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India is starting to go in the right direction on subsidies: IEA

The International Energy Agency’s executive director, talks about the need for India to improve its energy data and emergency systems
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First Published: Sun, Apr 21 2013. 11 32 PM IST
Maria van der Hoeven, executive director of the International Energy Agency. Bloomberg
Maria van der Hoeven, executive director of the International Energy Agency. Bloomberg
Updated: Mon, Apr 22 2013. 01 09 AM IST
New Delhi: Maria van der Hoeven, executive director of the International Energy Agency (IEA), is no stranger to India. She has been engaged in discussions with Indian policymakers and planners for facilitating India’s association with the IEA. Van der Hoeven, who was in India to attend the fourth Clean Energy Ministerial (CEM) that concluded on Thursday, spoke in an interview about the need for India to improve its energy data and emergency systems, the relevance of the United Nations (UN) climate negotiations, and potential developments in the global energy markets. Edited excerpts:
How has the proposal of India joining the IEA progressed?
I had very good discussions with your ministers and the planning committee (commission) here. It strikes me that there is great interest in Indian policymakers to work closely with the IEA and that there be a closer collaboration. But I can’t ask India to become a member because India will have to be a member of the OECD (Organisation for Economic Co-operation and Development) first. Currently, we are in the discussion phase with the members and a number of countries—India, Russia, China and some others. We have bilateral agreements already between India and the IEA, where we cooperate on a number of issues. That forms the basis. We are looking for a structure that enables countries to participate in committees. But it has to be based on mutual interest between India and the existing members on everything that has to do with data, with transparency, how to deal with emergencies because of a disruption in supply, how to have precautionary stocks. That’s something India is working on now.
What we are doing with India is having joint meetings on emergency response exercises. We are working on emergency response assessments that we are going to do this year. This shows that there is a mutual interest.
Data and emergency response technologies are areas where India needs a lot of knowledge, which can be provided by joining IEA implementing agreements.
Indian energy sector data has not been of a very high standard or transparent in terms of what is shared with the public. What has been your experience?
Yes, I think India knows the problem and that is why they are eager in participating in training and capacity building at IEA. Everything can always be improved.
You have talked about targeting subsidies. Are you convinced that India is there in dealing with subsidies?
I think India is not there, but it is starting to go in the right direction. But it is a huge country and there are a huge number of subsidies. It is also a planning issue. It takes many years to see that you change course without hurting the people who are the poorest, that is something you can’t let happen. It is not only about reducing fuel subsidies, so it is good for the budget and import bills when there are 300 million without access to energy. It is reducing fossil fuel subsidies, enhancing use of renewables as a solution for many of the people who don’t have access to energy, and doing it in an efficient way. So, it is not easy.
Nuclear energy has seen protests across the world and in India. Project-affected people have been opposing it at Kudankulam and other places for a very long time. Given this and the huge capital costs leading to high tariffs being proposed, do you think nuclear energy is viable?
It is, but you have to cope with public concerns. You have to take public acceptance seriously and that means you have to use the best available technology. But another thing is, if you look at the energy mix, nuclear energy is CO2-free so it is part of the solution. There are many questions like public acceptance, safety issues, does everybody knows how to deal with it—these have to be answered.
I always say that when you get different offers from different countries, you need to look at the business case and look at it practically. What is in it for them, what is in it for you. It is important to firm up other alternatives as well.
Also, if you only invest in generation and you forget about the grids, the power outages will still be there. Grids have to be seen at all levels—not only the low-voltage grids, but high-voltage grids.
Do you think the UN Framework Convention on Climate Change process is still relevant given that commitments that have been made have not materialized?
Things like this take time. As a policymaker and minister, your first responsibility is to your country, and at the same time you have an international responsibility. It is not always easy to balance that. That goes for all the countries that were present today. But I think it is encouraging that countries share their knowledge and their experience to see what they can do together.
The BRICS countries—Brazil, Russia, India, China, South Africa—have mooted a BRICS development bank, which they say will contribute to clean energy. What is your view on this?
It is up to them. These green funds and clean funds are what policymakers are doing. I think it is important that they make these commitments and then put it into practice.
At a point where there is global talk about austerity and reducing fiscal deficits, how is investment in clean energy being impacted?
One of the most important issues in all the discussions (at the ministerial) was how to incentivize investors in clean energy and how this is different in countries which are in different states of development and there are other needs. So, what’s necessary to get these investment is, first of all, to have a predictable policy and investment climate. The second issue is incentives to encourage investment in clean and not in dirty energy sources, something a government can do. The third thing is about regulation. The fourth is to find new investors—it is not only banks. What about insurance companies? Pension funds were mentioned. What about private investors? I think it is time to look at new investment models and use those that fit the country best.
To find investors to invest in the grid is something other than finding investors in clean energy in a distributed scale in remote areas like what India has done in the Ladakh valley. It is because the policy went hand in hand with the local government and the people there.
You have to learn from each other. There is no energy island. Even a country like the US, even Russia. In this globalized world where you have knowledge going around, capital flowing, a country, state or city can’t be an energy island.
What is your sense of the credible measures being taken by the big energy-consuming nations that are at the Clean Energy Ministerial?
I think all countries present are aware of the policies needed to engage in clean energy and energy efficiency, and they are doing all these things by themselves. I think it is useful if you share these initiatives and see what you can do together. An example is the EU (European Union) where a lot of countries have taken measures, they started 20-20-20 and now they are looking at a joint plan for 2030. I think it is important to do these things at the regional level and as a group of countries. That would be very important.
Shale gas in the US has been looked at as a game changer in clean energy. There is huge demand from India and others for this clean energy source, but they have a stand of not exporting it to countries that they don’t have free trade agreements with. How do you reconcile this?
The shale gas revolution in the US led to a fuel switching from coal to gas; that’s fantastic. Coal is being exported to Europe and they are seeing a different switching, from gas to coal. We project the US to be a small but important exporter of gas. They could be one, but they have to decide on that. But that is only part of the picture. At this moment, we know there is gas available in many parts of the world and it is not like oil, which is available in fewer parts of the world. We find new sources of unconventional energy like gas in the Pacific; at the same time, there are new technologies that allow us to explore the wells better than we could 10 years ago. So this will bring a lot of new gas to the markets. So let us not talk only about the US and let us talk about the other suppliers that will be there. These I think are very interesting for a country as gas-thirsty as India.
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First Published: Sun, Apr 21 2013. 11 32 PM IST