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Integrated Energy Policy
Integrated Energy Policy
India needs to sustain an economic growth of at least 9 percent over the next 25 years if
it is to eradicate poverty and meet its larger human development goals. The primary energy
supply (including gathered non-commercial such as wood and dung) must increase at the rate of
5.8% annually for fuelling the growth. Meeting this requirement is a challenge which needs to be
addressed through an Integrated Energy Policy. The broad vision behind the Integrated Energy
Policy is to reliably meet the demand for energy services of all sectors including the lifeline
energy needs of vulnerable households in all parts of the country with safe, clean and
convenient energy at the least-cost.
ð Both the tax structure and regulatory philosophy applied in each energy sector
should be consistent with the overall energy policy should provide a level playing field to all
players whether public or private.
ð Taxes should be neutral across energy sources except where differentials in taxation
across energy sources are specifically intended to counter differential externalities, such as those
reflecting environmental externalities.
ð PSUs operating in the energy sector must operate with autonomy and also full
accountability to ensure incentives for adequate investment through their own resources and
improvements in efficiency in energy production and distribution.
ð India will have to pursue all available fuel options and forms of energy and must
seek to acquire new energy sources abroad.
ð India must actively promote technologies that maximise energy efficiency, demand
side management, conservation and energy security and this must be done by encouraging
domestic research into such technologies and free access to suitable energy related technologies
available abroad.
ð For economic efficiency and for promoting optimal investment in energy, energy
markets should be competitive wherever possible. Competitive markets would lead to trade
parity prices ensuring that energy use and inter-fuel choices would be economically rational. But
a truly competitive market requires that there are multiple producers and that there are no
entry barriers to new producers or to imports.
ð Energy prices must send the right signal to producers and energy users to conserve
energy and, where relevant, switch to preferred sources.
ð Prices of all commercial primary energy sources which are tradable should be set at
trade parity prices at the point of sale.
ð Coal prices should ideally be left to the market and trading of coal, nationally and
internationally, should be free. Coal prices should be made fully variable based on Gross Calorific
Value (GCV) and other quality parameters instead of the current system of pricing on the basis of
broad bands of useful heat value.
ð Trade parity principles cannot be easily applied to Natural Gas because it requires
significant investments in pipelines or, alternatively, in liquefaction, cryogenic shipping & re-
gasification for trading. Natural gas price can be determined through competition among
different producers where multiple sources and a competitive supply-demand balance exist.
ð All generation and transmission projects should be competitively built on the basis
of tariff-based bidding.
ð Fuel wood plantations, bio-gas plants, wood gasifier based power plants, bio-diesel
and ethanol should be promoted.
- acquiring energy assets abroad and setting up energy using industries such as
fertiliser plants in energy rich countries.
ð Subsidy for electricity and cleaner fuels, kerosene or LPG to targeted households
should be delivered through a system of debit card in phased manner.
ð Recommended initiatives would have effect on reducing the green house gas
intensity of the economy by as much as by one third.