Integrated Energy Policy - almost there...

India has been working (for a while now) on an Integrated Energy Policy a draft of which was recently released by the Planning Commission. The draft gives an indication of the direction the policy is likely to take and the areas of concentration.

Firstly it has suggested an overhaul of the current fuel pricing mechanism. More than 50% of the retail selling price of petrol is made up of taxes in India, and taxes mandate that petrol is significantly more expensive than diesel in the country. The policy however aims at interlinking the prices of all fuels in the country.

It points out that the high cost of fuel affects competitiveness of industry, agriculture and commerce, thus negatively affecting the economy. Which is rather true. The high prices would have been justified when we were a more closed economy highly concerned with outflow of foreign exchange. Now if the price of petrol is lowered, we will see an increase in sales. But this increase will have a cascading effect on other areas of the economy. Sales of automobiles will go up. More people will travel more often, leading to an increase in business for the services sectors. The cost of a whole range of commodities for local consumption and export will fall, thus further fueling the growth of the GDP. And yes, we will be that wee bit more competitive with respect to China where petrol costs the equivalent of Rs 18 per litre.

The role of the government as both regulator and principal owner of almost 75 per cent of all fuel resources, came in for mention. Considering the current fuel pricing crisis, this it is especially relevant that the separation of both roles was suggested. "It also says that each regulatory body should be charged with the responsibility of creating enabling environment to foster competitive and transparent markets for energy supplies/services."

The policy could look at some rather "out-of-the-box" thinking. Companies like NTPC could be asked to increase their fuel efficiency (through acquired technology) by 30%. They could also used cleaner ways to use the coal reserves like, recovering coal bed methane, in-situ coal gasification, carbon-capture and sequestration; and integrated gasification combined cycle (IGCC).

And now for the best part - the policy stresses on the importance of reinforcing the National Solar Mission, "to promote innovation and acquisition of state-of-the-art technologies aimed at reducing cost of solar photo-voltaic technologies, exploring the use of solar thermal technologies for power generation and enhancing applications aimed at effective recovery of heat energy from available solar insulation."

The automobile industry will be asked, "to seek technology for super batteries and engage in research to develop such batteries in a time-bound manner." Does this indicate a move towards electric and/or hybrid vehicles?