 Hello and welcome to NewsClick. So today we are going to talk about the national energy policy, which has been drafted by Niti Aayog and now it was open for public comments. So a lot of issues have been brought up with this policy and one of which is the increasing commitment to coal, which we should be phasing out. But another aspect of it is that this policy is basically trying to open up all aspects of electricity generation and distribution to the market. So today we have with us Tejal Kanitkar, who is the chairperson of Centre for Climate Change and Sustainability Studies at TIS. She will be discussing this policy with us and what are the drawbacks in this policy. So Tejal firstly starting up with the fact that this policy is opening far too many aspects to the market. How much sense does that make for something like electricity? This has been a long time in the coming, you know, it's been something that has been spoken about since the reform and restructuring process began in the electricity sector, which was one of the first sectors to be opened up in the sense. And the 2003 Electricity Act also sort of underlines, emphasizes this aspect of it and all the other things that come along with it, the reductions or complete eliminations of cross-subsidy, which was later amended to a reduction in cross-subsidy. And the idea is that your energy markets will be able to rationalize all aspects of energy supply, both in terms of energy production. So whether or not you will do more coal or more solar or more wind will automatically be determined by the market and who will consume how much and you know, whether they will consume wastefully or be more efficient in terms of consumption, whether there will be a higher uptake of energy efficient appliances will also be therefore determined by the prices that are dictated by the market. Now, this has a lot of, you know, a very basic assumption that markets can function in this manner. And of course, you know, the critiques of that kind, those kinds of assumptions are available, you know, everybody, a lot of people know them, the fact that, you know, it is a very basic neoclassical assumption that you have everybody knows everything, that is to know about energy supply and production. There is complete information symmetry, you can choose wisely and perfect rational choice on both the sides of the producers as well as the consumers. So, you know, even assuming that this is all true in a situation like ours where you have a large section of society that still does not have access to electricity to you know, not only in terms of just access points in their households, but also a regular supply of electricity, largely because they cannot afford even regulated prices of electricity, prices that are regulated by the state, which does have a mandate to keep in mind the interests of a large section of its population, whether this will work at all. And this has been, it is not as if, you know, there has not been a push for this and there has always been a pushback as well. It has not been possible for governments to do this. It is very difficult. It is a very basic requirement, electricity supply and to therefore leave the future of and, you know, we make these arguments internationally that we are a developing country, that we need to supply our people with modern services, modern energy services, electricity and therefore, you know, we need, you know, carbon space to do it. And while we expect the market to be able to deliver this to us internally, I think it's a pipe dream. How much incentive will private companies have any way to supply electricity in areas which won't be as profitable like rural areas? So can that still in the goal of electrifying all of India we met when they're doing something like that? We've seen that, right? We've seen the fact that we talk about surplus power available today and yet you have load shedding, yet you have people who do not have 24 hours of supply. If you have excess power, why is it that people don't have 24 hours of supply? If you have excess power, why is it that you've not been able to provide electricity, even connections to all of your population? And that's because it's not profitable to do so. Why is it that you don't supply agriculture with more than four hours or eight hours of supply, depending on which region you're from? It's because it's not profitable to do so. And if it's not profitable for the state to do so, it's definitely not going to be profitable for private companies to do so. And therefore, you can expect that a large section of the population that does not have access today will continue to not have access tomorrow. So the policy, the NEP that the Niti Ayog has put out right at the beginning talks about government goals of providing 24 by 7 electricity by 2022. That seems to be directly in contradiction to the mode in which they plan to do this. If you want to provide 24 by 7 electricity to everybody, then it is not at all clear why you would rely on markets to do it, because it's very likely that if you have, you depend on the market to do it, that's not going to happen. And distribution is like a major hurdle in this way in being able to provide electricity to everyone. So even though we have surplus power, distribution is I think really blocking the fact that a lot of homes still don't have electricity. And now this national energy policy is putting pressure on distribution as well. What Niti Ayog said in the policy draft is that these distribution companies are failing because they don't have enough commercial pressure on them. And now they're attempting to separate the distribution from the grids. So the grids will still be owned by companies, but distribution will be carried out by these private companies. And this has been fried in the form of franchisees, et cetera, even earlier. And the situation is that the point is that you have, there is a lot of debt that these companies are in, and distribution companies. And there is definitely revenue loss. And to say that the distribution is a hurdle that doesn't allow you to supply power, even though you have excess power, is I think incorrect, because the hurdle is the fact that you don't want to supply power to people who cannot pay for it. And unless you're willing to do that, you know, till people are able to pay for power, assuming that people will be able to pay for power at some point of time, till people are able to pay it, you have to provide them with power at subsidized rates. But your entire policy is directed at reducing subsidies, against subsidies. You think that subsidies sort of, there's Q energy pricing, and therefore you have excessive use, you have irrational use, and therefore to rationalize electricity use, you need to remove subsidy. But that means that people who don't get, you who can't pay for power, they will not get power. And that will only worsen if this is sort of actually implemented. But it's not even clear whether it's possible to actually implement something like this. You know, there is going to be, there has been always a pushback, and political pressures do become important from time to time. And it is a sector that definitely falls within the purview of electoral requirements for parties that contest elections. And therefore it's not so easy to say that you'll have to now depend on your electricity requirements based on private companies that will collect your bills on a regular basis and will come and check your meters. And if you're not paying, you won't get electricity anymore. That's, it's going to be much more politically much more difficult to do. And then now coming to coal, if India really does have all this surplus power, then why are there talks of important coal? That is a, so one, I think there are two issues here. One is we have to really understand this question of surplus power. One is, you know, there were a few years ago we were in deficit, there wasn't surplus power. Now we are, you know, the last few years there has been a lot of capacity addition and there is excess power. Also that excess power, however, goes hand in hand with the fact that we have also an economic slowdown. You know, so your manufacturing capacity has not picked up, is not, is currently, you know, lower than was anticipated. That holds true for other economic activity as well. Agriculture is not doing so well. And, you know, and you still have people who have, who don't have access to electricity. So it has to be, it has to, that surplus power has to be understood in this context. So, you know, the fact that we have surplus does it mean that we don't need electricity or our requirements are low? I think has to be understood a little more carefully than a simple sort of zero sum game in that sense. That is one aspect of it. The other is, I think there is the pressure for climate to do something about climate change and undertake climate change mitigation is going to only increase from here on into the future. And, you know, we've already made commitments to, you know, for 40% of our install capacity to come from non-fossil fuel sources. You know, that's not too difficult a commitment to meet, given that you're already at 30, approximately 30%. Because this includes hydro and nuclear as well. But if that is to be increased further, then it is very possible that in the next, you know, in a subsequent, once the Paris Agreement comes into effect, in subsequent years, we are going to have a much more difficult time in adding, in justifying any more addition of coal. So, is there a strategy to add as much coal as possible when you can do it? And then, you know, start reducing in the other, what China did to a certain extent. You know, do that. China also did it, but while alongside really focusing on increasing manufacturing capacity. Whereas in India, while again, the same policy talks about, you know, an increase of, from 16% contribution of manufacturing to GDP to 25% by 2022, as a government target. You look at the policy and you look at the assumptions in their scenarios that they have constructed, the Niti Aayog, there is no then mention of this increase in manufacturing capacity. So when you say you need more base load and when you need, say you need more coal, what do you need it for? If you have an 8% overall GDP growth rate, but then your assumption is that it's business is usually 8%, which means the services sector continues to dominate, then your base load requirements are not going to be so much that they would justify this much addition of coal, you know. So I think the entire, there is an incongruence between what they say as their targets, set as their targets and objectives and the actual scenarios that they then construct to just to, you know, meet those targets, because you see that target of manufacturing and then you see it nowhere in the scenarios that they create. And also that they are making projections of electricity consumption, power consumption till the year 2040 to draft this policy. And the fact is that at this moment right now, I don't think it's very feasible to make that sort of prediction and then base your policy in that. And as you said, there will be more pressure to lower the amount of coal we're consuming. So that's true, you know, forecasting is a tricky, you know, business and, you know, to forecast energy requirements to 2040 is really, you know, nobody really believes, even the people who are actually doing the modeling, that these are going to be really exactly the numbers. So you come up with 3462 kilowatt hours as a requirement in 2040, nobody really thinks that it's going to be exactly that number. So because it's really, you know, energy demands will depend on economic activity and nobody can predict economic activity because it's dependent on so many things. So it becomes very difficult to forecast and therefore then to say that your supply will be dependent on that forecast. But some, you need to do some short-term planning. It's not as if, you know, you can't, it's a sector that is given to planning that the energy sector, you know, you can't say that I need power tomorrow and then build a plant tomorrow, right? You need to start thinking about what kind of energy supply systems you will need much before you actually might need them because it takes time for them to come up. So there is some exercise that is required of this nature, maybe not till 2040, maybe at least for the next 10 years, 15 years. The Planning Commission has to do this, you know, but now you no longer have the Planning Commission, so it's all policy and it's all, so you are, you know, you're talking about what kinds of policies are needed so that something like this, given that something like this happens, it's not even really a concrete plan for getting something done. So then this is simply, I think the entire coal question is, while it's important, in the NEP, it's not something that is, we are not, India is not, for example, planning to build that much coal. That's not what it is, that is not what the policy is actually focusing on. Saying given that this is the way in which demand grows, this is the amount of coal that would be needed. But like I've said earlier, that whether the one is necessarily connected to the other is not at all clear from the scenarios that they've constructed, or that connection has not been made clear to the public, you know. So it would be a little careful in terms of sort of putting, we should put too much stock in those coal figures because we should remember that this is not a plan, it's not a plan because there is no planning now. And like, you know, the policy itself says is the markets that are going to do this. So they're going to provide signals to the markets and the markets will then decide what, so even if you might feel that yes, if you need to increase manufacturing capacity, some coal would be needed. If the markets are supposed to do it, you have no guarantee that that much coal capacity is going to come up. So that's all the time we have today. Thank you, Tejal, for joining us in this discussion. Thank you for watching this clip.