[Scott] Coming up on "Energy Switch," we'll look at Indian energy and climate policies focusing first on electricity.

- Where India goes, goes climate, meaning that in the next decade to decades, they're going to require a whole lot of energy to basically move from a lower middle-income economy to a higher income economy.

- India's per capita is 1.89 tons per person.

- Tons of CO2.

- CO2, and the U.S. is around seven.

If India were to grow at the American rate, then it'll run through its oil and coal reserves very, very quickly.

So clearly there has to be other interventions made.

[Scott] Next on "Energy Switch," Energy and Climate Policies in India, Part 1.

[Narrator] Funding for "Energy Switch" was provided in part by, The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

India recently passed China to become the world's most populated country but uses just a quarter of China's energy.

India plans to develop much more energy to grow its manufacturing and other industries and lift its people out of poverty.

This includes expanding electricity generation using coal, just as China did.

This could make it very difficult for the world to meet its carbon reduction targets.

We'll talk about this and more with Padu Padmanaban.

He's a visiting researcher at the King Abdullah Center in Saudi Arabia, formerly an energy efficiency advisor to the World Bank and program director at USAID.

Tom Moerenhout is a senior associate at the International Institute for Sustainable Development and a professor at Columbia University's School of International and Public Affairs.

Next on "Energy Switch," we'll discuss electricity in India and its global significance.

Why should the U.S. viewers care about energy and development in India?

And Tom, I'll just start with you.

- Where India goes, goes climate.

It's one of the economies with the quickest energy demand growth rate in the world, meaning that in the next decade to decades, they're going to require a whole lot of energy to basically move from a lower middle-income economy to a higher income economy.

And the big vital question is, what is going to power that energy?

Is that going to be fossil fuels or renewables?

- Anything to add to that, Padu?

- India's time has come.

It's in the sweet spot.

- Yep.

- It's the fifth-largest economy in the world.

It's growing at six percent.

In terms of energy, it's the third-largest consumer of energy and the third-largest emitter of carbon dioxide.

So in many ways, India is very important for climate change and for climate solutions.

- Right, and interestingly, China, who has been the most populated country, is now second.

China has grown per capita, not to where the U.S. is, but certainly higher than India, and India needs to go there in order to grow its economy?

- Not necessarily.

India's per capita is 1.89 tons per person.

China is around 15.

[Scott] Tons of CO2.

- CO2, and the U.S. is around seven.

And if India were to grow at the Chinese rate or the American rate, then it'll run through its oil and coal reserves very, very quickly.

So it's not going to happen.

So clearly, there has to be other interventions made, and other interventions are renewable energy and energy efficiency.

- Just real broadly, what's the energy mix in India today?

- Coal is around 75%, and that includes a bit of gas also, but-- - Okay, natural gas and coal.

- But about 12% is what is generated by renewables, which is solar and wind.

- Okay.

- And about three percent is generated by nuclear.

[Scott] Okay.

- And hydro has another eight to 10%.

- In many ways, folks have framed the future of electricity in India as almost a competition between coal and solar, quite a bit of coal in the mix today.

Is that growing?

- Coal has had a small revival in, you know, the last couple of years, why?

Because the energy demand growth, electricity demand growth is so strong.

So when you talk about solar, last year was actually a record year.

They added about a third more capacity of solar.

That's crazy, those numbers are astronomical.

I think they were second to China in terms of the percentage increase, but even that only covered less than half of the demand growth that they actually had.

So the rest is mostly covered by coal, and that means existing power plants, you know, having them run more often, right?

So it's not that we're necessarily constructing a whole new fleet, but we definitely, you know- - Right, very interesting.

- But having said that, the number of coal plants being retired has accelerated.

- Absolutely.

- Largely because many of the coal-fired power plants are what are known as stranded assets.

And many of them are stranded assets because they're no longer profitable to run them.

It costs something like 12 cents a unit for a coal-fired power plant as again, just 2.5 or 3 cents a unit for a solar power plant.

- A unit being like a kilowatt hour or something?

- Kilowatt hour.

Yeah, like a kilowatt hour.

[Scott] Okay.

- So solar is about 1/4 to 1/5 the price of coal, but the question is the availability, as you rightly said.

Coal-fired power plants are base-loaded power plants, and you just cannot remove a coal-fired power plant from the system without the grid being impacted.

- Yeah, I wanna make sure to represent this fairly.

We're adding 10 times more solar and wind than coal, correct?

- Absolutely, yep.

- But when you get to the capacity factors and what we end up with there, you're still generating a little more from coal than solar and wind.

- Sure.

- They are, yep.

- But another angle to it which comes into the equation but doesn't show in the calculations as we would like to see it, and that is they want to reduce the energy intensity of the economy by 45%.

Then you're able to now see that they can meet the energy demands through solar as well as-- [Scott] Right, coal.

- So this is actually extremely important, right?

That 45% reduction of your emissions intensity of your economy is key, because if that doesn't work out, that doesn't work.

- That doesn't work out.

- Interesting, as we see energy demand projected to grow in India, what sectors is that happening?

- For energy, I mean, industry is a big one.

- Okay.

- And now, I mean, you were mentioning India is at the sweet spot.

I also think for domestic manufacturing, you know, where China was sort of the manufacturing hub of the world before, a lot of that is now also going to start in India, - Making the world's stuff.

- So the world's stuff, but also, you know, as the standard of living increases in India, you know, people use more appliances, so you have manufacturing there.

You have huge urbanization rates.

When you hear urbanization, you need to hear, I mean, everybody should hear cement, steel, right?

Demand for cement is gonna increase twofold in the next 10 years, steel demand threefold.

- Right.

- Forty-five percent of the energy consumed is in industrial sector.

There is some exports of steel and aluminum, but it isn't at the scale of China, nowhere close to the scale of China.

- Okay, gotcha, given this growth in population, manufacturing, industrial, internal, external, is there a net zero target in India?

When is that set for?

How do we meet that?

- So the second question is more difficult than the first one.

[Scott] [laughs] Let's go with the first one.

- India has a net zero target for 2070.

By 2030, India wants half of its electricity to be from non-fossil sources.

[Scott] Is that possible?

- It could be, but it is going to require a huge amount of investment, and it's going to require, of course, also, you know, shutting down certain coal facilities.

- Right, that's tough.

- Which is a whole political economy problem of its own, yeah.

- That's tough.

So let's get into electricity.

India is very populated.

How many people there still lack reliable electricity?

- It could be as much as 1/4 of the population, which could be almost 400 million people, or 1/5 of the population or 1/6 of the population.

But be that as it may, let us see what the Indian government has done to improve energy access.

And one can say with a certain amount of confidence that the cities and towns receive power.

Maybe the reliability of supply and the availability may be questionable in some areas, but by and large, they are connected to the grid.

Then there is the rural India, which has 600,000 villages.

If a village has all its governmental buildings provided with electricity and 10% of the household is provided with electricity, then the village is deemed as electrified.

All the villages have been connected to power, according to the government and their statistics.

But how many households have been covered?

That's questionable.

But my last point on this is there are 20,000 hamlets, if I might say so, which for love or for money, you can't provide them with electricity because they're too remote.

Now, all those 20,000, according to the government data, have now received power, but not from the grid, but decentralized energy systems.

- Can people afford to buy electricity?

- Many, yes, some no.

Access is one thing.

Indeed, affordability is another, and I think that's, you know, you have tariff systems for that, right?

And you could, right now I think tariff systems are skewed, often have regressive subsidies as well, where higher-income families still receive subsidies.

Eventually transferring that system to one where you do give very affordable electricity for, let's say, a first, certain consumption amount, 50 kilowatt hour or something like, that could make a lot of sense.

- Right, right, electric companies in India, how's their financial health?

How are they doing?

- The generating companies are doing well, reasonably.

They're turning a profit.

The transmission companies, other than a few exceptions, either the state or the central level, are also doing well.

The problem is with the distribution companies.

Many of them are running into huge losses.

Sometimes they don't do their forecasting planning well.

Then they make ad hoc decisions and end up buying power when it's very, very costly.

So that has been one major issue.

The other is transmission and distribution losses, which are very high in India.

We used to do a calculation based on the 35% loss.

- Wow!

- And 40% loss.

But now it's come down to 22%.

- Why was it so, were there people tapping into them or people- - That's exactly what it is.

- Yes, exactly.

[Scott] Okay.

- So you have technical losses, right?

That's often because distribution companies that don't have enough money can't invest in upgrading your infrastructure.

And then you have commercial losses, which is basically electricity that is either not built or it's built, but the bills are not collected, the payments are not collected, and these are quite high as well.

And that second part is for a large part because of political reasons, you know.

You allow people not to pay their bills or give them free electricity because they are an important group either voting for you or supporting your political endeavors.

India is not alone in this.

I don't wanna say-- [Scott] That never happens here.

[laughs] [Tom] That is a problem across the world.

- There was a time when the Indian electricity sector was seen as a political patronage machine.

Now it's far less because with the reforms in the sector, we have independent regulators in each of the states.

And that seems to have insulated it from political pressure, but not entirely, because at the time of elections, for instance, it's a fairly populous thing to offer free power.

- In some states, not all, but some of these so-called independent regulatory agencies are not particularly independent.

- Independent.

- They are very much under political pressure to keep the tariff low.

And then states throw in subsidies.

They don't always do this on time, which is a big problem for distribution companies for their financial viability.

And right now subsidies in total, it's 18 billion to distribution companies per year.

- It is $18 billion.

It's 25% of what India spends on health and almost 40% of what it spends on education.

[Scott] Wow, that's not trivial.

[Tom] No.

- The infrastructure itself, transmission infrastructure to go from the generation to the distribution, how's that?

Is that in pretty good shape?

- Well, it is in pretty good shape.

India was not a unified grid.

Now it is a unified grid.

- Okay, expanding it in the future, what are the projections for that?

- I don't know the amount of the investment needed, but that will be significant.

It's not different from anywhere else in the fact that if you want more renewables, you're going to need much stronger transmission.

- Right, yes.

- So that investment will be- - And you can't put those investments on the investor of the renewable project, so far, otherwise your tariffs will be very, very high.

And to a large extent, that's one of the reasons why solar power is 2.7 cents per unit is because the transmission infrastructure is built by the government.

Land is given at a subsidized rate, and a lot of other infrastructure facilities are provided and all that the developer has to do is provide the panels, do a bit of electronics, and it becomes a plug-and-play system.

- That also means that you see, what was it, 28% added capacity in 2022.

That's where that comes from, right?

So if you subsidize it, then at one point, you will get into trouble with both your market and to a certain extent with your grid capacity to integrate that.

And that should probably require more preparation.

- Right.

- I mean, when China did this big sort of growth spurt in renewables, you had a similar thing.

At one point, there was I think 20, 25% of capacity that was standing idle.

That was more because it wasn't getting connected.

But so a lot of people are asking also that question, you know, shouldn't you be thinking about that beforehand?

Sometimes when you install a lot of things and your problem gets bigger, that's when it rises up the ranks of priority items or-- - There are a lot of unintended consequences.

- There is, yes.

- There we go, yeah, yeah.

- Yeah, China is an interesting model for India to examine.

Their solar is incredible.

Their wind's incredible.

But China's still building more than one coal plant every week, too, though.

And that's why I think a lot of people worry about these stated goals and how they come in conflict with energy security.

So when pressed, would Mr. Modi choose electricity and energy security or climate security?

- Thus far, the government has been playing both sides of the equation, trying to have a policy on energy which is climate compatible.

Can't say politically what they would do if the push comes to shove and they're forced to take a decision, and then probably the politician will do whatever is necessary for his election in the next elections.

- Right.

- And I mean, that's a difficult part as well, right?

India imports a quarter of its coal, means it produces about 75% domestically.

That's a resource it has.

- Absolutely.

- It was it very similar for China.

- Absolutely, and here.

- And so it's difficult to say, "Hey, don't grow on the back of what you actually have at home."

I think beyond that, though, it's quite interesting because India also has goals for energy independence by 2045 focusing on renewables.

You go renewables because quite frankly, you know, it's also in your interest, right?

When you look at oil imports for India, costs a ton of money, like 120 billion in 2022 alone, right?

So if you can reduce that with electric mobility for example, you know, you're actually gaining energy security advantages as well.

- Which countries in the world are you dependent on to meet these solar and wind targets?

Where does all the stuff come from?

- A lot comes from China.

- A lot comes.

- It is for sure a security question, and that, of course, is the appeal of coal within India is look, we have it here domestically, right?

Now, when you look at renewable energy supply chains, let's not pretend that India is the only one who relies on China.

- No, pretty much everybody does.

[Tom] That's pretty much the whole world- [Scott] Yeah, China was brilliant that way.

- is relying on China.

- Just to add to this, India became an importer of coal only in 2005, and the reason is Indian coal is very, very difficult to burn.

It has a calorific value which is probably 50% of the calorific value of a U.S. coal.

Very few countries would be able to handle that kind of coal.

So now they use blended coal, imported coal, and thus it improves the availability of the power plant.

- Right.

- And another thing is that the government does not seem to have come out with a policy document or pronouncements saying in very clear terms that this is going to be a transition away from coal.

It has always been ambiguous.

- Right.

- One of the reasons could be that reducing coal mining has enormous socioeconomic issues.

When it comes to a coal mine, in India, the entire town, everyone is dependent on the coal mine.

[Scott] It goes away.

[Padu] So if that goes away, then everyone is affected.

- Absolutely.

- And that's where official statistics are often wrong.

Official statistics, they often talk about, you know, around half a million.

To begin with, it's more like two million when you look at informal workers as well.

- So they don't want to talk about a program which will transit away from coal and create all these political upheavals because they'll be answerable to the electorate at some time, so they want to be quiet about it.

And tomorrow a new coal mine may come up, in which case they'll try to take credit for it.

[laughs] So they want to leave that option.

[Scott] Well, politicians are politicians.

[Padu] Politicians are politicians.

- Can coal communities adapt?

How does that happen?

- The issue of just transition now is getting to be very important and is being taken up by the government very, very seriously, because coal mines are being shut down, and people are being unemployed, and one has to re-skill them, reeducate them, get them to work in other sectors of industry.

It's still work in progress, but it's a very, very important aspect of the planning.

- Could India's coal fleet, future coal fleet be used more efficiently?

- Many of the newer power plants in the last seven to eight years have been ultra-critical or supercritical power plants, which have a higher efficiency than the existing subcritical power plants.

So there's been a fair amount of development in that area.

- I think that's important, and you see, you know, getting to supercritical infrastructure, there's biomass coal firing, and then when you go down that list, you also obviously have CCUS, right?

- Sure.

- Like, these things help, but let's not pretend that they- - They're not the solution.

- That they're going to be the solution to global climate change- - They're not the solution.

- Or India's climate problem.

- Absolutely, yeah.

[Tom] Clean coal is, how do you call it, like when you have an internal contradiction between two words?

- Oxymoron.

[laughs] - There we go.

- It seems like there's a uranium elephant in the room here to me.

- Let's talk about it.

- What's the future for nuclear generation in India?

- First of all, there are, I think, about six reactors under construction.

- Six.

- So it is happening.

- That's a start.

- For me, there's like a theoretical side and a practical side.

Theoretical side is nuclear is low carbon, right?

It gives you a very nice base load.

The practical side is, it depends whether you can do it at a cost that is reasonable.

When you look at China, that is what they have been able to do.

They indigenize nuclear energy technology, and then they've been able to, you know, more or less copy/paste it, you know, in an economically sound way.

The type of power plants or nuclear power plants that we wanna go for, the big ones, in the United States and in Europe have always run over cost and over time.

There are plants in Europe which have been under construction for close to two decades, you know, next-generation power plants.

And when you look at their levelized cost of electricity- - Cost at the plant gate, not to the consumer, but at the plant gate.

- Taking into account everything, construction, capacity factor, subsidies, you know, across the lifetime, if we all put that into one metric, nuclear energy in the West, of new nuclear power plants, right, not existing ones, but new ones, super high, which doesn't mean that it couldn't be used in India.

But let's not put that nuclear elephant there as like, you know, this is the panacea, this is the solution to everything.

- But the reality is that in terms of nuclear, India has just got 6,800 megawatts.

- Yeah, very small.

- And when you have a nuclear power plant, it runs at a high load factor, no doubt.

But to get to that point requires enormous amount of effort which I don't think the Indian biosector is ready to embrace.

The NGO community in India is very, very strong.

- It is.

- It is very, very vocal, very, very vocal.

- Oh, interesting.

- They're not going to allow a nuclear power plant in one's backyard that easily.

It is even worse-- - And why is that?

- The entire issue of waste disposal and safety and all of that.

Another reason on nuclear is that information and data on nuclear is not readily available as it is available for other sources of energy, although it's far better than what it used to be.

Nonetheless, there isn't sufficient discussion and debate in the country on nuclear and the role that nuclear could play.

- You've done a nice job of talking about India policy.

Roll in your own thinking a little bit here.

If you had to bet your own money on where India would be in 2030 and 2050 with a coal, solar, let's say, nuclear mix, give me just a summary thought on that.

- I believe it's possible for them to reach their targets around the time that they've announced them.

It's going to require a whole lot more funding than is being put in right now.

So I look at your question through that lens, and the reality is that if we wanna reach those 2030, 2040, 2050 goals, that we have about 160 to 200 billion per year financing gap, and so is it possible technically?

Yes, is it possible because of the available skills and willingness and realization of the fact that climate change is a problem?

100%.

Do you have the money to do it in that timeframe?

That's where-- - Right, gotcha.

Same question, Padu.

- Financing, I think, is critical.

And just to add to the numbers, estimates are that 1.5 to 2% of the GDP of the country would have to be spent as an additionality to what is already being spent in the electricity sector.

That translates itself into a requirement of about 120 to $150 billion every year until 2040 when essentially much of the investments would've happened.

And cumulatively, it'll come to something like four trillion dollars is what India would require.

- Appreciate the summaries.

Been a great initial session here.

- Thank you.

[Scott] India is already the third-largest energy consumer and carbon emitter in the world but has the fastest-growing energy demand.

Coal currently makes about 75% of their electricity with the other 25% mostly solar, hydro, and other non-carbon sources.

The coal industry employs nearly two million Indians, making coal politically and economically important.

Yet, some older coal plants are retiring since they can't compete with new highly subsidized solar.

India values solar as a domestic resource that requires no imported fuel, reduces local air pollution, and helps meet climate targets.

But it would take four trillion dollars of additional investment from now to 2040 to dramatically increase energy efficiency, expand the grid, and improve electricity distribution, and build out solar and other non-carbon resources to transform the electricity system in India.

And it would likely make electricity more expensive.

Whatever India's choices, their future energy mix will impact the world's climate.

♪ ♪ ♪ ♪ ♪ ♪ [Narrator] Funding for "Energy Switch" was provided in part by The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.