate industrial base to furnish the required engineering, procurement and construction services. This of course assumes significant restructuring to improve the sorry state of most state electricity boards (with plants operating at low PLF, high operating costs and distribution losses) and that there would be enhanced private participation in building these capacities.


The biggest constraint upon this growth, however, will be from the coal linkage side. Since Indian coal has a low heat rate of 3500-4000 kcal/kg,5 current plants require 0.70 kg/kwh on average. Thus 300 gw capacity operating at 85% PLF would require about 1000 million tonnes of domestic coal and 300 million tonnes of imported coal for supercritical plants. Even if India were in a position to expand the required handling and freight capacities threefold, the added capacity would reduce extractable coal reserves (estimated at 40-58 billion tonnes6) to about half by 2032 and they would last only until 2050-60!7 With coal-fired power plants having lifetimes of 35-50 years, dwindling coal reserves would therefore start impacting any new addition in coal based capacity well before 2032.


India has added gas-fired capacity at a steady rate of about 0.7 gwe per year since 1988. Historically, gas turbines have been running at low PLF (national average of 50-55%) due to shortage of gas. Starting in April 2009, new supplies from the KG Basin have helped improve the PLF to 67%.8 Nevertheless, power generation and capacity addition continues to be hampered by lack of gas supplies and the highly uncertain future of domestic production. Since after 2002 (KG D6) no major new finds have yet been announced (in spite of the large number of blocks already in exploration under NELP), the current reserves of 1074 billion SCM will last about 15 years at production rates of 200 million standard cubic meters per day (mmscmd).9


Gas turbines are certainly much cleaner (0.4 kg/kwh CO2 emissions are 40% compared to coal) and remain the best available option to back up intermittent production from solar and wind plants. A significantly large gas based fuel basket provides the most doable way of reducing emissions. The optimum strategy for India would thus be to build 100 gw capacity of CCGT plants with efficiency of 50% or more by 2032. Operating at 80% PLF, these would generate 700 tw hours of electric energy and require 350 mmscmd of gas. This would represent a 6.5-fold increase, i.e., a sustained annual growth rate of 8% by 2032 making 22% of India’s generation dependent on gas. Another 250 mmscmd would fuel other industries, transportation and city gas. The problem here is that to meet this demand from domestic production, India would need at least twelve new KG D6 size fields over the next 23 years, whereas there have been no new discoveries in the last six. Going into the future, we therefore estimate here that projecting a low probability of new finds, it is unlikely that domestic production will exceed 100 mmscmd.

Importing the remaining 500 mmscmd, as LNG or through trans-national pipelines, with long-term contracts could cost $62 billion per year. Moreover, adding 85 gwe generating capacity at today’s price of $0.7 per watt for combined cycle plants would cost $60 billion. Another $40 billion would be needed for LNG terminals and pipeline development.

India’s hydroelectric potential as reassessed by the Central Electricity Authority lists resources of about 150 gw of hydroelectric capacity, 95 gwe of pumped storage and about 7 gw of small, mini and micro capacity.10 To exploit this potential, the prime minister launched the 50 gw scheme in 2003.11 Installed capacity in 2008 was only 40 gw, but extrapolating the 2 gw/year growth that has taken place between 2000-2009 India can contribute 90 gw capacity by 2032. This would generate 300 twh of electric energy per year at 40% PLF. This 50 gwe capacity addition will require an investment of $ 125 billion at $2.5 per watt for average construction cost.


India’s long-term hope for energy and climate security eventually lies in nuclear energy. With the lifting of the international ban on civil nuclear trade in 2008, India’s ambitious three-stage plan12 – first formulated by H. Bhabha in 195813 – can finally be pursued with vigour on multiple fronts. India currently has14 an installed operating capacity of 3.8 gwe consisting of 15 pressurized heavy water reactors (PHWR) at six facilities and two boiling water reactors (BWR) at Tarapur. Another 2.9 gwe capacity, consisting of three PHWR, two light water reactors (from Russia) and a prototype fast breeder reactor (PFBR) at Kalpakkam is close to completion. Many new plants are under discussion, but no new construction was started in 2009. Nevertheless, it is possible for India to achieve about 40 gwe capacity by 2032, as illustrated below:

* Five gwe of PHWR: India is developing an Indian Standard PHWR of 700 mwe capacity based on past successful experiences with 200 and 500 mw units. Seven plants could be built by 2032.

* Six gw of FBR: Anticipating the success of the PFBR due to start operation at Kalpakkam in 2012, 12 more units of 470 mwe each will be built by 2032 to kick-start the second stage of the three-stage plan.

* 20-25 gwe LWR (light water reactor) from Russia, France and other vendors: Atomenergoeksport of Russia will complete two units of VVER-1000 at Kudankalam by 2010 and provide six more units of VVER 1200 reactors.15 Negotiations are taking place for Areva to provide six EPR of 1.4-1.65 gwe capacity.16 Many other reactor manufacturers and NSSS suppliers are poised to enter the Indian market; however, based on the current price tag ($4-5 billion per gwe) a maximum 25 gwe of LWR from all vendors is anticipated.


The advanced heavy water reactor (AHWR) based on U-233 fuel produced from irradiation of thorium is the first step of stage III.17 India has tested the U-233 fuel concept in the Kamini reactor (30 kwe), but the construction of the first of this kind of AHWR is yet to start. It is likely that a large-scale deployable option will be developed only by 2032 with only four 300 mwe AHWR reactors operating. Achieving this 40 gw capacity will not be easy as much of the technology is new and supporting heavy industries and fuel reprocessing plants would have to be built.18 A bigger question is how long the Indian government will continue to assume all financial risks and provide funding for the required R&D. The 35 gwe capacity addition will require a capital outlay of about $150 billion, plus another $25 billion for developing fuel reprocessing facilities for the FBR programme. The cost of transmutation of thorium to U-233 at an industrial scale is still unknown.

If achieved, 40 gwe of nuclear power capacity by 2032, though seemingly small, is nothing to be scoffed at. It represents a seven-fold increase in capacity in 23 years along with the highly significant development and maturation of breeder reactor technology. If it is commercially successful, it will put India in an excellent position to transition to carbon neutral systems post 2032.


Looking at the transport sector, India consumes about three million barrels of crude oil per day (bpd) with an annual growth rate of about 0.1 mbpd. The growth in automobile sales indicates that it is unlikely that this increase in demand will stop in the near term. For 2032, the 2006 Integrated Energy Policy Report projects a demand of about six million bpd19 with domestic production remaining at 0.7 million bpd. To import oil at $100 per barrel, $190 billion per year in foreign exchange will be required. Additional infrastructure (product distribution pipelines) will require another $20 billion. Fortunately India will have a refining capacity of 5.3 million bpd by 2013.


The above optimistic yet minimal required energy growth scenario is summarized in Table 1. It shows that by 2032, in order to support the projected capacity, India will need to import 300 million tonnes of coal annually (in addition to 1000 million tonnes of domestic production), 500 mmscmd of natural gas (should domestic production stagnate at 100 mmscmd because of low investments and or no major new finds) and all the uranium for 25 gwe of light water nuclear reactors. In addition, India would be importing 5.3 million bpd of crude oil, besides producing 0.7 million bpd domestically. About 0.7 trillion dollars will be required in capital investment for new generation capacity, $1 trillion for transmission and distribution infrastructure, and $234 billion per year for fuel imports by 2032. The numbers projected here make it difficult to foresee how India could develop a fossil fuel driven economy larger than this. Thus, should India agree to cap its total CO2 emissions at 4.5 to 5 billion tonnes per year, it does not really compromise its ability to develop.


2009 installed capacity/used

2031 projected capacity

Cost of new plants

Imported fuel

Cost of imported fuel/year

Domestic fuel

Cost of domestic fuel/year

Additional infrastructure cost


80 gw


$220 b

300 mt

$18 b

1000 mt

$40 b

$50 b


16 gw

100 gw

$60 b

400 mmscmd

$62 b

100 mmscmd

$10 b

$40 b


40 gw


$ 125 b



3.8 gw


$150 b

4000 T of U

$0.8 b


$25 b

Crude oil

3 mb/day

6.0 mb/day


5.3 mb/day

$190 b

0.7 mb/day

$26 b

$20 b



$555 b


$271 b


$135 b

Table 1: A summary of current capacity and projections for 2032. Prices in 2009 dollar value: $100 per barrel for crude oil; $10 per million BTU for LNG; $40 per tonne for domestic and $60 per tonne for imported coal; and $200 per kg of unenriched uranium. Estimates of costs for enlarging the electric transmission and distribution infrastructure are not included. The World Energy Outlook 2009 estimates these costs at $1 trillion.20


At the same time, realizing this growth scenario by 2032 makes India highly dependent on imports, and thus subject to the vagaries of global energy markets and the attendant geopolitics. Its emissions of CO2 would have risen from the current 1.2 billion tonnes to about 4.5 billion tonnes per year. This, however, represents a very modest three tonnes per capita that any realistic climate treaty should accept. India’s dilemma, in agreeing to a particular peaking year, however, arises from the technological and economic uncertainties regarding the desired rate of growth needed to alleviate widespread poverty in the country.

This scenario also confirms that the major instruments for reducing emissions in India in the period 2009-2032 will have to come in the form of increased efficiency with which energy is produced and used along with structural changes that can facilitate the implementation of win-win options. In the period post 2032, a closed nuclear fuel cycle and other carbon neutral systems can drive the transition to a carbon neutral end-state.


If there is to be trust and cooperation between the developed and developing countries, any international framework on emissions reductions must meet the following six basic criteria. They would need to be equitable; be open, transparent and have non-intrusive emission monitoring systems; have growth timelines aligned with existing/plausible technologies; be cost-effective; reward good behaviour and not be punitive; and achieve a long-term and sustainable vision and end-state through a realistic roadmap.

The above tenets capture the strong sentiment that has been articulated a number of times during international negotiations: The developed world can reduce its carbon footprint very significantly by just tightening its belt (lifestyle changes and improvements in efficiency) whereas the developing world would need to condemn hundreds of million people to abject poverty if asked to stop growth in the near term through use of fossil fuels.

Given the above situation, there yet remain several options that are not only in the interest of India to implement but are also aligned with its stated goals and timelines. For power generation India needs aggressive deployment of the most energy efficient coal and gas-fired technologies even as it focuses on the development and maturation of four key nuclear technologies to build up large indigenous capacity post 2032. Simultaneously India must partner in the R&D for small and medium size modular nuclear reactors.

Alongside, it must invest in multiple demonstration projects of various scales to gain experience in the integration of utility scale distributed generation of solar and wind power so that large-scale deployment can take place as these technologies become cost-effective. India must partner in global R&D efforts to (i) reduce the cost of solar PV, (ii) develop cost-effective industrial scale technologies for photo-chemical and thermal splitting of water into hydrogen or hydrocarbon fuels, and (iii) gain better understanding of its on-shore and off-shore potential for conventional as well as unconventional gas and possible carbon sequestration sites.


On the demand side we need to mandate standards for urban buildings to reduce energy use in heating, cooling and lighting as India transitions to eco-friendly cities by design rather than necessity. In the transport sector, building on the Tata Nano story, India should aggressively take the lead in demanding an all-car international average of at least 25 km/litre (60 miles per gallon) by 2032. The transition to cleaner fuels, such as CNG, already undertaken in metropolitan areas, for all surface public transport systems needs to be accelerated, and necessary fuel resources made readily available. Long haul freight movement can be decarbonized by aggressively laying dedicated rail corridors, and effective public transport systems must be built as part of planned smart eco-cities as India urbanizes.

Simultaneously, the country needs to pursue several unconventional options such as population stabilization and reduction in emissions of black carbon by helping rural households transit rapidly from cooking with biomass or dung based solid fuel to LPG or kerosene stoves.

The most cost-effective option for significant new capacity in the near term is coal-fired generation. However, the volume of domestic and imported coal required imposes limits to growth. With proper policies for broader public-private participation in place, the success of 40 gw nuclear capacity will demonstrate a mature indigenous industrial complex for four nuclear technologies – pressurized heavy water reactors, light water reactors, plutonium based fast breeder reactors and thorium based reactors. Large-scale deployment of these nuclear technologies can ensure post 2032 growth even if the cost of wind and solar PV generation remains high, their integration into the grid is slow, and other anticipated clean-technologies such as hydrogen fuel cells do not become cost-effective. Even opponents of nuclear power should recognize this option as India’s long-term insurance policy.


By 2032 India’s ability to sustain its economy and industrial complex using fossil fuels will be predicated upon the state of world markets, climate treaties and geopolitics, rather than merely by its needs. For this reason development, energy security and climate change mitigation converge into one and the same goal. The challenges are daunting and require an unprecedented change in planning, policy and implementation. Cooperative action from individuals and state and central governments is essential. Given a long-term strategic vision, India can increase its annual electricity production fourfold while decreasing carbon intensity. This could lead to India capping its CO2 emissions at 5 gt/year, and reducing them after 2032.


* The article is based on a paper presented at the ORF-RLS Conference on Sustainable Development and Climate Change held in New Delhi on 24-25 September 2009.


1. India country data from Population Reference Bureau at

2. A good overall review of Indian coal-fired energy sector is A. Chikkatur and A. Sagar, Cleaner Power in India: Towards a Clean-Coal-Technology Roadmap, available at

3. The data ending on 31-08-2009 was retrieved from sec_reports/reports.htm

4. The August 2009 summary from Aug percent2009.pdf

5. Coal India Limited at

6. A.P. Chikkatur, A Resource and Technology Assessment of Coal Utilization in India, Pew Center Global Climate Change Report, October 2008. Report available at

7. Estimates of coal reserves have varied significantly in the last five years, the distinction between geological and extractable reserves is often blurred and the figures often include depleted reserves. Current estimates vary between 40-58 giga tonnes. Depending on what estimate and consumption rate is used, India’s reserves would last 30-40 years at an average consumption rates of 1.4 billion tonnes per year.

8. Monthly power sector reports available at percent2009.pdf

9. Basic Statistics on Indian Petroleum and Natural Gas 2007-08 from the Ministry of Petroleum and Natural Gas at

10. Hydro development plan for 12th five year plan (2012-2017) available at http://www. percent20 Development percent20Plan percent20for percent 2012th percent20Five percent20Year percent 20Plan.pdf

11. Preparation of Preliminary Feasibility Reports (PFRs) under 50,000 mw Hydroelectric Initiative. Central Electricity Authority. See

12. India’s three stage nuclear plan.

13. Dr. Homi Bhabha, address as President of first International Conference on Peaceful Uses of Atomic Energy held in Geneva in 1955. In his address at the second conference in 1958 in Geneva, he laid out the long term science and technology roadmap for nuclear energy in India that is now known as the 3-stage plan.

14. Summary of India’s nuclear energy programme at; Nuclear Power Corporation of India at

15. India-Russia nuclear deal: http://news. and

16. Areva to sell Light Water Reactors to India. 55216679-en.html,

17. India’s third stage nuclear programme.

18. M.V. Ramana and J.Y. Suchitra, Slow and Stunted: Plutonium Accounting and the Growth of Fast Breeder Reactors in India, Energy Policy (2009), doi:10.1016/j.enpol. 2009. 06.063.

19. Integrated Energy Policy Report at

20. World Energy Outlook WEO-2009 available at