India is one of the most compelling and complex stories in the world when it comes to energy and the environment. With an economy that has doubled in size since 2010 and a population on track to overtake China’s in the next 10 years, India is challenged to meet its growing demand for energy, and to do so in a sustainable way.
On a new episode of Columbia Energy Exchange, host Bill Loveless sits down with Ajay Mathur, the director general of The Energy & Resources Institute, a New Delhi-based think tank, and a member of the Indian Prime Minister’s Council on Climate Change. Ajay served as director general of India’s Bureau of Energy Efficiency, and head of the climate change team at the World Bank in Washington, D.C. He has been a key climate change negotiator for India, and was the nation's spokesperson at the climate negotiations in Paris in 2015.
Ajay and Bill caught up outside the Center on Global Energy Policy’s recent 2018 summit in New York to talk about the outlook for energy supply and demand in India, including the critical role that a combination of solar energy and storage could play in his country in coming years.
They also touched on some of the striking energy contrasts in India, a country where many go without access to affordable electricity despite the nation’s abundant installed electric capacity. Among other topics, they discussed India’s ongoing heavy dependence on coal for electricity, the outlook for nuclear energy, and India’s goals for reducing emissions under the Paris agreement.
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Bill Loveless: India is one of the most compelling and complex stories in the world when it comes to energy and the environment. With an economy that has doubled in size since 2010 and a population on track to overtake China’s in the next 10 years, India is challenged to meet its growing demand for energy and to do so in a sustainable way. Hello, I am Bill Loveless and welcome to the Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University.
Our guest today is a man who’s been a long time leader in India and throughout the world in developing and promoting energy and climate policies. Ajay Mathur is the Director General of The Energy & Resources Institute, a prominent New Delhi based think tank and a member of the Prime Minister’s Council on Climate Change. From 2006 until 2016, he was the Director General of India’s Bureau of Energy Efficiency and from 1986 until 2000 the head of the Climate Change Team at the World Bank in Washington DC. He’s been a key climate change negotiator for India too as well as his country’s spokesperson at the climate negotiations in Paris in 2015.
Ajay and I caught up outside the Center on Global Energy Policy’s recent 2018 summit in New York to talk about the outlook for energy supply and demand in India including the critical role that a combination of solar energy and storage could play in his country in coming years. We also touched on some of the striking energy contrast in India a country where many go without access to affordable electricity despite the nation’s abundant installed electric capacity. Among other topics, we discussed India’s ongoing heavy dependence on coal for electricity as well as the outlook there for nuclear energy. And of course India’s goals reducing emissions under the Paris Agreement came up too. Here is our conversation. Ajay Mathur, thank you for joining us on the Columbia Energy Exchange.
Ajay Mathur: Well, such a pleasure to be here.
Bill Loveless: Thank you. I want to start a little bit acquaint our visitors with you you’ve held a number of interesting positions around the world. Tell us about what’s brought you here?
Ajay Mathur: Well, right now I lead the Energy & Resources Institute TERI which is a Global Think Tank and Do Tank based in Delhi, but with offices all around India and the world. Before this for many, many years I used to head the Bureau of Energy Efficiency in the Government of India which was a great job --
Bill Loveless: Oh, really great.
Ajay Mathur: Well this was -- India has a huge potential for energy efficiency and whether it was the labeling program which is very similar to your labeling program or it was a program that we introduced for energy intensive industry in India. You know in India, industries are very, very efficient, but they’re also inefficient so it’s the bandwidth which is the problem. And so designing a program for that which we call Perform Achieve and Trade amazingly effective program was great.
Bill Loveless: I want to get to that a little bit more --
Ajay Mathur: Okay.
Bill Loveless: in a few minutes and I interrupted you in terms of your career path.
Ajay Mathur: Well and similarly another program that we did was to get LED -- LED bulbs into every household. So this was one very interesting piece of work that I did in the Bureau of Energy Efficiency. I also served for a brief period of time as the Chief Executive of the Green Climate Fund now based in Korea, but at that point of time still in born that was its first year when we got its administrative house in order.
But I’ve also been in the private sector with Suzlon which is India’s largest wind company I was President of Suzlon. I also was with the World Bank where I headed the climate change team and this was the time when the first climate change policy of the World Bank was introduced. And you know I’ve been across the world since financing, its regulatory policy, its private sector and it’s now research. It’s been a great life that I have had.
Bill Loveless: You’ve seen a lot, you’ve done a lot?
Ajay Mathur: I’ve enjoyed it.
Bill Loveless: Well, let’s talk about India. It’s -- it’s one of the most fascinating energy stories I think that we can look at around the world. The country has some great opportunities in terms of its development as it enters a new energy age. It also has its challenges too in terms of dealing with a growing in a very large population much of which is still without energy and electricity today. Tell us a little bit about the energy picture in India right now?
Ajay Mathur: Well, you know India is a study of contrasts. There is a large amount of electricity generating capacity, there is a large amount of energy available, but there are also very many people who don’t have access to that energy either because of lines don’t go to their homes or because they’re too poor to be able to pay for it. This I believe is our central challenge to make sure that everybody has adequate amount of energy electricity and fuels and has it at prices that they are able and willing to pay.
The other big challenge in India is that as we meet these energy demands how do we do it in a manner that is environmentally sustainable apart from being financially sustainable. You know nowhere in the world have any county been able to have a great quality of life and I use human development index of 0.9 as a surrogate for a good quality of life. So no country has been able to achieve this without using at least 4 tons of oil equivalent worth of oil worth of energy per person per year. Those countries which industrialized earlier used more those of it industrialized later used more efficient technologies were able to do it at 4. So there is no reason by tomorrow India maybe able to achieve this at 3 or 2.5, but today we are at 0.6. So we are looking at, at least a tripling or a quadrupling of energy use in India.
Bill Loveless: And how do you do that sustainably because the country is still heavily reliant on coal for the generation of electricity. India is -- is the -- that has the third largest coal reserves in the world and as of 2015 as I understand it relied on coal for more than 40% of its energy needs well if that continued to be the case?
Ajay Mathur: So one of the more interesting stories that has happened in India is that over the past one year the cost of a kilowatt of electricity from solar actually costs less than a kilowatt of electricity from coal.
Bill Loveless: Really?
Ajay Mathur: But that’s only when the sun is shining. On the other hand, we need electricity at night as well so we can’t do away with coal. And today if we put in enough storage so that I can charge the storage during the day and use it at night it ends up costing more. So till the point that solar plus storage becomes the cheapest option and I think that will take about 10 years. Coal is still the cheapest till them. So coal use in India will increase, but the estimation of my colleagues at TERI is that we will peak in about 2024, 25, 26 somewhere at that time. By that time, solar plus batteries would become cheaper, so all new capacity would be solar plus storage. So we would see an increase in coal use till the mid 2020s then a leveling of and then as the coal power plants retire this would start declining.
Bill Loveless: Are coal plants to what extent are coal plants still being constructed in India?
Ajay Mathur: The last coal plant that was financed was three years ago. And that plant is now in the process of being completed. So the important issue is that there has been no coal plant built in the -- has been approved for financing in the last three years. For a variety or reasons particularly because energy efficiency has increased far more rapidly than we thought it would. We have ended up with a coal generating capacity which is far more than what the country is economically able to buy. So we have something like 330 gigawatts of generating capacity of which 200 and something 202, 2003 is coal, but the maximum of electricity that we have been able to sell at any given time is 164 gigawatts. Demand 164, coal based capacity 202, total capacity 330. In other words, a lot of plant is just sitting there idle.
Bill Loveless: So there is no need to built out --
Ajay Mathur: For many years. So that is why the 2026 year becomes very important because that’s when we believe new power stations would be needed. And if coal plus -- sorry -- if solar plus storage becomes cheaper than coal then that new capacity when it is added would not be coal. That would be very interesting.
Bill Loveless: And as you mentioned before there are still many, many people in India without energy without electricity. I mean how distribute are these coal power plants are there a whole regions of the country where there will be a need for a new electricity infrastructure soon and if so what technology is that likely to be?
Ajay Mathur: Well, one of the things that India has been particularly good at is creating a country wide network of wires. And consequently it doesn’t matter today if the electricity is generated in the southern most part of India it can get to North India or West India or South India in real time. So we effectively have a single market. As I said, the single market is large enough and it doesn’t matter where the need arises it can reach there.
Yes, there are some places which are in the middle of forests, which are across very broad rivers, which are in the mountains where extending the lines is very expensive. Those are the places where renewables makes sense even today. And therefore the current government program aims at connecting every household either through the lines or through solar by the end of this calendar year. And what that would mean, is that depending on the person’s ability to buy everybody would be there in the market for electricity.
Bill Loveless: Interesting. And -- and how is that going and how that goal is been set?
Ajay Mathur: So we expect that that goal would be largely met by the end of this calendar year. We don’t expect that there would be 100% compliance by the end of this year, but I would very, very much doubt if it is not -- if it is not 100% met by the end of – 2019.
Bill Loveless: Interesting. Well -- speaking of solar energy, the Prime Minister, Prime Minister Modi has made that a top priority among his energy priorities solar is what the third -- India rather is what the third largest solar provider --
Ajay Mathur: That’s right. That’s right.
Bill Loveless: in the world and has already achieved some 20 --
Ajay Mathur: Gigawatts.
Bill Loveless: gigawatts of energy. It has a new target of 100 gigawatts over the next four years?
Ajay Mathur: That’s right.
Bill Loveless: And as I recall the -- the Prime Minister has -- has launched this initiative this international solar alliance along with other leaders in the world aimed at promoting development of new technology in financing investments across the supply chain some 121 countries are involved in that initiative. How is that been going?
Ajay Mathur: So first of all, as far as the goal of reaching a 175 gigawatts of renewables by 2022 is concerned of which a 100 gigawatts would be solar. This is challenging. Yet given the way growth has occurred in the last three years, it seems that if we are able to absorb all of this energy you know because solar is produced only when the sun is shining. Then we would be -- it wouldn’t be a problem to be able to reach the goal of a 100 gigawatts of solar and a total renewables goal of a 175 gigawatts.
So there is a certain amount of investment in terms of the lines that can take electricity from where it is generated to where it’ll be used. Some amount of thinking on how do you get this now cheaper electricity in place of the more expensive electricity. So what is you know in technical jargon called flexibility. If we are able to achieve these kinds of things, this goal is very easily achievable.
The international solar alliance a grouping of countries who all believe that solar presents an opportunity together the solar alliance can provide a forum a platform that helps in three kinds of ways. First is standards and specifications because if countries use the same standards and specifications then we are able to move towards the second goal which is helping create a global supply industry which can then supply to scale and bring prices down faster.
And the third is capacity building. Because if all of us are going to build up that much solar we need people where are they? And again I think it is very important that we have these people prepared in time for the solar revolution to occur. Through the solar alliance -- international solar alliance all of these three goals can be more effectively met both in terms of time and in terms of costs. The fact that so many countries have gotten together there was a launch of the solar alliance few weeks ago in Delhi and we had the large number of heads of state there. I think it tells you of how important many, many countries around the world feel that solar is in their future development.
Bill Loveless: What -- what about nuclear energy that had done a -- a major piece of the India’s energy policy and -- and all there is a number of plants under construction there now, but to what extent will nuclear play a role in India’s energy supply some years from now?
Ajay Mathur: Nuclear will probably play a role as in a sense the balancing agent because the electricity demand in India varies greatly by time of day, but more importantly by the time of the year. The challenge to nuclear really is the price of nuclear energy. The price of nuclear energy today is more than that of coal and obviously more than that of solar. The issue becomes -- if there is a new nuclear power plant who will buy that electricity. That therefore leads us to the question of whether we are on the threshold of a new set of technologies. We hear of super save modular nuclear reactors. Now if that happens, then of course we are in a different technological ball park, but the fact that it is carbon free is something which is positive and if it can be made to be cost effective as well then it has a place in the energy mix of tomorrow.
Bill Loveless: But there are nuclear reactors under construction --
Ajay Mathur: That’s right.
Bill Loveless: in -- in India at the time and others are planned. You know I read where a U.S. energy secretary Rick Perry who is India this week has been promoting _____ [00:16:39] technology for reactors there. So there is still -- there is going to be some level of nuclear added in India --
Ajay Mathur: Right.
Bill Loveless: in coming years?
Ajay Mathur: So you know, but you know it’s a matter of scale. As I said we’ve got about 330 gigawatts of electricity generating capacity today. The total amount which is nuclear is about eight gigawatts. As it grows the plants under construction will take it to about 16. Now beyond that whatever is added depends rarely on both safety and security on the one side and economics on the other.
Bill Loveless: So it’s a matter of seeing there is -- there is still a number of questions the extent?
Ajay Mathur: That’s right, that’s right. Technologically revolution in this area is going to determine where it goes.
Bill Loveless: I want to touch on something that I know is dear and near to your heart. You spoke about a few minutes ago and that is energy efficiency this was a field where you worked in the Indian Government where you were a leader and implemented a number of steps to help save energy. I mean so much of the discussion in -- in a place like India over the need to produce more energy, but here often lost in the discussion is the need to save energy a lot has happened along those lines tell us about that?
Ajay Mathur: Well, you know there is no doubt that there is a very large number of people in India who don’t have access to electricity and clean cooking fields. And it’s absolutely important that they get this access to have a better quality of life and have better livelihoods. But that said, if a person who doesn’t have electricity and gets it today it makes a huge difference whether she lights up her home with candescent bulbs or with LEDs. With LEDs, she would use 1/10th the electricity that she would within candescent bulbs and therefore pay much smaller electricity bills.
That makes it affordable, that makes it sustainable. Energy efficiency energy access productivity competitiveness are all dove-tailed together in a country like India. And what we realized was that because people did not have information about energy efficiency they were not able to make choices that made sense to them. Hence the labeling program refrigerators, air conditioners. You know today the largest increase in demand for electricity in India occurs from air conditioners.
As a matter of -- it’s a fact told the largest demand for electricity in India in the summers occurs at 11 p.m. at night and we said, what. Well it turns out that all of us who have air conditioners at home switch them on when we are going to bed and this is when only six percent of households in India have air conditioners. So you can imagine that as prosperity occurs and the number of air conditioners occurs what this will do to the electricity load. So it’s absolutely important that we focus on the energy efficiency. Hence the labeling program.
We -- I talked a little bit earlier about the Perform, Achieve and Trade Program for industry. Indian industry has some of the most efficient plants in the world. It also has some of the least efficient and it’s this bandwidth of energy efficiencies which became our policy problems. And therefore the Perform, Achieve and Trade Program provided specific targets to the energy intensive industries on how much energy they had to reduce per ton of product that they made. Amazingly successful and we said if you’re able to do more than your target you get to keep the extra savings in the form of an energy saving certificate. You can sell it and guys who buy it can use it to meet their compliance.
Bill Loveless: And it was effective?
Ajay Mathur: It’s very effective. So we also said if you got certificates you can keep it for your next cycle. We had a target of 6.6 million tons of oil equivalent worth of savings per year we reached 8.8. And now it’s in its second cycle and then it’s -- in its third cycle. So this is something on which there has been a convergent of national interest of industry interest. I would wincher to suggest that for developing countries where this kind of a band width of energy efficiency is the problem. This is an effective tool. It was an innovative tool when we had introduced it. It’s an effective tool in meeting the bandwidth problem. But then we also face this issue of okay what about the smaller industries these are the energy intensive industries. And there the challenge was here are these entrepreneurs who is the chief executive officer, but he is also the chief financial officer the chief marketing officer in small industries the entrepreneur does everything.
Bill Loveless: Right.
Ajay Mathur: How in earth do we get his time to focus on energy efficiency? And therefore what we are looking at is providing him or her with a package. Here is a package of technologies this is what it will do this is what it will cost, and if it doesn’t work there is somebody who is standing with a guarantee that if it doesn’t work I’ll pay you that if doesn’t work. So it’s that level of comfort that the SME owner is being provided with. This is relatively new so I can’t say whether it is been a success or not, but that’s the way in which we are looking at the smaller industries.
Bill Loveless: Interesting. And it’s showing progress so far. What about in transportation?
Ajay Mathur: Okay in transportation, the first thing that we did was to introduce fuel efficiency standards for vehicles. It was a tough nut to crack, but now we do have these the first set of standards have already come into play and the second set of standards which will come into play from 2022 have also been announced. We are now looking at seeing how we would look at a transition say for example to electric vehicles what happens to that? This is something which is still happening there has been a lot of government declarations about the fact that we’ll move towards electric vehicles.
Bill Loveless: If that isn’t there a goal that’s been set by the Prime Minister to -- for at a point at which there would be no further sales of petroleum fueled vehicles?
Ajay Mathur: So the minister has said that this he would like that by 2030 there are no more vehicles, but it is no more petroleum driven vehicles. But as yet it has become a part of government policy it is a statement, but what that has done is that it has if I am _____ [00:23:39] it has electrified the industry. And now you’re having all kinds of interesting things happening. You know there is this company that the government had created called Energy Efficiency Services Limited. They put in a competitive tender for 10000 electric vehicles and the price fell to two-thirds of what it was earlier and this is just on 10000 electric vehicles.
So what we foresee is that this is an area in which because of the advantages to the people because of the advantages to the country because you are importing less petroleum fuels we are a net petroleum importing country this is something that will be amazingly successful. I can’t tell you what the timelines. There are too many uncertainties about technology, but this is one in which all the policy convergence that we can think of is towards moving towards electric vehicles.
Bill Loveless: Interesting. Ambitious.
Ajay Mathur: Very ambitious.
Bill Loveless: Let’s talk a little bit about climate. India made big promises under the Paris Agreement to reduce its emission -- intensity up to 35% by 2030 compared to 2005 levels and to get 40% of its electric capacity from non fossil fuels by 2030. Has it made much progress in pursuing those goals?
Ajay Mathur: You know as far as the first goal which is the reduction of the carbon intensity is concerned, I think we are on track because right now we would -- we are at about 17 or 18% below the 2005 number and we’ll probably be at about 20 or 22% by 2020. And because energy efficiency is happening much faster than what we thought it’s quite possible that we may achieve this target. The renewables target is a little more challenging and that really depends on how the cost evolution of renewables occurs. If as I said earlier, if we are able to come to a point that the price of solar plus the storage electricity from solar plus storage is less than the cost of electricity from coal by the mid 2020s then we will be able to meet this target by 2030. So there is some amount of effort that is needed in order to meet these targets. They are not unachievable but they are not easy either.
Bill Loveless: You know -- speaking of Paris Agreement the Trump administration has caused a stir by declaring that it would withdraw the United States from the treaty by the agreement by the year 2020. What -- what do you think is the future of that agreement now?
Ajay Mathur: You know I would like to separate our two things. One is the agreement itself and the second other pledge that country has made to that agreement. In a certain sense, the agreement is probably a robust agreement. And if I look at it from a very -- from a U.S. perspective the fact that each country says what it will do and then periodically raises its ambition. I can’t see how any country can get a better structure within which they place their own long-term goals that’s one part.
The second is the pledges. I -- this is a personal view, I don’t think that the U.S. will have a problem in meeting its pledge. And that’s because the amount of research the amount of technology development, the amount of market development that has been done in the U.S. over the past 10 years has been such that for example you got shale in the market shale gas in the market. You also have a far more far more energy efficient economy than you had earlier. Because of these reasons the U.S. will meet its 2030 goals now. Will you be able to meet the goal beyond that? That depends on the kinds of competitiveness structures that are put in place in the economy in the next five years.
Having said that, the greatest problem of the U.S. withdrawal is a signal of loss of leadership. The Paris Agreement to a very large extent occurred because the U.S. was ready to step up to the plate and say this is that kind of goal that we would like to see and carry the rest of the world with it. The absence of that leadership means that there would be other countries which will have to step up to the plate and marshal the countries of the world along so that we continue to move in the direction of the Paris Goals.
Bill Loveless: If the United States were to withdraw from the agreement in 2020, would -- do you think India would remain part of the negotiation process?
Ajay Mathur: So this has been said -- I mean I have heard three ministers including the Prime Minister say this in very clear and unambiguous terms. The first was we adopted the Paris Agreement and the Paris Goals because it made sense to us. The fact that other countries may or may not agree with it is in a sense irrelevant this was said by the Prime Minister. And one minister and I was rather surprised when he said it.
So he said something to the point that he named the U.S. and said if the world’s largest economy doesn’t remain in it really doesn’t matter to us. These are things that make sense for us anyway. So I think India would remain in the process the fact that the climate goals and our development goals coincide means that the whole agenda of climate change has in a sense become internalized in the development agenda.
Bill Loveless: What kind of a public conversation is there on climate change in India? You know in the United States there is a lot of debate and a lot it is political debate, but over climate change, but in India where -- where people are you know trying to get by day-to-day and looking for new opportunities for perhaps better energy and -- and technology and economic opportunity. Do they talk or is -- is climate change a big part of the conversation?
Ajay Mathur: Bill, this is -- this is -- I would frame the question a little bit differently. And the question in India is why am I adopting for example solar energy, why am I adopting energy efficiency? The questions so it’s been adopted because it is providing me with benefits today. The point that you said people are looking to make a better life for themselves and what has happened is that over a period of time the climate friendly options renewable energy efficiency have also become the economically the most efficient options. That is why people are adopting them.
So as far as India is concerned the key is that energy efficiency and renewables provide me with hear and now benefits. They also provide very strong climate -- co benefits. The flip side is the adverse impacts of climate change. In India, more than almost anywhere else in the world and people said India is the third most vulnerable country in the world climate changes play havoc with people’s life today. The changing hydrological patterns means that we’ve got and this is statistically already happening that the number of rainy days in the year have decreased. So the total amount of rainfall is more or less the same.
But if you got fewer number of rainy days that means there is a lot of rain and then rain drains away and then you got a lot of days where there is no rain. So you have flooding and droughts occurring more than they did in the past. People understand that these changes are because of climate change that’s where climate change has entered into the public debate. So every time there is a flood or a drought the debate in India is -- is this because of climate change?
Bill Loveless: If people do not need to be persuaded that it may not be?
Ajay Mathur: No, across political parties there is a very broad agreement that the adverse impacts of climate change are already here. There is some amount of discussion on how proactive India should be in addressing in mitigating climate change whether we should go whole hog or only go as far as economically viable options are concerned, but the fact that we need to address climate change is here.
Bill Loveless: The measured conversation.
Ajay Mathur: Let me say it’s a conversation which is really about survival.
Bill Loveless: Ajay Mathur, thank you very much for joining us on the Columbia Energy Exchange and this fascinating story about India and its energy needs and its energy future.
Ajay Mathur: Bill, it’s been absolutely great. Thank you very much.
Bill Loveless: And thanks to our listeners too for tuning in. If you have a minute, please rate us on iTunes and tell us what you think of the podcast. I love to hear from you and we hope to hear from you soon. And for more on the center for global energy policy, go to our website at energypolicy.columbia.edu or follow us on social media at columbiauenergy. For the Columbia Energy Exchange I am Bill Loveless. We’ll be back again next week with another conversation.