[Scott] Coming up on "Energy Switch," we'll continue our look at Indian energy and climate policies and their global impacts.

- India needs to work on both sides of the energy equation.

More energy has been saved through energy efficiency in India than has been generated through renewables or coal or oil.

- Climate reality in India is already real, so don't question that this is not on the top of their priority list, but rather than seeing that as a challenge, I think it's also really important to see the opportunity.

[Scott] Next on "Energy Switch," Energy and Climate in India, part two.

[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."

In part one of our look at India, we talked mostly about electricity with coal, the legacy choice still providing three quarters of India's electricity, versus solar, popular as a domestic resource that reduces local air pollution and atmospheric emissions.

In this episode, we'll look at electric vehicles and batteries in India, the growth of air conditioning, decarbonization targets, green building, and the importance of efficiency.

My guests, again, are Tom Moerenhout.

He's a senior associate at the International Institute for Sustainable Development, and a Professor at Columbia University School of International and Public Affairs.

Padu Padmanabhan is 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.

Next on "Energy Switch," we wrap up this eye-opening session on India's climate and energy policies.

Welcome back.

You know, let's keep going on this vital conversation.

Transportation.

How many cars does India have now?

What does that fleet look like and what's the projection for the future?

- It has about 350 million vehicles.

[Scott] Three-hundred-fifty million?

- Yeah.

- It's going to add around 250 to 300 million in the next two decades.

- But that includes two wheelers.

- Two wheelers, and three wheelers.

- Three wheelers as well.

- So that's only, that's still only one vehicle for two people.

- I think that's pretty good.

- We have two vehicles for one person here-- [Tom] And that's the problem.

- And the penetration rate of electric vehicles is just one percent.

- For four wheelers.

For wheelers and three wheelers, it's higher.

- It's a little higher.

- Yeah.

And for four wheelers, it's going to go to three percent by 2026.

[Scott] Yeah.

- Now you might say one to three percent, this is nothing.

[Scott] That's a big deal.

- But- Yeah, you know- - It's a big deal.

- Tripping in three, four years is actually quite significant.

And for two wheelers and three wheelers, that's going from where we are now, which is around five percent to 40%.

[Scott] Right.

- In the next five years.

- Even with this amount of cars, the traffic is horrendous.

[Scott] Yes, I've been there!

- In the city there's very little parking space.

- So what are they gonna be?

We've talked a little bit about gasoline, electric.

- For the type of transport we're talking about two wheelers, three wheelers, cars.

[Scott] Yeah.

- That is going to be electric.

- Electric vehicle.

- So we are still going to add, you know, internal combustion engines as well for sure.

Those will be more and more replaced by electric vehicles.

Like, bus is easy thing to do and already happening, like 16% is happening.

But now, heavy trucking, you know, there's a few companies in India who focus on that.

They can't keep up with demand.

- As you get bigger and bigger vehicles, you're hauling more battery weight.

- Then you need, you know, bigger batteries, more expensive batteries and so forth.

So it definitely adds a cost, but the demand uptake.

- Interesting.

[Tom] Is there more and more.

- In fact, fleet electrification is now taking priority over personal transport electrification.

[Scott] Yeah.

- Personal transport electrification has a problem because the costs are very high.

- Oh, yeah.

- And it's two to three times the cost of a normal IC car.

And customers are very price-conscious.

India is a very price-conscious society.

So they'll have to think of very creative ways-- - Battery swapping.

- And one way of doing it is battery swapping.

Now in the battery swapping, a person buys a electric vehicle without a battery.

[Scott] Right.

- And then he has an arrangement with the battery operator, either rental or lease arrangement.

It's just like adding fuel into your gas tank.

And then he changes the battery again at another point.

- Yeah.

- And a lot of these battery operators are- - This works great for two wheelers and three wheelers.

[Padu] This is a particularly good- - I can't see that happening with four wheeler cars.

- It'll start with two- - Right now that's a luxury product.

And then they're gonna democratize more as costs fall, right?

- Right.

- Is India gonna build a battery manufacturing market of it its own?

And what does that depend on in terms of supply chains?

- Currently, India imports 80% of its lithium.

But there was a development a couple of months back when a major find of lithium in the state of Jammu and Kashmir was announced.

- Okay.

- And the geological survey of India said there is something like 4.9 million tons of lithium ore available, which is a matter of speculation whether that inferred reserve will be a proven reserve and will be exploited.

- Okay.

- But if indeed that were to happen, then India would be fairly comfortable as far as lithium is concerned.

- Given the EV demand, what would prevent developing it?

- Nothing.

And that's exactly what they're working towards.

- Okay.

- However, India has a 30% electrification of vehicles target by 2030.

You're gonna need to meet that by importing.

- Okay.

- There's a very small chance that you're actually producing domestic lithium.

That doesn't mean-- [Scott] Interesting.

- That you shouldn't do it.

And actually the government is clearly working on that.

They just made a change before lithium was recognized as an atomic mineral, which means that private companies were not allowed to be involved in the process.

The government just changed that, so they can basically allocate concessions and invite private players to help develop that lithium.

So that is good, but that is also, you know, that takes some time, right?

And before that, again, for climate change, we need to have these type of, you know, adoption targets- [Scott] Today.

[Tom] Today.

[Scott] Right.

- That will include engaging with international supply chains.

- Is India going to be building batteries, developing a battery industry?

- So it's definitely their goal.

Can you produce cells in India?

Probably.

But you will be importing components.

And any country that says we want a full supply chain is being completely unrealistic in my opinion.

And that includes China, for example.

[Scott] Yeah.

Yeah, they've locked up the processing of these things.

But they don't mine most of it.

- Why did China become the mineral processing hub of the world?

Skilled labor, low cost of capital.

- Yep.

- Low labor costs, right?

And experience in the chemical industry.

Does it ring a bell?

- India has all of that.

- Has all of it.

[Tom] India has all of that.

They can become a processing powerhouse.

- That'd be kind of fun to see, competition's good, drives the price down.

- It would be.

That's true, that's true.

Competing with China, I think it's going to take some time before-- - You can do it.

- Any country in the world can do that, but India has created institutions to do exactly that.

- So in terms of oil demand and importing oil, that balance starts to look like what if we go forward?

- If they reach their 30% target, this will, this will definitely eat out part of the oil demand.

- It'll like- - So right now, I mean India, you know, imports the vast majority of its petroleum products, right?

Both oil and gas.

At a huge cost, 120 billion a year.

- It's almost $200 billion now in terms of oil imports.

- Chipping away from that is gonna be good from that perspective- - It's going to be good.

Almost 40% of the oil is used for transportation, so- [Scott] Right.

- It's a fairly large chunk.

- Fuels for heavy transport.

We've talked about fleets and things, but over the road, trucking, shipping, aviation, what does that fuel sector look like?

Next five, 10, 15 years?

- Fossil fuels, if that's your timeframe.

No, five years, I mean, we have to be realistic, these are things that are extremely difficult to decarbonize.

I think green hydrogen, which is something that India is absolutely jumping on.

[Scott] Right.

- And similarly, you know, ammonia, I think, are going to play a hugely important role in the energy system.

- Right.

- I'm not sure it's going to be in transport of cars.

Can you say, well, what if you go to the level of trucks and so forth?

At that point-- [Scott] Yeah.

- You know, I don't wanna simplify things, but the bigger the better.

- Right.

[Padu] But, I'd just like to add that there is a sector which has completely moved away from coal 100%.

And that's the third largest railway network in the world.

They don't use coal at all.

And, for a long time until 1980, coal was the mainstay for the railways until they started the dieselization program and electrification program, and all major trunk routes are now dieselized or electrified.

- Trains are running on diesel.

- Diesel.

- But they're hauling coal.

- While they're hauling coal, yes, yes.

Little better than trucks hauling coal because that also happens.

- That's true.

[Padu] So we have- - On diesel.

[Padu] Yeah, on diesel.

- Well, let's it's come into, you know, some of the things on the demand side of the equation.

Padu, I know you've looked at energy efficiency and conservation, other things.

Where is it today in India?

And then how do you see it going in the future?

- In the context of climate change and decarbonization and the coal transition, efficiency fits very well with all the objectives in a way that even renewables does not.

And unless you have a foundation of efficiency, you'll not be able to have renewables delivering at the price that we would like them to deliver.

[Scott] Right.

- So look at efficiency as a bridge.

Assuming you have a solar home system, and you're using the power to run electric lamps and your electric lamps all incandescent, if you were to have LEDs, for instance, then the size of your solar panels will shrink and reduce, and you have to invest less.

So it's not so much the supply side efficiency, but more importantly is the end user efficiency.

- Got you.

Sure, what are some of the incentives or disincentives for efficiency that exist?

- One of the incentives, at least for Indian industry, is the high tariff that they have to pay.

Indian industry pays much higher tariff than any other sector.

So essentially they have to be efficient.

Another incentive is some of the government programs, which I think have now moved at scale.

[Tom] Yeah.

- Big opportunity, which is being discussed is ceiling fans.

Not many people know that Indian homes have more ceiling fans than they have mattresses.

And it's affordable.

- And very few have air conditioning.

- Very few have air conditioners.

Eight percent only have air conditioners.

[Scott] So a lot of fans.

- So efficiently ceiling fans is now getting to be aggregating the market, bringing down the cost.

Improving the quality.

[Scott] Nice.

- But India air conditioning market is the fastest growing market in the world.

It's growing at about 15% every year.

The thing about air conditioning is that it'll take a while before India reaches anywhere close to the United States, and probably that may never happen.

[Scott] Okay.

- But the important point here is the load the air conditioners would have on the electrical system.

- Yeah.

- The electrical load demand, the peak load demand by 2030 would be 140 gigawatts if air conditioners were to multiply the rate at which they're multiplying now.

- That's an insane amount.

[Scott] Yeah, yeah.

- Now assuming you go in for a rather dramatic scaled up efficiency program, you can reduce peak load demand by about 30 to 40 gigawatts.

- Twenty-25%?

- Is 20, 25%.

[Scott] Yeah, yeah.

- Can I ask him a question?

- Yeah, absolutely.

[Tom] All right.

- Of course, you guys chat away.

- So one thing that was mentioned as well, which I found very cool, is this program where the government says they're going to try to incentivize having a lifestyle, which is more moderate.

But I'm curious, does that live among the population?

The idea we need to be more moderate.

- Internally in India it has got a lot of support.

The idea here is having your same standard of living, but being with less.

The question is, can India have something like the world average and have a standard of living much higher than the rest of the developing world?

- It kind of brings us, in many ways, this whole dialogue into looking forward a bit at climate.

How concerned is India about this, about warming?

- If the question is, is the Indian government serious about climate change?

I think the answer is quite frankly, 100%.

[Scott] Yeah.

- Because climate change is already happening in India.

I'm not saying global warming, specifically, I'm saying climate change because we are talking about floods, we're talking about heavy rainfalls, extreme weather events, droughts, the heat wave that we saw last year, which, you know, cost many lives.

Like, all of that is already happening.

It's now estimated about 75% of people in India live in areas that can be seriously affecting their wellbeing either through a direct climate effect.

[Scott] Right.

[Tom] Or through the economic sector that they're working in, for example, agriculture, right?

- Right.

- And in addition, it is impacting government significantly because it's costing a lot of money.

Zero point five percent of GDP just on floodings.

You know what that is?

It's huge.

- Yeah, that's a big number.

So we talked about AC earlier, air conditioning, but let's put it in this context.

I mean, talk about that.

- I mean that, that's the difficult balance.

Yes, they will be installing more air conditioning and to a certain extent, that's a very good thing.

[Scott] Yeah.

- 'Cause you're gonna have less loss of life.

- Right.

- As simple as that.

- Right.

- But that is, you know, how to power that is a very big question.

And that brings you into a complete energy system analysis that you need to do.

[Scott] Right.

And efficiency helps in that way too.

You can use less to do more.

- Absolutely.

You can use less.

To survive, we don't need an AC in four rooms, right?

Like...

But this is what it comes down to, you know?

- A number of startups are beginning to work on efficient air conditioning systems.

In fact, there are about 80 startups in India who are working on this.

And there's a fair amount of accent given on architectural practices, natural cooling, natural ventilation.

[Scott] Right.

I mean, we tend to use colors for lots of things.

We're describing things, and buildings is one, green buildings.

I mean, what is that?

What's a green building compared to an old building and how is that part of this efficiency dialogue?

- Green building is a building which saves on natural resources, water and energy.

It involves renewables, it involves energy efficient equipment, it involves efficient operations.

[Scott] Okay.

- And materials which are less energy intensive, which are less embodied energy.

Some total of several measures seen from a holistic sense and begins right from the point of design.

[Scott] Right.

- India is the second largest after the United States on green buildings, and is slated to overtake the U.S. in terms of green buildings by 2030.

Almost 70% of the buildings in the year 2035 are yet to be built.

Seventy percent of the buildings are yet to be built.

- That's a great opportunity.

- That's a great opportunity right there.

- It sounds like efficiency is cultural in India to me.

I mean, it sounds like it's part of the government's understanding and strategy.

- Absolutely.

You know, the efficiency movement began way before many of the developing countries had used efficiency.

[Scott] Right.

- And at that time, homes were not considered to be targets of opportunity and people did not look at it, they looked at industry.

[Scott] Right.

- Utilities came in later, and they're now got into the act of demand response programs and so on.

The agricultural sector is also another sector with a huge efficiency opportunities because the agricultural sector accounts for almost 25 to 30% of electrical demand.

- It's holistic.

It's just everything, kind of- [Padu] Everything kind of comes together.

- And great opportunities, I think, in this area for India to lead in many ways, export market perhaps, and help.

- You know, we hope that they are going to deliver a blueprint for other lower income economies-- [Scott] Yeah.

- To, you know, move to middle income and higher income.

[Scott] You bet, you bet.

- And efficiency there is always underestimated.

- Today, energy efficiency doesn't get the attention it deserves.

For efficiency to move center stage and to really now start taking a position, it has to be considered as an energy resource no different than oil and coal.

- Yeah.

So what are some specific CO2 emissions targets?

- Prime Minister Modi came out with what India would do in order to address climate change.

And one was to raise the level of renewable energy capacity to 500 gigawatts.

Number two is to reduce energy intensity by 45%.

The third is to reduce carbon emission by one billion tons between 2021 to 2030.

And the fourth is to have a penetration rate of 30% of electric vehicles.

And the fifth commitment was that India will be net zero by 2070.

- I mean serious about climate, serious about decarbonization, it's phenomenal.

We've talked about the rapid energy demand growth and it is coming, there's no doubt about it.

How do you rectify that?

I mean, it's always painted as this tension, this either or kind of thing.

Climate or economic growth, you know, can it be both?

- You can have both, you can have both.

- I think you can have both, but you can only have both when India is a real supply chain participant there, when they manufacture part of that at home.

When this is delivering economic opportunity for them as well, then can we have both of that next year?

No.

So you need to be realistic about the timeframe.

[Scott] Okay.

- But the big picture I think is important because what India does in the next eight to 10 years by 2030, maybe a few years beyond that, is extremely important to set the trajectory.

And what can be done in the short to medium terms to get the trajectory right, has to be technologies which are already scalable.

[Scott] Sure.

- Renewables up to a point, but efficiency right through because Indian industry is energy intensive in some sense and can move over to less energy intensive sectors.

- Yeah, got you.

- Two major sectors, one is steel, and one is cement.

[Scott] Yeah.

- Both are hard to abate sectors.

And in both those sectors, India's got pilot projects underway in the hope that those technologies can then be made available worldwide.

So there's a variety of forces at play here.

[Scott] Right.

- But what can be done in the next 10 to 15 years and what can be done at speed and scale to get you the kind of reduction in carbon.

- Yeah.

[Padu] You know, is what they have to look for.

- Tom, you were kind of bringing this in to how developed countries, let's say wealthier countries, could support this effort in India so critical to the world energy and climate.

How does that look to you?

- I think we need to recognize much more that India is a priority, if not the biggest priority in the fight against climate change.

We had the green climate fund.

[Scott] Came out of Paris.

- Came out of Paris.

[Scott] Yeah.

- We've not lived up to both the potential and what we committed to, so that needs to be reassessed.

Secondarily, I think investors here should also be made much more aware of the potential in India, you know?

The investment potential is just gigantic.

[Scott] Yeah.

- Second biggest startup ecosystem in the world.

Economic growth already happening, skilled labor, low labor costs, you know, this is huge potential.

And I think that that's also something tangible that you can add.

- Yeah.

So look, it is been terrific, the dialogue, your knowledge.

Kind of at a, in the last thoughts or final thoughts sense, what should someone take home who's listening to all of this?

- India has had a historical relationship with the U.S. in the energy sector.

One is certainly in green buildings, another is in the area of power distribution.

Distribution reforms in India came about largely due to the intervention of USAID with the government of India sometime in the late 1990s.

- Interesting.

- They wanted to have a system where they'll have low losses and so on and so forth, but what is interesting about it is the projects were small, but it helped leverage money several times greater than what was invested.

Because the government of India then put in about eight to $10 billion worth of investments on the model of the small pilots that had been developed.

So basically the point I'm trying to make is that partnerships in India, collaboration with India is not at all capital intensive, it is knowledge intensive.

- Yeah, interesting.

Let's pretend like I'm Prime Minister Modi.

What would you say to me for action?

- I'll say, Mr. Modi, India needs to work on both sides of the energy equation.

You have worked very hard on the supply side of the equation.

- Thank you.

- But you now need to move on the demand side for which you need to reposition energy efficiency so that it can get the kind of attention it deserves.

More energy has been saved through energy efficiency in India then has been generated through renewables or coal or oil.

- Ding, now I gotta get out the elevator and shake some hands of school kids.

[laughing] Tom, over to you.

What would you say?

- Maybe I can address the U.S. audience, right?

Climate reality in India is already real, so don't question that this is not on the top of their priority list.

- Okay.

- Right?

- That's one.

Secondarily, that doesn't mean that there's no trade offs, they're going to do growth sprint, this is a legitimate growth sprint.

You don't just need to accept that, you need to respect it.

But rather than seeing that as a challenge, I think it's also really important to see the opportunity.

Number one, absolutely economic opportunity, right?

A lot of money is to be made in India, a lot of money is to be made together, you know, in joint ventures or whatever partnerships that you have between your companies and Indian companies, that's number one.

Secondarily, I think there's a huge political opportunity.

Where India is now, you can almost compare it to China 30 years ago in terms of what they're about to do, right?

You allow things to go to happen with China in one way and now you have a huge geopolitical foe right there.

And this is not good for the U.S., this is not good for China, it's not good for the world.

Here you have a country that is about to take up a position of global leadership within the next few decades.

You can do things differently.

[Scott] Yeah.

- Right?

And that can be leveraged on energy and climate.

And then the third one I think is a cultural opportunity, and that's to what Padu was saying.

If they can export part of that cultural element of more moderation and consumption patterns and so forth, I think we can learn a lot from that.

- That's fantastic.

Well look... Gosh, I've enjoyed the dialogue.

- We have enjoyed being here too.

- So much.

- Scott, we've been enjoyed being here too.

- I've learned more than I thought I would and I was expecting a lot.

- So Tom, thank you.

- Thanks for having me.

[Scott]India's standard of living is rapidly rising, as is vehicle ownership.

Many are two- and three-wheelers with a goal that 30% will be electric by 2030.

To power them, India hopes to become a battery manufacturer and to process critical minerals.

And hopes hydrogen could one day power its heavy transport.

Both could help reduce oil demand.

India imports nearly all of its oil and natural gas.

Heatwaves still kill thousands, so India is the fastest growing air conditioning market.

Even basic AC can increase survival.

But if powered by coal electricity, it could also increase warming.

India's sweeping decarbonization targets include green buildings.

They'll soon be the global leader.

Reducing energy intensity and increasing efficiency are government goals and culturally popular.

India will need to balance energy and economic development with climate.

It will take time.

This creates opportunities for investment in and political alliance with the world's largest democracy.

♪ ♪ ♪ ♪ ♪ ♪ [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.