DNA : Pricing?
Jain: Exactly! Pricing. Policy. Policy and its implementation. A very simple example, a recent example, is when IOC, BPCL and HPCL said that supply of LPG [cooking gas or liquefied petroleum gas] are linked to the Aadhar card to reduce the subsidy bill. Overnight, the bill for gas has come down. I mean, the full programme hasn't even begun, and the consumption has come down.
And even at this stage when the policy stated that people will have to pay Rs.950 per cylinder and that subsidy will be reimbursed to customers only if they are linked to the Aadhaar Card and that only nine cylinders per year would be available for reimbursement of subsidy, people have begun saying that “I will have to pay Rs.950, so why not save money? I’m anyway getting that subsidy.”
Radhakrishnan: The effect was that LPG consumption came down by little over 10%.
Jain: There you are. I was just trying to bring out where those opportunities lie. The opportunity is right in front of you. And whom you want to really subsidise? Most diesel cars are Mercedes or big cars. Many new cars are coming out with diesel versions. Why?
Parasnis: Yeah. I think when it comes to opportunities we have to focus on specific sectors. So if you take the buildings and construction then you must understand that they contribute to 40% of the CO2 emissions. So if we go for green buildings, you could conserve around 20-30% of those emissions and other impacts and the life cycle costs.
So if you want to go into urban areas or rural areas and want to say “we want to have good houses”, why not have green houses over there. They were there earlier, maybe with different material that was used then. Or the construction type was different then.
Parasnis: All the houses in the past were green. Why not now? We need to have some modification over past designs and material. If you talk about transport…
Jain: Let’s pick up the low hanging fruits. I’m still saying, do what you have to do, but what you can do very easily do that first. And why can’t you do it I just don’t understand that. It is just the implementation of policies that are lying in front of you.
Jain: Identify the target. Any society, any government, any public, will have some sections which need support on government. That’s absolutely undeniable. Even in U.S. it is there.
So most developed countries also have a system wherein they will provide a social support to the weaker sections. That is required. Nobody denies that. What we need is implementation of the policy that is already before the government. I am not talking about innovations like green houses or high efficiency cars, better super thermal power plants, pit-head plants, better transportation, better organization, less congestion, distribution. All this can be done. But look at the policy underlying everything. Many people realise the costs only when they are paying. Nothing comes cheap.
Parasnis: I feel that the buying in of the stakeholder is very important. A poor house or a lower income group house, which needs the support of government at some point, you can fix that will give you a subsidy on hundreds units of electricity consumption…
DNA: That is a policy which already exists.
Jain: Which already exists on an average, right? Market unit rate is Rs.5. To you it will be e.1/-. Rs4 into 100 units is Rs.400. The subsidy will come to your account. Now you can use as much of electricity as you want. Your subsidy amount remains Rs.400. This way, there can be no diversion, no misdeclaration. The target group is identified, the market price remains uniform.
DNA : So there is no dual price in the market, hence no theft.
Jain: This is just one such opportunity. Low lying fruit. It has been done worldwide. So I personally feel that in the Indian context the lowest hanging fruits are the easiest thing to be done. Just put in the policy framework in such way that we are correctly able to meet the energy requirements of the country. This also helps the economy, because otherwise our oil import will go through the roof and we may be repeating 1991.
DNA: So your first thing is policy in terms of pricing and what you’re recommending is uniform pricing the market place target the subsidies; the way Brazil did with the CCT [conditional cash transfers].
Radhakrishnan: Just price alone does not address an issue of this type. Second, now all of us are discussing a great deal about environment, green house gases, emission and the rest.
So you may have money to buy as much of fuel as you want – just like what has happened in the U.S. people are consuming gallons and gallons of petrol, but then they are equally concerned about the damage that they are causing to the environment.
So yes, pricing is one aspect. Yes, definitely it will bring in more responsibility as far as the public is concerned.
But again, implementation issues will always be around. It depends on the given size of the population and with the willingness or unwillingness on part of the stakeholders to bring that kind of discipline and transparency.
Look at the way there are people who are talking in favor of such methods and others who are against it.
DNA: But we have a choice, if you want to prevent leakages a centralized system is better?
In fact, I wonder why policies do not encourage use of solar – India is blessed with abundant sunshine – and gas – India has the largest cattle population in the world. That could allow villages to use solar by day and gas by night. It would reduce transmission costs, and even imported fuel bills. And it is sustainable.
Parasnis: Yeah. TERI has done considerable work in these areas. We also believe very strongly that there has to be a multipronged approach, using different energy sources. There could be a combination of solar, there could combination of bio methane and there could be also a combination of bio-fuel as such or rather biomass based technologies.
We have very successfully established a biomass-based technology. It’s called gasifier technology.
And we have given it for both power generation as well as for thermal application.
Parasnis: We also have a flagship project called Lighting a Billion Lives and under that we have ben electrifying more than 16,000 villages, each comprising around 100 households.
None of these have any access to the grid.
DNA: Oh! Wonderful.
Parasnis: You will be surprised to hear that MSEDCL [Maharashtra State Electricity Distribution Company Ltd] gave us a list of 78 villages in Thane district near Mumbai. None of them had been electrified by MSEDCL as they are in remote areas, Aadivasi areas. So we actually went and electrified those villages. But I feel that biomass based technologies would play a greater role. Solar is not that successful because during the rainy season we have less efficiency from solar panels. As far as solar is concerned the lantern thing has worked out extremely well.
And we have come up with a very sustainable model, because what we realized is if we just give them a lantern and some spare parts, they may not be able to use the technology. So what we do is that we go into a village, which is not electrified at all. We identify the entrepreneurs from the same village, we set up a charging station in their own household.
Parasnis: And what people do is they get their lanterns and the entrepreneur charges them one or two rupees per lantern. They hand over their lanterns to the entrepreneur in the morning for charging, and collect them as charged lanterns on their way back to their houses in the evening.
They are very happy with these lanterns.
Parasnis: Once we made a surprise visit to a village and we found out that six people didn’t have the lanterns with them, although they had taken them. So we asked them “where are the lanterns”. They kept quiet. Then admitted that they had sublet them for a marriage function. They were earning a rental on those lanterns.
Radhakrishnan: Very often we tend to look at things with a very narrow perspective. Now, let us take the case of LPG as a cooking fuel. Compare it with other conventional fuels like firewood.
That is what most villagers use. Or they use cow dung or any other alternate sources. Now the planning commission document while talking about the need to improve the penetration of LPG as a cooking fuel in rural households is very interesting. The document talks about addressing a whole lot of societal issues by mainly replacing conventional fuel with LPG.
But there are problems. How would the rural household bear the cost of a cylinder and the basic installation which would involve a one-time cost of around Rs.2,000? The basic installation will be a one-time cost of something like 2,000 odd rupees, plus each time they buy a cylinder. Today it is subsidized, so it’s about Rs.500 else it could be Rs.800-900. So then we came up with this concept of what we call community cooking or community kitchen. And you pay by the hour a bare minimum. That worked out, you know, comparatively cheaper than compared to any other method.
DNA: As closing remarks could I have a few thoughts on what policy initiaves would be required to make energy conservation more meaningful?
Parasnis: Integration of renewable energy.
Radhakrishnan: Actually talking about this policy, one thing which comes to my mind is that Indian markets and Indian consumers are very, very price sensitive.
Now there are many manufacturers who take advantage of this price sensitivity by offering products which is not energy efficient, but are available at a very low price. I think one policy that the government could be to discourage or put a disincentive for manufacturers who offer these low cost energy inefficient gadgets or items.
We have seen in our experience, you know, out in the villages where people are drawing water from the deep wells, you know, for agriculture. The foot valves, you know, 90% of the foot valves which they use are non-ISI, non-standard, items of local make. And when we replace them with, you know, ISI branded foot valves, straight away the difference in energy consumption is to the extent of 25%.
Jain: There are a thousand things that you can do. But the first thing is framework has to be right.
Jain: The point is, are you creating a right framework for a society where whatever you are using comes for free. Sunlight as free, wind as free, water as free, everything you are treating as free.
But these are common property. Does one person have the right to plunder it at the cost of somebody else. So you have to create a right framework.
You are not developing that water transport, which in this country, the rivers, the canals, can be excellent movers.
Parasnis: You can even improve the quality of roads.
Radhakrishnan: Road improvement. Yeah. This is again surprising.
See what HPCL is doing. We have plans of putting up something like 60 megawatt equivalent of wind mills of which the first phase of 20 megawatt is already been done.