UP FROM DEVELOPMENT A Framework for Energy Transition in India - Working Paper No. 8 - Rosa Luxemburg Stiftung
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Working Paper No. 8 UP FROM DEVELOPMENT A Framework for Energy Transition in India
Table of Contents
Up From Development
A Framework for Energy Transition in India...............................................................................1
By Rohan Dominic Mathews with Susana Barria and Ashim Roy
Climate Change and Development in the South......................................................................2
Projecting Transition....................................................................................................................3
Energy Policy in India...................................................................................................................5
Energy generation and coal dependence...................................................................6
Shifting patterns of coal production...........................................................................7
Confused renewable energy policy...........................................................................7
Missing the opportunity on the manufacturing front................................................9
Missed employment creation, repeated employment destruction.......................11
Industrial Policy for Energy Transition....................................................................................12
The components of industrial policy........................................................................13
Industrial policy for the energy sector......................................................................14
Democratic Framework for Just Transition..............................................................................15
Redeployment and retraining of the coal sector workforce..................................16
Financing for the transition........................................................................................17
Public-sector-led and municipalities-controlled renewable energy development....18
Conclusion..................................................................................................................................18
References..................................................................................................................................20
Published by Trade Unions for Energy Democracy (TUED), in cooperation with the Rosa Luxemburg
Stiftung—New York Office and the Murphy Institute at the City University of New York, November 2016
Edited by James Hare
With support from the German Federal Ministry for Economic Cooperation and Development (BMZ).
Cover image: Brahma Kumaris, Flickr Creative Commons
Disclaimer: This paper represents the views of its contributing authors. The opinions expressed here
may or may not be consistent with the policies and positions of unions participating in TUED. The
paper is offered for discussion and debate.
Trade Unions for Energy Democracy (TUED) is a global, multi-sector initiative to advance democratic
direction and control of energy in a way that promotes solutions to the climate crisis, energy poverty, the
degradation of both land and people, and responds to the attacks on workers’ rights and protections.
unionsforenergydemocracy.orgUp From Development
A Framework for Energy Transition in India
By Rohan Dominic Mathews with Susana Barria and Ashim Roy
Trade Unions for Energy Democracy (TUED) In the early stage, the need was felt to devel-
emerged as an attempt to develop a common op a space for deeper engagement with trade
understanding of a “democratic direction and unions from other countries in the South fac-
control of energy in a way that promotes solu- ing similar challenges. The idea of a coal work-
tions to the climate crisis, energy poverty, the ing group was proposed based on the fact
degradation of both land and people, and re- that several countries were characterised by
sponds to the attacks on workers’ rights and coal-dependent energy systems, and such a
protections”. 2 This initiative brought together group would therefore provide an adequate
trade unions working on core sectors that are space to develop a framework from which to
central to the debates around energy from understand energy transition. The advantage
within the energy production process but also of such a group would have been to ground
those that saw the centrality of energy in the the discussion on energy in a transition frame-
climate debate. Over the last five years, trade work from the perspective of the pathways to
unions from developed and developing coun- take our economies out of a dependence on or
tries have worked together covering important dominance of fossil fuels as the main source
ground and discovering areas that need fur- of energy while ensuring that this framework
ther discussion. also subscribes to principles of social justice
and workers’ rights. Unfortunately, the work-
One of these areas is the importance of artic- ing group could not be taken forward.
ulating the specific challenges that face coun-
tries in the global South, emerging from the In the second stage, there was again a felt need
complexity that is raised by its populations’ to articulate the perspective of labour from the
“need” or “right” to development. This is a real South. This was evident in the meeting that fol-
and concrete issue, though in international ne- lowed the 2014 Peoples’ Climate March in New
gotiations it often gets conflated with a “right to York. There was a very vibrant articulation of
pollute”. This has direct implications for coun- issues and strategies to engage trade unions
tries that have a singular source of energy. membership on climate and energy issues.
Trade unions from Latin America shared the
The New Trade Union Initiative joined TUED at progress of discussions in Peru being held in
its creation. It felt that this was an important anticipation of the United Nations Framework
space that would enable trade unions to en- Convention on Climate Change (UNFCCC) meet-
gage with climate change issues and advance ing (COP 20, Lima, December 2014), which were
an informed perspective within the interna- very well received. However, it was clear that
tional trade union movement. It also presented the overall perspective of the group was shaped
an important opportunity to develop a trade by experiences located in developed countries.
union understanding that could contribute to
the debates and efforts that had been devel- From our perspective, the main concern is in
oping in India. the implicit assumption that industrialisation
1UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
has a purely economic role and that pursuing As a contribution to the ongoing process of
industrialisation strategies would derail efforts articulating a trade union movement perspec-
at decreasing emissions, especially in countries tive on energy issues and with an intention to
where energy production is highly dependent contribute to strengthening the perspective of
on fossil fuels. In northern countries, the indus- southern countries in our network, NTUI pro-
trialisation phase is over, with a shift towards a posed to develop a study on energy transition
services-led economy being already completed. in the South, based on the case of India. In this
In contrast, in southern countries where agri- sense, this scoping study is informed by NTUI’s
culture is not able to provide for the livelihoods concerns. This study aims at discussing the
of the population there needs to be a frame- components and framework for such a just en-
work that addresses the need for an expansion ergy transition from the perspective of a south-
of other sectors of the economy. There is an as- ern country, as well as arguing for industrial
sumption that a necessary requirement for this policy in the energy sector—as distinct from a
shift will be an industrialisation process. Howev- simple regulation of energy markets—as a key
er, in addition to the purely economic argument policy tool. This will address both the necessity
described above, industrialisation also plays an for regulation in the energy sector in light of the
important welfare function. Creating general global climate crisis as well as fostering a transi-
welfare (i.e. public schools, hospitals, or a public tion that recognises the development needs of
transport system) is a fundamental objective of people in the South and the key role of Labour
industrialisation that is too often overseen. It is in this process. Further, as a qualification, this
essential to link the dialogue on emissions with document holds a core labour perspective and
a social justice and development perspective sees this paper as an initiation for dialogue be-
and not to see them as mutually exclusive. tween unions from across the globe.
Climate Change and Development in the South
The UNFCCC conference, which was held in accounts for an average temperature rise of 2.7
Paris between November 30 and December 11, degrees Celsius above pre-industrial levels.4 At
2015 (COP 21), could have been an opportuni- present, the scientific evidence regarding glob-
ty for the international community to reach a al warming leaves little doubt of the threat that
binding and conclusive agreement that serious- climate change as a phenomenon poses.5 The
ly deals with the threat of climate change if it decades between 1983 and 2012 represent the
weren’t for the deep gaps in perspectives that warmest period in human history. Between
cast a shadow very early on the possibilities of 1880 and 2012, the average ocean and land
such an outcome. The final document emerging surface temperature has risen by 0.85 degrees
out of the conference reduced the average tem- Celsius.6 With increased oceanic acidification,
perature above pre-industrial levels target from receding arctic ice sheets, and increasing global
two degrees Celsius—agreed at Copenhagen in mean sea levels, the threat of climate change is
2009—to 1.5 degrees Celsius.3 Prior to the Par- immediate and real.7
is conference, almost 180 countries submitted
pledges on emission reductions (Intended Na- While national leaders representing their coun-
tionally Defined Contributions or INDCs), and tries’ priorities gather every year to pledge cer-
estimates from these pledges indicate that it tain commitments and seek negotiated settle-
2UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
ments, the day-to-day effects of climate change One important component of the “anthropo-
are felt across the world, especially in the tropi- genic interference” in terms of emissions has
cal regions, which are largely populated by peo- been the energy supply. Fossil fuels, since the
ple from the global South. Changes in precipi- emergence of capitalism, have been the ener-
tation levels have meant the alteration of exist- gy source that has fuelled immense economic
ing hydrological systems, negative impacts on and technological advancement. Fossil fuels,
crop yields, and an increase in extreme events like coal, oil, and natural gas, have been ad-
like droughts, heatwaves, floods, cyclones, and vantageous for technological change under
wildfires, all pointing towards an imminent capitalism, owing to their high returns to en-
catastrophe.8 Therefore, any binding, equita- ergy input, ease of transportation, and stor-
ble commitment on reducing greenhouse gas age and flexibility in production.10 However,
(GHG) emissions has direct implications for the their intrinsic link to the growth of capitalism
lives of the poor in these countries, and any such has meant that energy use has similarly seen
commitment impacts the nature of production an inequality in matters of access, both within
in these economies, affecting those working in and between countries. With advanced capi-
key sectors.9 talist countries boasting of access to immense
energy resources, the lack of access to basic
The core debate at the UN climate change energy sources, like electricity, has been a
summits has been the question of limiting an- mainstay of daily reality in large parts of the
thropogenic interference in nature by limiting global South. However, the fossil-fuel-centric
GHG emissions. However, it is the division of energy supply across the world has called into
responsibility—in this case of what are the lim- question not only issues of access but the na-
its to emissions across countries—which have ture of the energy mix in different countries,
been at the forefront of all debate and disagree- including in the global South. The immediate
ment in these summits and have led to a fail- threat of global warming has meant that the
ure to reach a binding agreement. The lack of global order within a structure of capitalist
consensus within this framework is a reflection growth is facing the limits of nature. Howev-
of the difference in the needs and perspectives er, within this global crisis, the starkness of
of participating countries. It shows the failure the situation can be better understood if we
of countries to bridge these gaps. Underlying see that while the three largest consumers of
these differences are key elements that inform energy remain China, the United States, and
the discussion on energy transition, which re- India, the per capita energy consumption of
inforces our conviction of the need to develop the United States at 6815 KTOE (Kilotonne
these problematics in this paper. An interna- of Oil Equivalent) is nearly three times that
tional trade union movement, if informed by a of China and around ten times that of India
southern perspective on these issues, can be at 680 KTOE.11 This sharp difference reflects
a powerful tool in pushing the debate in a con- the crisis of access that is at the centre of the
structive direction. debate.
Projecting Transition
Energy security is a dominant narrative gov- to assess energy demand projections. The pur-
erning any attempt by Indian official agencies pose is largely to assure adequate resources to
3UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
meet the current rate of economic growth and the future [...] implies that a simple extrapo-
eventually lead to an expansion of the energy lation of historical trajectories for economic
base, i.e. increased access to the poor. Energy growth may be an inaccurate measure of the
modelling appears to serve this purpose. Sev- potential changes in the future”. Furthermore,
eral agencies across the world, and in India, these extrapolations based on the existing
undertake modelling exercises, providing po- structure of the economy or energy demands
tential scenarios based on energy use.12 These “are likely to significantly underestimate the
scenarios should not be seen as predictions, as future requirements of physical infrastructure,
they are based on certain assumptions about industrial production, and energy services for
policy changes and structural transformation developing countries and the constraints that
of the economy, and therefore can be seen as climate change would place on their increase”.15
possible futures if the necessary conditions This is especially true for fulfilling welfare ob-
are met. In fact, quite often, modelling in In- jectives that are too often not clearly spelled
dia is plagued by these assumptions, and as out when, in fact, infrastructural requirements
a result the normative argument is primarily quite often imply infrastructure for the pro-
growth-centric and has little space for ques- motion of production and ignore any effort to-
tions of employment generation or human wards expanding social infrastructure.
development or even emissions constraints.
The business-as-usual approach, where pro- From this discussion, it is evident that CO2 emis-
jections are mere extensions of current trends sions, if linked to projected economic growth,
with limited scope for lower cost or climate-op- whether in terms of current or transformed
timal solutions, is a common concern.13 economic structures, still appear to retain a
dependence on the supply and demand projec-
In addition, when referring to economic tions for energy based on this very economic
growth, current economic growth patterns growth model. This almost amounts to a tau-
represent a limited insight into the nature of the tological account for it places energy markets
economy, and any projection based on current within the domain of markets, subject to the
growth patterns needs to account for variabili- rules of other markets, while claiming that tran-
ty in the structure of the economy, i.e., “the rel- sition will take place led by an innate market-dy-
ative contribution of primary, secondary and namic. This approach in appearing to locate en-
tertiary sectors to the economy, the energy in- ergy markets outside existing fossil-dominated
tensity of different sectors, and the emissions markets—ends up persuing a business-as-usu-
intensity of energy”.14 This has implications for al approach—towards emission reduction.
developing countries, especially for the vast
sections of their population still excluded from Furthermore, such a market based approach
access to modern forms of energy. Further, intrinsically moves away from the primary rea-
this gives us an indication of the relevance of a son behind any discussion on emissions. As
sectoral analysis of emissions, which can pro- mentioned in several key international docu-
vide insights into particular economic sectors. ments, especially the Copenhagen accord, “to
stabilize greenhouse gas concentration in the
Different countries take different economic atmosphere at a level that would prevent dan-
growth trajectories. For example, India has gerous anthropogenic interference with the cli-
seen a shift towards the service sector during mate system, we shall, recognizing the scientif-
the last three decades while China has moved ic view that the increase in global temperature
towards manufacturing, meaning that “the should be below 2 degrees Celsius, on the basis
range of available structural compositions for of equity and in the context of sustainable de-
4UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
velopment, enhance our long-term cooperative impacts of climate change will be felt in trop-
action to combat climate change”.16 It is this co- ical regions, leading to huge economic as well
operative element that cannot be delivered by as human costs. A just energy transition model
the market, even in a peculiar moment where must recognise and reconcile these diverging
the expansion of renewable energies is prof- and partially contradictory priorities.
itable enough that from a narrow perspective
on energy transition the market might seem to In this context, Kanitkar et al. use a “carbon bud-
deliver. The market remains inadequate when get” approach, which considers the total usable
it comes to enhancing social infrastructure and carbon space in order to have a fifty percent
improving access to energy for the poor. probability of an increase within two degrees
Celsius of average global temperature above
It appears that the whole discussion on emis- pre-industrial levels as standing at 327 Giga
sions and its linkage to economic growth sees tonnes of carbon (GtC) over 2010-2050. They
emissions as a controlled feature of the cur- propose a budgeting exercise where the car-
rent economic system when, in fact, there bon share of a country is decided on the basis
should be recognition that economic decisions of the population residing there, i.e. a per capi-
need to be cognizant of emissions. The climate ta approach.17 This is different from the general
crisis demands that all economic decisions practice of average annual emissions, which do
be based on ensuring limited increase in CO2 not give any indication of the population and
emissions. In the case of southern countries, require mitigation targets that adversely im-
the argument for economic growth has essen- pact the current development requirements of
tially been reduced to a “right to pollute” that developing countries. For instance, India ranks
would place the burden of mitigation solely third in terms of total CO2 emissions but 97th in
in the court of northern countries. However, terms of per capita CO2 emissions,18 indicating
a right to access energy as well as to develop a skewed distribution of energy access. This
welfare infrastructure and goods remains val- model provides useful tools to deal with con-
id and has to be reasserted while recognising tradictory priorities and contribute to framing
that ignoring mitigation targets will also have an energy transition model. This will be elabo-
disastrous consequences, as the immediate rated further in the paper.
Energy Policy in India
At COP 21 in Paris, India submitted its INDCs, to note that the document on INDCs recognis-
which outlined its strategy to deal with in- es, “the gap between their equitable share of
creasing global temperatures until 2030. These the global carbon space and the actual share of
included reducing its GDP’s emissions inten- carbon space that will be accessible”,20 but sees
sity by 33-35 percent (based on 2005 levels), this problem resolved through an appropriate
achieving a total electric power installed capac- transfer of technology, implying that concerns
ity from non-fossil fuel based energy resources of transition are restricted to technology trans-
of forty percent based on technology transfer fer. This is not very different from an approach
through the Green Climate Fund (GCF), and cre- that sees increase in renewable energy as an-
ating an additional carbon sink of 2.5 to 3 bil- other factor in furthering the current model of
lion tonnes of CO2 equivalent.19 It is interesting neoliberal economic growth. However, a more
5UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
detailed understanding of the energy situation limited resources, with an annual production
in India will allow us to recognise the complex of 37.79 million tonnes, which accounts for
picture that emerges, one that is not immedi- only 16.64% of the total available oil supply,
ately resolved through any major improvement with the remainder of 189.24 million tonnes
in access to technology, especially if one is con- are imported. 27 While coal and oil represent
sidering democratic access to energy for work- the two most significant components of the
ing people in the country. energy mix, the increase in imports implies a
progressive dependence on imports to meet
end-use requirements for these primary re-
Energy generation and coal depen- sources. Therefore, any discussion will take
dence into account the total available supply of either
coal or oil, but it is important to recognise the
Coal is the largest contributor to India’s prima- significant import proportion as it is a crucial
ry energy supply. Raw coal represents a primary rallying point for any perspective on energy se-
source of energy which is converted into other curity and self-sufficiency in India.
forms, such as electricity and utilised in differ-
ent sectors. Electricity or power generation The CO2 emissions from consumption of coal was
accounts for 74.70% of raw coal and 83.09% of at 1.28 gigatonnes, which was 69.91% of the
lignite consumption in India.21 The electricity total emissions for 2012 (1.8 GtC). 28 Any shift
sector represents the single largest component towards a low-carbon economy will need to
of energy consumption in India. Any discussion address the complexities underlying coal pro-
on coal and future emissions cannot ignore this. duction and consumption in India, with direct
Further, electricity generation has been rapidly bearing on potential carbon emissions in the
expanding over the last two decades. In 1989- future. As has been shown earlier, this com-
90, the gross electricity generated from coal was plexity requires a perspective that recognises
172,643 GWh or 70.34% of gross electricity gen- the status of coal as a source of energy in the
erated.22 According to recent figures, the gross economy, and any transition will need to rec-
electricity generated from coal has increased ognise the policy options with respect to coal.
almost five times to 835,838 GWh and stands at
75.61% of the total gross electricity generated.23 It is evident that coal-based electricity generation
is a crucial component in the overall energy sce-
India has significant coal resources, with do- nario in India, and consequently carbon emis-
mestic production at 565.77 million tons in sions cannot be understated. In fact, the rapidly
2013-14, which has been growing at a com- growing electricity generation and its increasing
pounded annual growth rate24 of 3.73% since dependence on coal is a crucial component in
2005-06. However, owing to high ash-content any discussion on energy transition in the Indi-
and low calorific value, the net energy output an context. Additionally, while petroleum-based
per kilogram of coal is significantly less. This energy consumption is also a significant compo-
has led to an increasing trend in coal imports. nent of the energy mix—and has implications
In 2013-14, coal imports increased 15.54% to for current and future carbon emissions—any
168.44 million tons as compared to 2012-13, transition framework which attempts to evalu-
which is 22.76 % of the total available coal re- ate prospects for a transition to renewable en-
sources in India. 25 In fact, the contribution of ergy sources would necessarily have to begin at
coal imports to total available coal in India was electricity as most sources of renewable ener-
2.28% in 1990-91 and 6.43% in 2000-01.26 In gy, whether wind or solar,29 are primarily geared
the case of crude petroleum, India has very towards production of electricity.
6UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
Shifting patterns of coal production emerged was dismal. Most of the plants used
coal which had ash content of 40-50%, old and
Recent legislative changes present significant inefficient sub-critical technology, with a quar-
changes in coal production in India. In March ter of these exceeding their operational life. The
2015, the government of India, passed the Coal plant-load factor34 was on an average at a low of
Mines (Special Provisions) Act in Parliament, ef- 65%, with many plants claiming that sufficient
fectively ending four decades of state control demand did not exist to run on higher capacity,
on coal mining. Until recently, Coal India limit- leading to higher pollution as a proportion of
ed (CIL), a public sector corporation, possessed produced-electricity. Further, owing to a policy
a monopoly over coal production in India. order that allows cheaper electricity to be load-
However, the act permits the private sector ed on to the grid first meant that older plants
to augment CIL’s activities in order “to ensure which produce cheaper electricity are allowed
continuity in coal mining operations and pro- to run at higher capacity as opposed to more
duction of coal, and for promoting optimum efficient plants which perform at below par ca-
utilisation of coal resources consistent with the pacity. Also, severe pollution violations were
requirement of the country in national inter- another concern raised by the report. Based on
est”. 30 CIL has been showing increased produc- the CSE report, Union Minister for Coal Piyush
tion over the last year. For the year 2014-15, the Goyal recently reiterated that coal will continue
rate of increase in coal production has been 8% to remain central to power generation in India
over the previous year, with CIL showing a net but acknowledged the need to de-commission
profit for the year. While 2014-15 saw a corre- older plants and move towards super-critical
sponding rise in coal imports of almost 34%, coal technology, which is more energy-efficient
that trend has been reversed over the last few and less emissions intensive.
months with coal imports falling 5%, with in-
creased production from new and old pits. 31 Two intended goals of an energy transition
This turnaround has several implications, as are to ensure access to energy and to estab-
previous trends had suggested that increasing lish a low-carbon transition pathway. While re-
coal imports could serve as one of the many newable energy appears to serve both these
deterrents against expanding coal-based elec- purposes, one crucial factor in favour of coal-
tricity in India. This new trend in privatisation based electricity has been its limited fluctua-
of coal mining and increased production in ex- tion and ability to provide baseload. Most of
isting pits may taper off in the end, but if the the projections in the earlier section provide
trend continues for a few years, this would ample space for baseload capacity of coal to
mean continued lower costs for coal. In fact it be a crucial factor in any transition pathway, in-
has been shown that to maintain a global aver- cluding options that mark a shift from sub-crit-
age temperature target of two degrees Celsius, ical to super-critical coal technology.
around 66% of known reserves in India and
China will need to remain untapped. 32 Based
on current trends, the scenario appears bleak. Confused renewable energy policy
Further, the Centre for Science and Environ- The drive towards renewable energy appears
ment (CSE) recently released a report titled, to have gained steam under the new govern-
Heat on Power: Green Rating of Coal-based Ther- ment. Union Minister Goyal had stated that a
mal Power Plants.33 The report assessed 47 coal- dedicated effort towards increasing the share
based thermal power plants, almost half the to- of renewables is underway. 35 In his annual
tal number in the country, and the picture that budget speech the Finance Minister had an-
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ENERGY TRANSITION IN INDIA
nounced an amount of US$400 million to en- both political and social. Further, mismanaged
sure a renewable energy target of 175 GW. state-run utilities under the burden of a com-
mercial regime introduced over the last decade
According to 2015 figures, the total grid-inter- and a half has meant that several state utility
active renewables installed capacity was 37,414 companies are running heavy debts and are
MW, out of which wind power had the highest unable to purchase power from the generat-
share at 65%, solar energy at 11.6%, bio-power ing companies. In fact, the current electricity
(including biomass, gasification, and bagasse being generated is not completely consumed.
generation) at around 11.8%, small-hydro proj- In 2013-14, the total electricity available for
ects at 11%, and waste-to-power accounting consumption was 980,941 GWh, but the total
for around 0.3%. 36 Apart from this, according electricity consumed was 882,592 GWh, with
to 2013-14 data, off-grid efforts include the in- a transmission loss of 23.04%.38 According to
stallation of 1221.26 MW solar cookers and the census figures, only 55% of the rural population
electrification of 7971 remote villages and 2183 use electricity from the grid to meet their elec-
hamlets through off-grid power. The Strategic tricity requirements, and this is further plagued
Plan for New and Renewable Energy Sector for by questions regarding the quality and regu-
2012-2017 clearly outlines steep aspirations larity of supply. While 94.1% of rural areas are
that include plans to “develop, demonstrate connected to the grid, the low use of electricity
and commercialise technologies for harness- signifies problems at the level of supply.39
ing new and renewable energy resources”, re-
placing use of fossil fuels “wherever possible”, Several attempts by governments to roll-out
and increasing the contribution of renewable rural electrification through solar decentralised
energy to the total installed capacity in India. systems appears not to have solved the problem,
as they fail to recognise the prevailing grid con-
Recently the Ministry of New and Renewable nectivity issues of most of these villages. While
Energy released a draft act titled “National in the case of remote villages, where providing
Renewable Energy Act 2015” for public com- immediate grid connectivity is a challenge, the
ments. The rationale for the draft act includes a case of solar PV technologies in grid-connected
need to acknowledge the human development villages has met with several problems: first,
needs that energy provides, to move away even with free installation, the cost of spare
from overt dependence on fossil fuels, and parts makes them unaffordable for populations
to promote renewables as a “hedging mecha- that are largely not high-income. Second, there
nism” against the volatility of fossil fuels. 37 is a paucity of skill available to service these
units, and third, these villages fall outside ex-
While the draft represents a fairly detailed pol- isting supply chains that allow for continuous
icy plan, two features need to be understood maintenance of these technologies.40
in order to locate this draft act and the spirit in
which it has been drafted. First, the situation of In February 2015, the government of India or-
electricity generation in India is a vastly com- ganised the first renewable energy investment
plicated combination of state-run electricity expo, where commitments of 266 GW were
generators as well as private generators, both made, out of which almost half was for solar
public and private transmission enterprises, energy—40% of this for rooftop decentralized
and state utilities that have the responsibility solar power units.41 In October 2015, a series of
of purchasing power from the generating units. high profile investment commitments were con-
Many state governments have waived electrici- cretised with over US$100 billion in investments
ty payments from farmers for several reasons, pledged by several high profile companies, in-
8UP FROM DEVELOPMENT
ENERGY TRANSITION IN INDIA
cluding Sany Group, China; Chint Group, Chi- unleash another round of competition for capi-
na; and a memorandum of understanding be- tal investment and will also require destruction
tween SoftBank/Foxconn/Bharti and the State and retrenchment of the existing fossil-based
Government of Andhra Pradesh for renewables industry. This investment and destruction cycle
up to 3 GW. These high profile investments will have different impacts on different coun-
are projected to increase the renewable ener- tries, different forces of capital. The economic
gy capacity two-fold over the next few years. conditions are already moving towards a phase
Further, the Union Power Minister recently an- where renewable energy will have cost pari-
nounced that transmission of renewable-based ty with non-renewable energy. Even in India,
electricity across states will be free as a project where “it is widely accepted that renewable en-
for green energy corridors.42 With every succes- ergy has the potential to meet all of India’s fur-
sive tender, the cost of producing electricity has ther needs in electricity”, the viability of clean
dropped, with the latest and lowest to date be- energy has emerged as a potential for capital
ing a 25 year power purchase price (PPA) fixed intensification. It is here that the contention be-
at Rs. 4.63/kWh or US$0.07/kWh, which is sig- tween the globalised framework and national
nificantly lower than the PPA for imported coal- developmental framework will also open up.
based electricity generation.43
In one 2013 estimate, global financial flows to
The spurt in renewable energy capacity is sig- the renewable energy sector were US$331 bil-
nificant, with a mix of state-run renewable lion, of which the private funds totalled about
energy agencies as well as larger scale pri- 58%. IEA estimates that an additional US$1.1
vate-sector investment. The current year has billion every year on an average is required
seen an unprecedented increase in installed to keep the global temperature within two
capacity, with major international energy com- degrees Celsius. Though there has been a re-
panies such as Trina Solar, JA Solar, Hanwha duction in investment, partly due to the cheap-
Q Cells, and LONGI planning to set up units ening of renewable technologies, it shows
in India. Major renewable utilities EDF Ener- the potential for large investments that glob-
gies Nouvelles, ENEL Green Power, and ENGIE al finance capital is looking for. This becomes
have acquired renewable project development more so as the fossil fuel sector is retrenched
firms in India. Further, funds have been re- (in other words, destroyed) under the garb of
leased to several state governments for solar a green economy and climate sustainability.
parks, which appear to be a concrete feature of It nevertheless means that there will be mas-
the renewable strategy in the Indian context, sive retrenchment in terms of job losses and
as are programs to set up solar panels along destruction of local economies based on coal
irrigation canals across the country).44 Decen- mining and coal-fired power plants. These
tralised off-grid projects include both state- changes imply destruction of old investment
based agencies as well as private companies.45 in coal-based industries, power stations, and
local areas in which these are embedded and
IPCC’s twenty-year assessment has opened up adverse impacts on people in these areas.
the possibility of the expansion of the renew-
able energy sector and in many ways will force
a business development model where new en- Missing the opportunity on the
ergy expansion will be biased towards the re- manufacturing front
newable sector but dominated by big capital. In
other words, it opens another investment cycle India has not been an alien to producing so-
in the context of the capitalist crisis. This will lar panels. Companies such as Tata Solar and
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BHEL had begun producing solar components al finance appears to view this as a major in-
as early as the 1980s and by the 1990s were ex- vestment opportunity. Further, it is becoming
porting them to most of Europe and the United evident that this makes global energy trans-
States.46 The Jawaharlal Nehru National Solar formation a contested terrain. In the contem-
Mission (JNNSM), the state-led national solar porary capitalist framework, the real issue is
power initiative, had boosting local produc- not just promotion of renewable energy but
tion as a priority, including developing domes- more importantly open market access to re-
tic manufacturing capacity across the value newable energy trade and investment. This
chain.47 Under JNNSM, a defined amount of so- market access has already become a point of
lar-based projects are required to source their contention. Since 2010, when renewable-ener-
panels and modules from domestic units. This gy-related disputes emerged in the WTO, they
is called the Domestic Content Requirement have already reached eight percent of all new
(DCR), and this requirement has been touted disputes. Moreover, the growth in import of
as an attempt to boost domestic production of renewable energy equipment is higher than
solar panels. However, the mission only aims at the overall growth of merchandise imports
developing a meagre four to five GW manufac- from 2007 to 2011. Disputes related to renew-
turing capacity and does not have provisions able energy have to be seen in the context of
for other components of the value chain, in ef- capturing and dominating the rapidly growing
fect falling short of an effective framework to renewable energy market. 50
promote the expansion of manufacturing.
This puts into perspective the domestic con-
In practice, under phase I of the JNNSM it was tent policy dispute with respect to India in the
noticed that there was no significant capacity WTO. Domestic content policies are a widely
utilization despite addition of manufacturing accepted policy option enforced by the United
capacity. In fact, the import content of so- States too, but, at the same time it is the Unit-
lar projects increased dramatically. Further ed States that has brought this dispute in the
moves towards DCR were suggested. However, WTO. Beyond the legality of this policy under
under phase II, batch one and two, out of a to- WTO rules, this case is about a contention for
tal 2275 MW, only 375 MW aggregate capacity investment and market access for global capi-
were reserved for domestically manufactured tal into the expanding renewable energy sec-
solar panels and modules (16 %). Under phase tor in India.
II, batch three, out of the total capacity of 2000
MW, a capacity of 250 MW will be earmarked However, the twist in this whole debate is that
for bidding with DCR (12.5%). while India’s track record in producing solar
panel components has not picked up and the
In February 2016, based on appeals by the recent surge in Chinese imports has meant a
United States at the World Trade Organisa- severe slump in domestic production, the tech-
tion, 48 the WTO dispute settlement board nology required to transform sand into silicon
ruled that India’s policy with regard to solar capable of being used for panels is largely miss-
panel procurement breaches trade rules.49 ing, and there is no policy to either develop it
This was an interesting development, consid- locally or ensure technology transfer. Hence a
ering it was a complaint that simultaneously lot of the domestic firms’ sourcing of silica is
occurred while the United States was lauding based on imports, resulting in no grand ex-
India’s efforts towards expanding solar pow- pansion in solar panel production in the near
er. There is an increasing shift of global energy future, falling far short of government projec-
towards renewable energy and internation- tions of one-hundred GW by 2022.
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Missed employment creation, re- other hand, coal mining is concentrated in less
peated employment destruction prosperous states, such as Orissa, Chhattis-
garh, Jharkhand, Telangana, Madhya Pradesh,
There are also implications for employment cre- and Uttar Pradesh, where local economies
ation. A study using data from 2009-10 shows were disrupted with the entry of mining and
that if a total investment of 1.5% of the GDP is will be disrupted again in the event of existing
focused on clean energy, which includes build- mines’ closure, with adverse impacts on local
ing new capacity as well as increasing energy ef- livelihoods at each phase.54 This in most ways
ficiency, the jobs created in the renewable sec- represents a reproduction of the uneven devel-
tor greatly exceed those under the current fossil opment characteristic in India, accentuated by
fuel regime.51 Pollin and Chakraborty show that the introduction of neoliberal reforms in India
renewables’ direct and indirect jobs created—if post-1991.
the domestic content is kept stable—is on aver-
age 291.7 jobs per one-million US dollars in in- The competition for new areas and new energy
vestment as opposed to 129.1 jobs in fossil fuel growth is taking place. As rightly stated by Trade
sectors. Based on these figures they estimate Unions for Energy Democracy, “the commodifi-
an addition of twelve-million jobs.52 cation of nature opens new areas of economic
growth, exploitation, and privatisation, and the
There is a clear mismatch between the areas green transition is nothing but an expansion of
where renewable energies expansion is taking big capital into new areas.” Previously, many
place and the areas where coal production is had thought that the market would not be able
taking place. On the one hand, at present the to deliver this good “clean energy,” but we now
widely promoted green energy corridors, based see that capacity creation is taking place in re-
on resource assessments, seem to be focused newable energies, but in the form of big capi-
on fairly prosperous states such as Andhra tal. This will lead to a new round of privatisation
Pradesh, Gujarat, Karnataka, Tamil Nadu, Ma- and enclosures by big capital. Therefore, if we
harashtra, and Himachal Pradesh.53 Rajasthan, look at the trends within the two major aspects
a not so prosperous state, appears to be the of any energy transition, the coal sector and
exception, but this can be attributed to the the renewable energy (solar) sector, we notice
state government’s very pro-business attitude that while efforts are underway to expand re-
over the last year and a half. In fact, owing to newables, the policy mix, both domestic and in-
high costs for building infrastructure to trans- ternational, provides for conditions that foster
port electricity from remote locations such as capitalist growth in renewables “at their own
the coast or solar parks, it has been suggest- pace and leisure”, while continuing the “busi-
ed that states with rich renewable resources ness-as-usual” approach when it comes to coal-
provide transmission infrastructure to states based electricity. Even within a purely market
with lesser burden. However, this is where we driven scenario, this would lead to decreased
meet a very core problem with the private sec- investments in coal and increased investment
tor. Its generation will be limited to returns on in renewable energy. However, this will not
investment, and in this case the returns are amount to a just transition that addresses both
guaranteed when utilities are able to purchase the welfare of the people and eventual struc-
electricity. Hence, based on current investment tural transformation. Such a transition must be
patterns, one notices that most of these firms directed by an industrial policy in the energy
are focusing their investments towards more sector that address both the expansion of re-
urbanised states such as Gujarat, Tamil Nadu, newable energy and the transition away from
Andhra Pradesh, and Maharashtra. On the coal dependence.
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Industrial Policy for Energy Transition
An effective energy policy is required both to developing human needs, making industriali-
give direction and to accelerate the process of sation sustainable, and providing livelihoods.
energy transition. In India such an industrial pol-
icy will also be required to make the shift away In post-independence India, coinciding with
from the oil, gas, and coal sectors and to build the post-Second-World-War phase, there was
up the renewables sector in a short and limited a general environment of support for industri-
time. At this point, there is an underlying conten- al policy, which allowed for expansion of the
tion as to whether this can be achieved based economy, increased provision of public goods,
on domestic capacity or whether it will demand and active demand management. Globalisa-
international capacity and resources. This is im- tion collapsed this function of the state and
portant in so far as such a transition will allow allowed for the dominance of the market and
the ground work for a sustainable energy tran- the retreat of the former, or rather a reorien-
sition and structural transformation. For us, it tation of state priorities. The financial crisis of
is important to frame such an energy transition 2008 has brought back industrial policy as an
within the larger framework of national develop- instrument for managing economies. The crisis
ment as this transition should contribute to the has revealed the inadequacies of unregulated
welfare of the people and to structural trans- markets and weak states to sustain the econo-
formation. my and build sustainable industries.
This will require policy tools to evaluate the The energy transition will also require the
direction and the condition under which large phase out of the coal industry. This means that
scale investment in renewable energy and en- a large workforce and embedded local eco-
ergy efficiency is being done. It is in this context nomics in more than twenty districts in India
that an industrial policy becomes an important will go through a phase of retrenchment and
tool to shape this transition. Developing econo- will require reorganisation and reintegration
mies like India need to strengthen their capabil- into viable local economies to provide liveli-
ity to “trigger, accelerate and manage structural hoods to the people. A fair and democratic
and technological transformation and accumu- transition means that resources as well as
late productive capacity through sustained pro- planning will be required to rebuild such lo-
cesses of investment”. In both these aspects, a cal economies. An energy transition will not
policy framework is needed to enable planning only require resources for making the shift to
and coordination and to provide incentives. renewable energy, but also for rehabilitating
a retrenched workforce and local economies
Even if it is assumed that the market has a role into viable and sustainable economies.
to play, the development of the market re-
quires the proactive role of the state in order In fact, in the literature, there has already been
to ensure national development, encourage an acceptance that there will have to be some in-
technological upgrades, and build up a learning dustrial policies and the debate is on the scope
process for accumulating these capabilities. It of such policies. In other words, the role of gov-
will require protective mechanisms for devel- ernance institutions has been recognised, and
oping these productive capacities. Only in such such governance can only be provided by the
a framework will an energy transition itself play state. There is an additional reason for renewed
the role of making structural transformation, interest in industrial policy: East Asian develop-
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ENERGY TRANSITION IN INDIA
ment states have successfully deployed indus- of national development in which people’s
trial policy in their efforts to absorb technology needs are prioritised and the public sector
and know-how from the rest of the world. This is dominant. Even assuming a market frame-
becomes more important in the case of ener- work, a mixed economy demands the public
gy transition, where a whole new science and sector act as an instrument for regulating the
technology are developing and being absorbed market. So it cannot be driven by the needs of
into industrial processes at a high pace. This ap- global markets. Experience has shown that a
proach recognises a proactive role for the state receding discourse on national development
in overcoming information, coordination, and as a policy instrument has been a result of
externalities issues in the development of new global finance-led globalisation.
activities and sectors, but integrated into the
concept of comparative advantages. The participatory dimension implies that
such an industrial policy necessarily requires
In our understanding, the developmental a strong people’s movement and democratic
needs of developing countries require both political processes not only to concretise an
an ideology and policy framework for national industrial policy, but to sustain it. This partic-
development. It has to be one in which there ipatory dimension means spaces where mass
is both independence and interdependency organisations and trade unions democratically
with the global economy. In the absence of a engage and shape industrial policy and mon-
national development framework, the concept itor its implementation on a day to day basis.
of comparative advantage, in view of the cu- Institutionalising this participatory perspec-
mulative advantage of developed countries, tive into industrial policy would allow social
invariably benefits the early industrialisers. development, labour rights, equitable sharing
In this view, energy transition will require the of productivity and profitability, and a more
support of an energy policy which is framed in concrete sustainable approach to energy tran-
the larger framework of national development. sition.
Only then will this energy transition contribute
to climate-change mitigation and also to the The question of national development, in its
development needs of the people. democratic form, implies an inclusive strategy
that takes into account both access to energy
and empowerment of the working people of
The components of industrial policy the country, while the idea of “national interest”
under private capital implies the usual idea of
Industrial policy has three broad dimensions: a trickle-down economy, where the enhanced
Technological, political economic, and partici- human development of the working people is
patory. The technological dimension looks at based on the expansion of capitalist accumu-
the existing technology and knowledge frame- lation. Private capitals returns, when subject
work for a new research agenda and develops to taxation regimes and a robust state ma-
production processes for local needs and as- chinery, allow for such trickle down to occur. In
similates them into the economy. This dimen- the recent history of India, under a liberalised
sion needs to be institutionally embedded to economy, neither of these conditions appear
ensure continuity beyond the immediate polit- to occur. Instead what we have is a promise of
ical expediencies and cycles. trickle down without the institutional and dem-
ocratic mechanisms to even allow this, while
The political economic dimension, from our growing inequality becomes a reality even as
perspective, must be driven by a perspective our economic growth rates soar.
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Industrial policy for the energy sector Power planning in India has been an extreme-
ly top-down process, and in fact, the influence
Industrial policy in India was closely linked to of workers and citizens is severely limited, ex-
the five-year plans, inspired by the Soviet mod- cept in terms of gaining waivers to pay dues,
el of a planned economy. The Industrial Policy as in the case of farmers. A comprehensive
of 1956 was crucial because it outlined what decentralisation of the governance processes
was essentially the blueprint for economic that are inherent to power planning in India is
strategy in the coming decade, which essential- necessary to make the sector more respon-
ly meant an active role for the state in 17 indus- sive to people’s needs. However, the imme-
tries, including heavy electricity, coal, oil, and diate task towards reclaiming this sector is to
generation and distribution of electricity. It also ensure that increased disinvestment in public
called for a progressive expansion of the public sector enterprises does not take place. For ex-
sector in 12 industries, such as aluminium, ma- ample, the Union Ministry recently announced
chine tools, fertilisers, ad transport. This focus a ten percent dilution of the government stake
on the public sector did not reject the private in Coal India (CIL), which has been directly
sector but implied a heavily regulated system opposed by the trade unions, threatening a
of licensing that allowed for adequate alloca- nation-wide strike if the government were to
tion of capital in order to meet planning tar- go ahead with its proposed plan.56 Based on
gets. This policy of a heavily regulated private contemporary trajectories of coal use in India,
sector with a public sector monopoly over key there is very little evidence to suggest that
sectors gradually began to dilute by the 1980s coal will make its exit from the energy mix, so
when the Industrial Policy statement of 1980 government disinvestment will lead directly to
“emphasized the need for promoting compe- a larger role for the private sector in coal pro-
tition in the domestic market, technological duction. The resistance against disinvestment
upgradation and modernisation”.55 While an from the state-run CIL is a crucial matter in
expansive system of public investment was this respect. It safeguards a model of indus-
envisaged, the growth rates of the economy trial relations that allows labour to negotiate
remained terribly low, and the shift from a pop- terms, however contested and fragmented
ulation based in agriculture and traditional oc- they may be, and provides greater democratic
cupations to the industrial workforce remained spaces for communities to raise concerns over
fairly stagnant. But in terms of expansion of project implementation than does the private
public sector units, there is no doubt that the profit-led model.
number of public sector enterprises increased
drastically and did in some ways constitute the With the entry of renewables at a large scale,
organised workforce within the Indian popula- any attempt at state-supported industrial de-
tion. In terms of sheer numbers, this remains velopment in the RE sector needs to be seen
fairly low, at around seven percent of the total with respect to those working there and those
working population, but trade union density is living there. The predominant notion within
very high among the organised sector, includ- the current RE policy essentially seeks to pro-
ing the traditional carbon-based energy sector. vide a fostering ground for the expansion of
If we were to consider the expansion of pro- the private sector, which in itself does not au-
ductive capacities under a liberalised economy, gur well for labour’s bargaining power in the
we can reconsider the possibility of a focused future energy sector. The focus on solar parks
industrial policy. The power sector appears to with huge land requirements further raise is-
present an immediate and concrete space for a sues of democratic rights for displaced com-
coherent industrial policy. munities.
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