U NIVERSIT Y OF TOMORROW

Energy Law and

Policy
Contents

Unit 1 Energy Laws.................................................. ................................................................ 1

Unit 2 Renewable Energy Sources.......................................................................................... 10
Unit 3 Other Renewable Energy Sources...............................................................................19
Unit 4 Carbon Emissions........................................................................................................ 27
Unit 5 Law of Energy Consumption...................................................................................... 39

Unit 6 Distributed Energy Resources.................................................................................... 46

Unit 7 Affordable and Clean Energy....................................................................................... 56
Unit 8 The World Energy Trilemma........................................................................................66
Unit 9 A smart electric grid..................................................................................................... 70
Unit 10 Environmental Economics........................................................................................... 78

Unit 11 Environmental Justice................................................................................................ 88

Unit 12 Energy Justice.......... ................................................................................................... 99
Unit 13 Creating an Energy Policy.......................................................................................... 107
Unit 14 Energy Efficiency Policy Objectives, Planning and Dispute Resolution..................121
Unit 15 National Energy Policy............................................................................................... 133

Unit 16 Politics of Green Energy Policy..................................................................................... 144


Learning Objectives
By the end of this unit, you will be
able to understand:
● Main law of energy
● Need for energy laws
● Energy laws in India
● UNEP guide for energy efficiency
and renewable energy laws
1 Energy Laws
Unit 1
Energy Laws
Introduction
Laws governing energy consumption and taxes cover
both renewable and non-renewable energy sources.
Laws pertaining to energy include case law, guidelines,
directives, legislation, and orders.
Energy law deals with drafting, enforcing, and contesting
rules that control how energy is used. It controls the taxes
and usage of both renewable and non-renewable energy.
Energy laws are in place to regulate the production and
use of energy.
The taxation of energy use is likewise governed by
these rules. Topics of energy regulation include nuclear
energy, sustainable energy production, and oil and gas
management.
Main Law of Energy
A conservation law is a rule that states, “If a certain
physical quantity in an isolated physical system does not
change over time, then that quantity is conserved.” The
law of conservation of energy is a physical law that states
energy cannot be created or destroyed but can change
from one form to another.
Another way to express this law in chemistry is that
the total amount of energy in a system, when kept
separate, remains the same or is conserved.
One interesting aspect of the law of conservation of
energy is that it implies machines of the first type,
which move indefinitely, cannot function. In other
words, a system requires an external power source
to continuously provide energy to its surroundings.
Energy Conservation
Energy is divided into different types based on its
mechanisms of operation. Energy conservation is
a method to reduce the amount of energy used.
People are learning how to save energy in order to
minimize society’s impact on the environment. We
recognize the value of energy. The reduced use of
energy contributes to:
● Prolonging the availability of fossil fuels
● Protecting the environment
● Reducing pollution
Energy Flow in Ecosystem
Energy flow in the ecosystem is a vital factor that
enables a wide variety of living organisms to sustain
their lives. An ecosystem is a complex network
of connections between living and nonliving
components. The study of how energy moves
through an ecosystem is known as ecological
energetics.
The flow of energy through ecosystems is a crucial
aspect of the growth and survival of life on Earth.
Nearly all energy utilized by Earth’s ecosystems
originates from the Sun. Within an ecosystem,
energy can transfer between all living and nonliving
entities.
2 Energy Laws
A food chain illustrates the movement of energy
and nutrients from one living organism to another.
Levels in the Food Chain - A food chain consists
of different levels known as “trophic levels,” all of
which begin with producers that harness sunlight.
Energy then progresses to organisms that consume
or decompose these producers. This continues
until it reaches the apex predators, which are
animals typically not preyed upon by others and
whose remains take longer to decompose.
Figure 1.1: Energy transfer between trophic layers in an ecosystem
There is a certain amount of biomass at each level,
which is transferred from one level to the next.
The second law of thermodynamics explains why
this transfer is not highly efficient. As it moves
from one level to another, only a small portion of
the consumed biomass is actually converted into
usable biomass, typically with efficiencies ranging
from 2% to 40%. This phenomenon is referred to as
environmental efficiency.
Need for Energy Laws
Energy laws encompass taxes on both renewable
and non-renewable energy usage. Some of the
most significant energy laws include case law,
legislation, guidelines, and edicts. On the other
hand, energy policy refers to both energy policy
itself and the related policies.
Power law entails regulations concerning taxes
on gasoline, fuel extraction, and exploration. The
work on energy laws involves aspects such as pre-
exploration activities, soil capture and arbitration,
mining, permits for oil and gas acquisition, and
possession rights.
Energy plays a crucial role in the infrastructure of
every country. Therefore, energy security stands at
the core of any modern energy policy system and
is reflected in numerous national energy laws and
regulations. It is essential due to the significant
impact of energy on society as a whole.
Energy Laws in India
India does not have comprehensive laws that
encompass all the various aspects of energy
production. The Electricity Act of 2003 addresses
the generation, transmission, distribution, and
trading of electricity, as well as the collection of
tariffs.
The 2003 Act grants the authority to hear disputes
to electricity regulatory commissions at both the
central and state levels. The highest authority
under the Act is the Appellate Tribunal for Electricity
(APTEL), with further appeals going to the Supreme
Court.
As there is no adequate legislation to regulate the
natural gas sector, it is currently managed by the
executive branch of the central government. The
Oilfields (Regulation and Development) Act of
1948 and the Petroleum Act of 1934 have been in
place for a considerable period, providing a general
framework for these energy sources. Liquefied
petroleum gas is currently in a legal gray area,
lacking regulation and being subject to an open
general license regime.
3 Energy Laws
The Indian economy is heavily reliant on LNG
imports and licenses. Rules and guidelines are
not issued concurrently with other energy types.
India also has a fully automated Foreign Direct
Investment route for both the traditional power
sector and the renewable power sector.
Under the central regulatory commission (power
market) regulations of 2010, FDI in power exchanges
is further limited to 49% through the automatic
route. In the natural gas and LNG market, India has
shifted from long-term contracts to medium-term
and short-term contracts.
The national electricity policy of 2005 was the
initial step toward managing energy resources in
this loosely regulated sector. The NEP of 2005 laid
the foundation for a set of institutions aimed at
achieving the following goals:
● Ensuring inclusion through equitable distribution
and access to electricity
● Promoting economic growth through the
provision of reliable and affordable power
● Encouraging private sector participation in
capacity expansion and efficiency improvement
In the pursuit of sustainability, the current National
Electricity Policy of 2021 demonstrates how the
2005 policy was implemented. The Samadhan
Scheme and the Shakthi Scheme serve as
reminders of the government’s plans to develop the
energy sector.
The Electricity Act
The Electricity Act of 2003 brought about significant
changes in the energy industry, with one of the most
crucial changes being the allowance for power
generation without requiring a license.
Prior to the implementation of this act, it was
necessary to obtain a license from the central
electricity authority in order to generate power
independently. Techno-economic clearance was a
prerequisite for this process.
However, under the new law, the
requirement for Section 9 licenses
was eliminated and made
explicit. This change enabled
private companies to play a
larger role in power generation,
distribution, and transmission.
Private individuals, however, still
require a license for the latter two
activities.
Approximately 40% of the energy generated in
India now comes from the private sector. Another
significant aspect of the Electricity Act of 2003 is
the separation of responsibilities between the state
and central government in the domains of power
generation, transmission, and distribution.
Since the act does not provide specific guidelines
on unbundling, each state has established its own
set of rules in this regard. Furthermore, following
the implementation of the Electricity Act of 2003,
the ministry took steps to ensure fairer electricity
prices.
4 Energy Laws
The act introduced the concept of power trading
and facilitated open access to transmission and
distribution. Additionally, the 2014 amendments
emphasized the promotion of renewable energy in
alignment with the Sustainable Development Goals
(SDGs).
The Conflict Conundrum
● The Goods and Services Tax does not apply to
the transmission of electricity from one location
to another.
● Electricity is under the jurisdiction of individual
states, and each state government has its
own regulations regarding power plant
registration.
● There has been uncertainty
regarding the taxation of
renewable energy. While
electricity is exempt from the
Goods and Services Tax (GST),
lawmakers have had differing
opinions on whether renewable
sources should also be excluded
from the GST.
● The Electricity Act grants private
entities significant freedom to generate and sell
electricity at the lowest price, which may be in
conflict with competition laws.
● Some remote areas of the country lack electricity
meters.
● Issues related to land acquisition and
environmental are the concerns in constructing
power plants.
● India’s challenging financial situation and policy
paralyse the country.
● Slow progress in the energy sector is exacerbated
by competition from private entities.
India faces significant energy challenges. Despite
being the third-largest electricity producer globally,
some regions still experience electricity shortages,
and reliance on outdated energy sources remains.
It is imperative to establish comprehensive energy
laws, with the government playing a dominant role
in the energy sector.
India has prioritized the use of energy from natural
sources. Implementing smart grids, granting greater
authority to state governments for distribution
and supply divisions, and reducing cross-subsidy
charges will stimulate the sector’s growth.
Additionally, the government aims to transition
to electric vehicles by 2030. The path
to sustainability lies in leveraging
renewable resources. However,
collaborative efforts are
necessary to address the
existing complexity of laws
and regulations.
Renewable Energy Regulations in
India
As the world combats climate change,
India has made the decision to gradually transition
from conventional methods of electricity generation
to clean and renewable alternatives. In 2008, both
the federal and state governments launched India’s
National Action Plan on climate change, along
with a major initiative known as the National Solar
Mission.
With the aim of embracing clean and renewable
energy, the country has set a target to achieve
a capacity of 450GW by 2030. India has already
established renewable energy plants with a
combined capacity of over 100GW, of which
5 Energy Laws
approximately 80GW comprises solar and wind
facilities.
Legal Framework
India operates under a federal and unitary system,
and the constitution delineates the distribution of
executive and legislative powers between the union
and the states.
Electricity plays a significant role within this
framework of separated powers. Both the national
parliament and state legislatures have the authority
to enact laws pertaining to electricity. However, in
cases of conflict, central laws take precedence
over state laws.
The primary legislation governing
the electricity sector in India is
the Electricity Act of 2003.
Presently, India does not have
specific laws dedicated to
renewable energy.
Renewable energy falls within the
purview of the electricity industry
and is regulated by the Electricity Act.
This legislation establishes guidelines for the
generation, transmission, distribution, trading, and
utilization of electricity.
The Ministry of Power is responsible for ensuring
compliance with the Electricity Act and monitoring
the growth of the country’s electricity sector. On
the other hand, the Ministry of New and Renewable
Energy oversees the growth and development
of renewable energy in India. It serves as the
government agency responsible for all matters
related to renewable energy’s progress and
advancement.
Policy Initiatives
India operates under a federal and unitary system,
and the constitution outlines the distribution of
executive and legislative powers between the union
and the states.
Within this separation of powers, electricity is a
common factor. Both the national parliament and
state legislatures have the authority to enact laws
regarding electricity. However, in the event of a
conflict, central laws take precedence over state
laws.
The main legislation governing the electricity sector
in India is the Electricity Act of 2003. Currently, India
does not have specific laws pertaining to renewable
energy.
Renewable energy is considered part of the
electricity industry and is governed by the Electricity
Act. This legislation establishes regulations for the
generation, transmission, distribution, trading, and
utilization of electricity.
The Ministry of Power is responsible for ensuring
compliance with the Electricity Act. Its primary
role is to monitor the growth of India’s electricity
sector. Conversely, the ministry of new and
renewable energy is responsible for the growth
6 Energy Laws
and development of renewable energy in India. It
serves as the government agency overseeing all
matters related to renewable energy’s progress and
advancement.
India possesses numerous renewable energy
sources, with solar and wind energy being the
most extensively used. Since 2015, both the federal
government and most state governments have
implemented policies that facilitate private sector
investments, including foreign investors, in the
renewable energy sector.
According to the Electricity Act, the federal
government must collaborate with state
governments to establish a National Electricity
Policy. This policy outlines strategies to expedite
the development of the electricity sector while
optimizing resources such as coal, natural gas,
nuclear materials, hydro, and renewable energy
sources.
The government also releases a National Electricity
Plan every five years, which provides a short-term
roadmap for the electricity sector.
The Electricity Act also mandates the publication of
a National Tariff Policy. The first policy was released
in 2006, and the most recent one was issued in
2016. It’s noteworthy that the 2016 national tariff
policy places significant emphasis on:
● Promoting the use of clean energy sources for
electricity generation
● Encouraging private sector participation in the
construction of renewable energy plants
Previously, the government introduced a
generation-based incentive plan to incentivize the
development of wind and solar projects. Under this
plan, electricity generators receive compensation a single-part tariff. Their revenue is generated
for each unit of electricity they contribute to the through electricity generation and transmission
grid during the first 10 years of operation. to other locations. The “must-run” status ensures
that wind and solar plants are not arbitrarily shut
Generators also enjoy an accelerated depreciation down or curtailed when the grid infrastructure is
benefit, enabling businesses and industries utilizing overloaded.
solar power in India to write off their investments
in wind and solar at a faster rate than other fixed The Ministry of Power occasionally exempts solar
assets. and wind power from interstate transmission
system charges when transmitted through the
Regulatory commissions established by the central grid. Such exemptions are communicated
Electricity Act have established rules requiring through notifications issued by the ministry .
distribution licensees to procure a minimum
amount of renewable energy as part of their overall Regulatory Framework
demand. This ensures greater utilization of
electricity from renewable sources. In India, there are numerous
regulations governing electricity.
Most state governments have The Electricity Act outlines
implemented policies to the rules for establishing the
encourage private investment Central Electricity Regulatory
in wind and solar energy. Some Commission and the State
of the benefits provided by Electricity Regulatory
these policies include: Commissions.

● Streamlined access to land for These commissions possess

project setup both legislative and judicial powers.
They can create primary and secondary
● Expedited conversion of land use for
laws, and they also have judicial authority to
renewable energy development
resolve disputes between electricity generators
● Preferential procurement of renewable power by
and distribution licensees, as well as between
state distribution licensees
distribution licensees and consumers.
● Preferential allocation of evacuation capacities
The Appellate Tribunal for Electricity (APTEL),
● Streamlined transmission infrastructure
a specialized body responsible for handling

Assigning “must-run” status to wind and solar electricity disputes, has the jurisdiction to hear

power plants has significantly contributed to the appeals against orders issued by either the central

large-scale growth of solar power in India. Unlike or state commissions. Decisions made by APTEL

traditional power plants, which operate under a can be further reviewed by the Supreme Court of

two-part tariff, wind and solar power plants have India upon request.

7 Energy Laws
The central and state commissions undertake waste, and other sources approved by the Ministry
various tasks, including: of New and Renewable Energy.

● Setting electricity prices for sales at both the
central and state levels.
● Establishing regulations for purchasing electricity
generated from different sources, including
renewables.
● Adjudicating disputes.
● Regulating electricity transmission.
● Granting licenses.
Similarly, state commissions establish generic
tariffs through a public hearing process, based
on fixed generic parameters or cost components
specified in tariff determination regulations.
Generators can voluntarily accept these rates and
sell power to a distribution licensee. For such
projects, the power purchase agreements are
submitted to the state commission for approval.
Once approved, the generator has the right to sell

According to the Electricity Act, there are two electricity to the distribution licensee at the agreed-

methods of determining tariffs: upon rate.

● Tariffs are established by the The act states that if a tariff is

central and state commissions determined through competitive

based on the tariff rules they bidding, it must be adopted by the

have issued. central or state commission,

and the agreement between
● Tariffs are determined
the generator and licensee
through competitive bidding,
must be approved.
following standard bidding
rules and documents provided
To ensure secure payment, these
by the federal government.
power purchase agreements typically
require a letter of credit from the buyer
Currently, the Central Electricity
(the distribution licensee) to the generator.
Regulatory Commission (Terms and Conditions
for Tariff Determination from Renewable Energy
Way Forward
Sources) Regulations of 2017 guide the Central
Commission in setting generic tariffs for renewable
The Electricity (Amendment) Bill, 2020, was
power plants. These regulations define “renewable
introduced by the federal government to propose
energy” as electricity derived from renewable
changes aimed at promoting the growth of the
energy sources that meets grid-quality standards.
renewable energy sector.

The regulation broadens the definition of “renewable

For instance, the bill seeks to establish the
energy sources” to include small hydro, wind, solar
Electricity Contract Enforcement Authority as the
(including its integration with combined cycle),
sole entity responsible for settling disputes related
biomass, biofuel cogeneration, urban or municipal
to power purchase agreements.

8 Energy Laws
This authority will:

● Ensure the implementation of payment security mechanisms for power purchase contracts.

● Impose fines on distribution licensees failing to fulfill their renewable purchase obligations.

● Grant the government the authority to announce a National Renewable Energy Policy.

● Enforce a minimum obligation to purchase renewable energy.

● This bill, along with the draft National Electricity Policy 2021 and other related policies, aims to facilitate
necessary reforms to achieve energy efficiency, keep pace with technological advancements, and meet
climate change goals.

Summary

● Energy law is a branch of law that deals with the utilization and taxation of both renewable and non-
renewable energy sources. It encompasses case law, rules, regulations, statutes, and edicts related to
energy.

● Energy conservation involves reducing energy consumption to allow the energy supply to replenish. Often,
the most effective approach is to switch to an alternative energy source. Conserving energy is essential for
saving money and preserving resources for longer periods.

● The law of conservation of energy states that energy cannot be created or destroyed but can only be
transformed from one form to another. Thus, unless external energy is added, a system will always maintain
the same total energy.

● It is important to note that Energy Law focuses on the creation, enforcement, and questioning of laws
governing energy usage. These laws regulate the generation, collection, and taxation of energy.

● Energy regulation encompasses various aspects such as nuclear power, the development of clean energy,
oil and gas regulation, and more.

9 Energy Laws
 Unit 2

Renewable Energy Sources

Learning Objectives Introduction

By the end of this unit, you will be

Renewable energy comes from natural resources that
able to understand:
can be replaced faster than they are used up. Sunlight
● Renewable and Green
and wind are two examples of sources that are constantly
energy
replenishing. Renewable energy sources are abundant
● Solar power, Geothermal and and diverse.
Wind energy
These resources regenerate naturally, but they have a
● Biomass energy
limited energy output per unit of time. They are referred
to as “renewable resources.”

Renewables are increasingly replacing “dirty” fossil fuels

in the power sector. This shift results in reduced carbon
emissions and other forms of pollution being released
into the atmosphere. Furthermore, renewables generate
minimal or no harmful emissions when utilized, making
them crucial in mitigating the worsening effects of global
warming.

However, not all “renewable” energy sources are

environmentally beneficial. Biomass and large
hydroelectric dams entail challenging trade-offs
concerning wildlife, climate change, and other issues.

As the adoption of renewable energy continues to

soar, one of the primary objectives is to modernize the
10 Renewable Energy Resources
electricity grid, making it smarter, safer, and more
interconnected across regions.
Renewable Energy
Renewable energy, also known as “clean energy,”
is derived from natural sources or processes that
continuously generate more energy. For instance,
the sun and wind consistently provide energy, albeit
their availability depends on time and weather
conditions.
While many perceive renewable energy as a new
technology, harnessing the power of nature for
heating, transportation, lighting, and other purposes
has been practiced for a long time.
The significance of renewable energy sources is
increasing as we discover new and more affordable
methods of capturing and storing energy from the
sun and wind. Renewable energy is expanding on
both large and small scales, with solar panels, for
example, enabling individuals to sell excess power
back to the grid.
Renewable energy plays a crucial role in ensuring a
sufficient energy supply and reducing greenhouse
gas emissions. Its utilization can help decrease
dependence on imported energy and the
consumption of fossil fuels, which are the leading
source of carbon dioxide emissions.
11
Here are some reasons why accelerating the
transition to clean energy is essential for a
healthy and livable planet, both now and for future
generations:
We can Obtain Energy from Various Sources: Every
country has access to renewable energy sources,
but not all of their potential has been fully utilized
yet. The International Renewable Energy Agency
(IRENA) predicts that by 2050, renewable energy
should account for 90 percent of the world’s
electricity.
Renewables offer countries a way to reduce
their dependence on imports. They contribute to
economic diversification and shield economies
from fluctuations in fossil fuel prices. Moreover,
they facilitate job creation, foster economic
development, and help alleviate poverty
Renewable Energy is Cheaper: It is the most
affordable means of power generation. The prices
of renewable energy technologies have been
rapidly declining. Between 2010 and 2020, the cost
of solar power led to an 85% reduction in electricity
costs. Onshore and offshore wind energy costs
also decreased by 56% and 48% respectively.
By 2030, renewable sources could potentially
generate nearly 65 percent of the world’s electricity.
This transition would not only lower carbon
emissions but also reduce electricity costs.
Renewable Energy is Healthier: The World Health
Organization (WHO) reports that nearly 99 percent
of the world’s population breathes unhealthy air,
leading to severe health issues. Each year, over 13
million people worldwide die due to preventable
environmental problems, such as air pollution.
Adopting clean energy sources like solar and wind
Renewable Energy Resources
power can prevent pollution hazards and mitigate
climate change.
Renewable Energy Makes Economic Sense: In
2020, the fossil fuel industry received subsidies
amounting to $5.9 trillion, including
subsidies, tax breaks, and unaccounted health and
environmental costs. To achieve net-zero emissions
by 2050, an investment of approximately $4 trillion
per year in renewable energy, including technology
and infrastructure, is required until 2030.
Additionally, efficient and reliable renewable
technologies enhance the resilience of the energy
system, reducing vulnerability to market shocks.
They also improve energy security
and contribute to global warming
prevention.
Green Energy
Green energy is the utilization
of energy sources that can be
replenished. Renewable energy
refers to energy derived from
sources that are inexhaustible and
can be repeatedly used. Some examples
of these sources include wind, water, waste
(biomass), and the sun.
Utilizing green energy offers numerous benefits to
individuals, such as improved air quality, mitigation
of climate change effects, and cost savings on their
electricity bills.
The terms “green energy” and “renewable energy”
are often used interchangeably. However, there
is an important and occasionally confusing
distinction between the two. Most green energy
sources are also renewable energy sources, but
12
not all renewable energy sources are necessarily
considered green.
Water power serves as an example. Hydropower
harnesses energy from swiftly moving water, which
direct is a renewable resource. However, some argue that
extensively utilizing water power is not considered
green due to associated industrialization and
deforestation for constructing large hydroelectric
dams.
Benefits of Green Energy
Renewable energy sources, such as the sun, wind,
water, waste, and geothermal heat, are abundantly
available. They are naturally replenished
and have minimal or no pollution or
greenhouse gas emissions.
Here are some of the ways
renewable energy helps:
● Clean Solution: Green
energy is clean, meaning it does
not emit greenhouse gases into
the atmosphere. Greenhouse gases
contribute to air pollution and are a
leading cause of global warming.
● Cost-Effective: Green energy is affordable and
can help reduce electricity expenses. While there
is an upfront cost for installing solar panels, some
companies offer solar assistance programs that
allow payment over time.
● Stability: With numerous renewable energy
options, it is a reliable and sustainable resource
that can be harnessed from various locations
worldwide. By diversifying their energy sources,
countries can maintain a stable energy supply
and reduce reliance on fossil fuels.
Renewable Energy Resources
Green Energy Corridors
The goal of the Green Energy Corridor Project is
to integrate electricity generated from renewable
sources, such as solar and wind, with electricity
from conventional power plants within the grid.
In 2015-16, the Ministry approved the Intra State
Transmission System (InSTS) project, enabling the
transmission of significant amounts of renewable
energy to other regions. Eight states abundant
in renewable energy sources were selected
for the project, namely Tamil Nadu, Rajasthan,
Karnataka, Andhra Pradesh, Maharashtra, Gujarat,
Himachal Pradesh, and Madhya Pradesh. The
State Transmission Utilities (STUs) in
these states are responsible for
implementing the project.
The revised target of the
project includes the installation
of approximately 9700 km
of transmission lines and
substations with a total capacity
of around 22600 MVA. The
completion deadline for this target is
set for December 2020. The project aims
to facilitate the transfer of over 20,000 MW of large-
scale renewable power from the implementing
states and enhance the grid infrastructure in those
states
Solar Power Energy
Solar radiation refers to the light emitted by the sun,
also known as electromagnetic radiation. While
every location on Earth receives some sunlight
throughout the year, the amount of solar radiation
reaching each specific spot on the Earth’s surface
varies.
13
In a mere hour and a half, the sunlight that reaches
the Earth’s surface can potentially generate enough
power to meet the world’s energy needs for an entire
year. Solar technologies utilize either photovoltaic
(PV) panels or mirrors that concentrate the sun’s
rays to convert sunlight into electricity. This
electricity can be directly used or stored in batteries
or thermal storage systems.
There are two primary types of solar energy
technologies: photovoltaics (PV) and concentrating
solar-thermal power (CSP).
Photovoltaics: When the sun shines on a solar
panel, the PV cells within the panel absorb
the sun’s energy. This energy prompts
electrical charges to move within
the cells’ electrical field, resulting
in the flow of electricity.
Concentrating Solar-Thermal
Power: These systems employ
mirrors to reflect and focus
sunlight onto receivers, which
capture solar energy and convert
it into heat. This heat can then be
utilized to generate electricity or stored
for later use. Concentrating solar-thermal power is
predominantly utilized in large-scale power plants.
Geothermal Energy
Geothermal energy is derived from the heat within
the Earth. Since heat generation is a continuous
process beneath the Earth’s surface, geothermal
energy can be repeatedly utilized. It finds
applications in activities such as bathing, heating
buildings, and generating electricity.
Renewable Energy Resources
The majority of the Earth’s heat energy does not
manifest as magma, water, or steam. Instead, it
remains within the mantle and gradually moves
outward, accumulating in areas with high heat
concentration. This dry geothermal heat can be
accessed through drilling and can be converted
into steam by introducing water.
Numerous countries have successfully harnessed
geothermal energy. Different regions of the world
offer varying types of geothermal energy resources
that can be utilized.
Iceland stands as an excellent example, where a
significant portion of the population benefits from
geothermal energy due to the abundant presence
of easily accessible underground hot water.
Geothermal energy in Iceland is known for being
safe, reliable, and cost-effective. In contrast, other
countries like the U.S. may require more costly
drilling processes to tap into geothermal energy
reserves.
Harvesting Geothermal Energy: Heating and
Cooling
Low-Temperature Geothermal Energy: Geothermal
heat can be readily utilized as a heat source in
various locations worldwide. This type of heat
energy is known as low-temperature geothermal
energy.
14
Geothermal energy with low temperatures
is derived from pockets of heat that reach
temperatures of approximately 150°C (302°F).
These low-temperature geothermal energy sources
are typically located just a few meters below the
Earth’s surface.
Low-temperature geothermal energy can be
employed for heating purposes in greenhouses,
residential buildings, fisheries, and industrial
processes. While primarily used for heating, it can
also be utilized to generate electricity.
Co-Produced Geothermal Energy: Co-produced
geothermal energy technology relies on other
energy sources to function. This type of geothermal
energy is obtained from oil and gas wells, where
water is heated as a by-product.
Geothermal Heat Pumps: Geothermal heat
pumps (GHPs) utilize the Earth’s heat and can be
implemented in nearly any location worldwide.
GHPs are typically drilled between 10 and 300 feet
(3 to 90 meters) deep, significantly shallower than
most oil and natural gas wells. GHPs do not require
rock fracturing to access their energy source.
A continuous loop, known as a “slinky loop,”
consisting of pipes connected to the GHP, is set up
both underground and above ground, often within a
building. Alternatively, the loop can be completely
buried to provide heating for parking lots or garden
areas.
In this system, water or other liquids, such as
glycerol, which acts as an antifreeze, circulate
through the pipes. During winter, the liquid absorbs
heat from the Earth’s core, transporting it upward
through the building via a network of ducts. These
Renewable Energy Resources
heated pipes can also be routed through hot water
tanks to save on water heating costs.
During summer, the GHP system operates in
reverse. The heat in the building or parking lot
warms the liquid in the pipes, which then transfers
the heat underground for cooling.
Harvesting Geothermal Energy: Electricity
Geothermal power plants utilize the heat located
several kilometers below the Earth’s surface to
generate sufficient energy for electricity production.
In certain locations, underground steam or hot
water naturally serve as heat sources. However, in
most places, water needs to be injected
to generate steam.
Dry-Steam Power Plants:
Dry-steam power plants
utilize naturally occurring
underground steam. The
steam is directly piped to a
power plant, where it powers
turbines to generate electricity. Dry-
steam power plants are the oldest
method of using geothermal energy for
electricity generation.
Flash-Steam Power Plants: Flash-steam power
plants employ naturally hot water and steam from
underground. A low-pressure environment is filled
with water exceeding 182°C (360°F) in temperature.
Some of the water rapidly evaporates or “flashes”
into steam, which is then utilized to drive a turbine
and generate electricity. Any remaining water can
be heated in a separate tank to extract additional
energy.
15
Binary Cycle Power Plants: Binary cycle power
plants employ a unique process to conserve water
and produce heat. The underground water reaches
temperatures of about 107°C to 182°C (225°F to
360°F). This hot water is contained in a pipe that
runs above the ground. A liquid organic compound
with a lower boiling point than water is heated by
the hot water. The organic liquid creates steam,
which passes through a turbine, generating power
for electricity production. Only steam is emitted
during this process, while the water in the pipe is
returned to the ground, where it will be reheated
by the Earth, providing more heat to the organic
compound.
Enhanced Geothermal Systems: A
significant amount of energy and heat
exists beneath the Earth’s surface.
However, it cannot be utilized
unless there are “hydrothermal”
areas underground, meaning
places that are not only hot
but also wet and porous. Many
locations lack all three conditions.
Enhanced geothermal systems
(EGS) implement drilling, fracturing,
and injection techniques to introduce
fluid and permeability into hot but dry underground
rock formations.
Wind Energy
Electricity is generated from wind by converting the
kinetic energy of moving air into electricity. Modern
wind turbines operate by utilizing the wind to turn
the rotor blades, thereby converting the wind’s
kinetic energy into rotational energy. This rotational
energy is then transmitted to the generator through
a shaft, which in turn produces electricity.
Renewable Energy Resources
The amount of power that can be harnessed from
the wind depends on the size of the turbine and the
length of its blades. The output is determined by the
cube of the wind speed and the square of the rotor
size. Theoretically, when the wind speed doubles,
the energy potential increases by a factor of eight.
Since 2000, wind power has experienced rapid
growth due to research and development, supportive
policies, and declining costs. According to data
from IRENA, the installed capacity of onshore and
offshore wind farms has multiplied by a factor of
98 over the past 20 years, increasing from 7.5 GW
in 1997 to approximately 733 GW in 2018.
Onshore wind capacity has risen from
178 GW in 2010 to 699 GW in 2020,
while offshore wind capacity has
increased from 3.1 GW in 2010 to
34.4 GW in 2020, representing
a higher percentage growth.
Between 2009 and 2019, wind
power production grew by a
factor of 5.2, reaching 1412
TWh.
Wind energy is one of the fastest-growing
energy sources globally, owing to its numerous
benefits. Researchers are actively addressing
technical and socio-economic challenges to
facilitate the development of a carbon-free
electricity future. This will enable wind energy to
provide greater assistance to a larger population.
Types
Land-Based Wind Energy: Wind turbines
canfunction independently, connected to a utility
power grid, or in combination with a photovoltaic
(solar cell) system. For large-scale (megawatt-
16
sized) wind energy sources, multiple wind turbines
are often installed in close proximity to form a wind
plant, also known as a wind farm.
Stand-alone wind turbines are typically
employed for purposes such as water pumping
or communications. Wind turbines can help
homeowners, farmers, and ranchers in windy
regions reduce their electricity expenses.
Distributed Wind Energy: Small wind systems
can also serve as a form of distributed energy.
Distributed energy resources comprise a collection
of small, modular power-generating technologies
that improve the functionality of the electricity
delivery system.
Offshore Wind Energy: Offshore
wind power is a relatively new
industry. In this case, offshore
wind farms are established in
coastal areas.
Benefits
● Wind power is clean and can
be used over and over again.
● Wind turbines use mechanical power to spin a
generator and generate electricity. This is how
they harness energy from the wind.
● Wind is a resource that never runs out and can
be utilized to produce electricity without burning
fuel or polluting the air.
● Wind power is a cost-effective option.
● Utility-scale wind turbines on land are among the
most affordable methods of obtaining energy
today.
● Moreover, the cost competitiveness of wind
Renewable Energy Resources
 energy continues to improve as advancements India has long relied on biomass as an important
are made in its science and technology energy source due to its various benefits, such as:

● Wind turbines operate effectively in various

settings.
● Wind energy generation is well-suited for working
landscapes that are utilized for farming and other
purposes.
● Wind energy is easily implemented in farms,
ranches, coastal and island communities, as well
as other rural or remote areas where favorable
wind resources are often present.
Biomass Energy
Biomass is organic, which means it comes from
living things such as plants and animals. Plants,
wood, and waste are commonly used as feedstocks
to generate energy from biomass.
Biomass energy can also be derived from non-
renewable sources. It originates from the sun, as
plants utilize photosynthesis to convert carbon
dioxide and water into nutrients (carbohydrates) by
harnessing solar energy.
There are direct and indirect methods to convert the
energy from these organisms into usable energy,
including:
● Renewable nature
● Wide availability
● Carbon neutrality
● Potential for significant rural employment
Biomass can also be used to produce solid energy.
Approximately 32% of the country’s total primary
energy use still comes from biomass, and over 70%
of the population depends on it.
The ministry of new and renewable energy
recognizes the potential and role of biomass energy
in India. Consequently, it has implemented several
programs to promote efficient technologies for
utilizing biomass energy across different sectors
of the economy to maximize its benefits.
The primary objective of the Biomass Power &
Cogeneration Program is to encourage technologies
that effectively utilize the country’s biomass
resources for generating grid power. Biomass
materials such as bagasse, rice husk, straw, cotton
stalk, coconut shells, soya husk, de-oiled cakes,
coffee waste, jute waste, groundnut shells, sawdust,
etc., are used to generate electricity.

Direct And
The program focuses on bagasse-based
Indirect Methods cogeneration in sugar mills and biomass power
To Convert
The Energy generation to optimize biomass utilization.

Bioenergy Technologies

Burning to
Produce Heat
Processing
into
Biofuels: Biofuels are liquid fuels used for
(direct) Biofuel
Conversion
(indirect)
transportation, such as ethanol and biodiesel,
into Electricity
(direct)
which are produced by converting biomass into
liquid fuels.
Figure 2.1: Direct Indirect Method

17 Renewable Energy Resources

Biopower: Biopower technologies employ three methods to convert renewable biomass fuels into heat and
electricity: burning, bacterial breakdown, or conversion to gas or liquid fuel.

Bioproducts: Biomass has applications beyond electricity and fuels. It can also be transformed into chemicals
used in the production of plastics and other petroleum-derived products.

Benefits of Biomass

Biomass offers a range of benefits, including:

● Reduction of Greenhouse Gas Emissions: Biomass energy usage has the potential to significantly reduce
greenhouse gas emissions.

● Reduction of Dependence on Foreign Oil: Biofuels, derived from biomass, are the only renewable liquid
transportation fuels available, thus decreasing reliance on foreign oil.

Summary

● The world is rapidly transforming into a global village because people worldwide require increasing amounts
of energy daily, while the Earth cannot alter its shape.

● People require additional energy and related services to support their social and economic development,
well-being, and health.

● Renewable energy sources are synonymous with sustainability. They are clean and inexhaustible.

● As a local energy source, it also maintains a balance between the energy being consumed and the creation
of new energy sources. This enables local communities to achieve energy independence.

18 Renewable Energy Resources


Learning Objectives
By the end of this unit, you will be
able to understand:
● Hydropower and tidal energy
● Nuclear power energy
● Biofuel energy
● Green hydrogen energy
19
Unit 3
Other Renewable
Energy Sources
Introduction
Up until the mid-1800s, nearly all of the energy required
for heating, cooking, and lighting in the country was
derived from wood. Fossil fuels such as coal, oil, and
natural gas have been the primary energy sources since
the late 1800s.
However, utilizing fossil fuels for energy production
results in significantly more pollution compared to using
renewable energy sources. The most effective approach
to addressing the climate crisis is transitioning from
fossil fuels, which are the main contributors to emissions,
to renewable energy.
Renewable energy sources are considerably more
accessible than fossil fuels, prompting governments
worldwide to strive for their exclusive utilization in
powering their nations. There are numerous reasons why
relying on energy derived from natural sources is crucial
for our future.
Hydropower Energy
Hydropower is a form of renewable energy that utilizes
the movement of water to generate electricity. It is one
of the oldest and most widely used sources of renewable
energy. Other Renewable Energy Resources
There are various sizes of hydropower plants.
Some can be quite large, while others can be
small and employ the flow of water in municipal
water systems or irrigation ditches. There are even
“damless” plants that divert or run a portion of a
stream through a powerhouse before the water
returns to the main river.
Regardless of the method employed, acquiring
hydropower is much easier and more common
than most people realize.
Types of Hydroelectric Energy Plants
There are three primary types of hydroelectric
energy plants:
● Impoundment Facility: This
facility utilizes a dam to
regulate the water flow in
a pool or reservoir. When
more power is needed,
the dam releases the
water, and gravity propels
it through a turbine, which
powers a generator.
● Diversion Facility: Unlike other
plants, this type does not require a
dam. Instead, it employs a system of canals to
channel water from the river to the turbines that
power the generators.
● Pumped-Storage Facility: This plant stores
energy from the sun, wind, and nuclear power
for later use. It accomplishes this by pumping
water from a lower elevation pool uphill to a
higher elevation reservoir. When there is a high
demand for electricity, water from the higher
pool is released, flowing back down to the lower
reservoir and turning a turbine to generate
20
additional electricity.
Working
To understand hydropower, it is important to grasp
the water cycle, which consists of three steps:
● The sun heats the water on the surface of rivers,
lakes, and oceans, causing it to evaporate.
● Condensation occurs, forming clouds, and
precipitation in the form of rain or snow falls
from the clouds.
● The rain and snow flow into streams and rivers,
ultimately reaching oceans and lakes. The
water then evaporates, and the cycle
begins anew.
● Hydropower harnesses the
difference in height between
where water enters a dam
or diversion structure and
where it exits, much lower
down, to generate electricity.
Cost
In comparison to other electricity
sources, hydropower also boasts relatively low
costs for maintenance, operations, and fuel over
the project’s entire lifespan. Although it incurs
significant upfront costs like any major energy
source, its longevity allows for spreading out these
expenses over time.
Furthermore, the equipment used in hydropower
facilities generally lasts longer before requiring
replacement or repair, resulting in long-term cost
savings.
Other Renewable Energy Resources
Benefits Types of Tidal Energy Systems

The benefits of hydropower are: Tidal Barrages: A barrage is a structure resembling

a dam that is used in a specific type of tidal energy
● It’s a clean and cheap way to obtain energy. system. The barrage is constructed across an inlet

● Hydropower plants can immediately supply of an ocean bay or lagoon, creating a tidal basin.

power to the grid, making them a flexible and

The water level and flow rate within the barrage are
reliable backup source of power during major
controlled by sluice gates, allowing the tidal basin
outages or disruptions.
to fill with water during high tide and drain through
● Hydropower offers additional advantages beyond
an electricity turbine system during low tide.
electricity generation, such as flood prevention,
support for crop growth, and water provision.
A two-way tidal power system utilizes both
incoming and outgoing tides to generate electricity.

Tidal Turbines: Tidal turbines, similar to wind

turbines, consist of blades that rotate a rotor to
power a generator. They can be installed in locations
with strong tides on the sea floor.

Due to water being approximately 800 times denser

than air, tidal turbines must be much stronger and
heavier compared to wind turbines.
Tidal Energy
While tidal turbines are more expensive to build
As the need for clean electricity, renewable
than wind turbines, they can gather more energy
fuels, and key materials for energy and industrial
with the same size blades.
processes grows around the world, it is important
to find and secure more sustainable energy sources
Tidal Fences: Similar to tidal turbines, a tidal fence
than those currently available.
is a type of tidal power system that employs vertical
axis turbines mounted in a fence or row on the
Tidal energy represents a significant opportunity
seabed. When water flows through these turbines,
to increase the utilization of renewable energy for
electricity is generated.
powering the world.

Importance and Applications

In the future, tidal energy could potentially supply a
significant portion of the world’s electricity needs,
Tidal energy is a type of power that arises from
provided that issues such as device durability,
the rise and fall of tides, which are caused by the
environmental concerns, and the cost-effectiveness
gravitational pull of the sun, moon, and Earth.
of its commercial use can be addressed.
When water passes through a narrow area, where it

21 Other Renewable Energy Resources

moves faster, it creates tidal currents with enough ● Areas where waterways and tidal channels
energy to be harnessed. narrow, resulting in stronger tidal currents

Tidal energy can be used to generate electricity
by strategically placing generators in suitable
locations designed for that purpose.
The ocean can also be utilized to generate other
forms of energy, such as:
Historically, tidal energy has primarily been used to
generate electricity for terrestrial use through the
national power grid. However, there is potential
value in employing tidal energy to meet the
requirements of other ocean industries that either
already exist or are in the early stages, such as:

Waves 1 Aquaculture
1

Persistent Ocean Currents 2 2 Ocean Mineral Mining

Differences in temperature
3 Oceanographic Research
3
and salinity within seawater

4 Military Missions
Figure 3.1: Forms of Enery

Tidal energy is more potent than wind energy due

Figure 3.2: Other Ocean Industries
to the density of water, as water is denser than
To fully utilize tidal energy as a large and
air. At the same turbine diameter and rotor speed,
dependable source of clean energy, researchers
tidal energy produces exponentially more power
need to find ways to facilitate the development
than wind energy. Additionally, tidal power is more
of technologies and methods that simplify its
consistent and predictable compared to wind or
widespread commercial adoption. The industry
solar power, which fluctuate and are less easily
is still in its nascent stages and must overcome
planned for. This makes tidal energy an intriguing
numerous obstacles to ensure sustainable growth
renewable energy source worth exploring.
and success.

Some areas that are ideal for capturing tidal energy

Benefits of Tidal Energy
are:

● Tidal energy is a clean, renewable, and sustainable

● Locations with significant differences in tidal
resource that is not being fully utilized. This
range, which refers to the variance between high
represents a significant opportunity for the world
tide and low tide
to meet its current and future energy needs.

22 Other Renewable Energy Resources

● Water is denser than air, which is why tidal energy Other test sites and technology deployments are
is stronger than wind energy. in various stages of development in countries
such as Scotland, France, Japan, Korea, China,
● Tidal energy is more efficient than wind or solar
Canada, and the United States. This is because
energy due to its higher density. It also does
developers are introducing new and improved
not produce greenhouse gases or other waste,
tidal current technologies that show promise in
making it an excellent renewable energy source
overcoming key barriers to commercial viability. To
to pursue.
propel the industry forward, it is crucial to test the
● Another advantage of continuous tides is their
performance and environmental impact of these
predictability and reliability, particularly when
new technologies under real sea conditions.
compared to other renewable energy sources
such as wind and solar, which are influenced by Nuclear Power Energy
the randomness and uncertainty of atmospheric
conditions. Nuclear energy is a type of energy derived from the
protons and neutrons in the nucleus, which is the
Recent Advances in Tidal Energy center of an atom. This energy can be
generated in two different ways:
Around the world, people are
constructing or have recently ● Fission: When atomic nuclei
constructed tidal power split into multiple parts
arrays of varying sizes, with a
● Fusion: When atomic nuclei
significant focus on harnessing
merge together
energy from tidal streams or
currents.
Presently, nuclear fission is used
worldwide to generate electricity,
The newest and first-of-its-kind tidal
while the technology to produce
stream array is located in the Pentland
electricity from nuclear fusion is still in the
Firth in Scotland, which is the body of water
research and development phase.
situated between the Scottish mainland and the
northern islands.
Nuclear fission involves the splitting of an atom’s
nucleus into two or more smaller nuclei, releasing
The MeyGen tidal energy project began operating
energy in the process. Each time this reaction
in stages in 2018. By the end of 2020, the first
occurs, heat and radiation are emitted, both of
four turbines had generated and delivered over 35
which are forms of energy. In a nuclear power plant,
gigawatt-hours of power to the grid. At full capacity,
the heat can be converted into electricity, similar to
the high-speed currents in the area will generate up
how heat from fossil fuels like coal, gas, and oil is
to 400 MW of power through 61 turbines buried in
utilized for electricity generation
the seabed.

23 Other Renewable Energy Resources

Nuclear Power Plant Working
Inside nuclear power plants, nuclear reactors and
their equipment contain and control the chain
reactions that produce heat through fission. These
reactions are usually powered by uranium-235. The
heat warms the cooling agent in the reactor, which
is usually water, to produce steam. The steam
is then used to turn turbines, which activate an
electric generator to generate electricity with low
carbon emissions.
Nuclear Power and Climate Change
Approximately 10 percent of the world’s
electricity and about 20 percent of the
energy in the United States comes
from nuclear power. There are
440 nuclear reactors used to
generate electricity in 30
countries around the world.
No other source of electricity
can surpass nuclear power in
terms of efficiency and reliability.
Nuclear power plants can generate
large amounts of electricity around
the clock for many months without
interruption.
Nuclear power is a low-carbon energy source
because, unlike coal, oil, or gas power plants, nuclear
power plants almost never release CO2 when in
operation. Nearly one-third of the world’s carbon-
free electricity comes from nuclear reactors, which
play a crucial role in achieving climate change
goals.
24
Biofuel Energy
Biofuel is fuel derived from living matter called
biomass, usually plant matter. Based on the source
of biomass, there are three different types of
biofuels. Biofuels are a renewable source of energy
because they are made from plants that are still
growing.
The most common method of using biofuel is by
blending it with refined petroleum products such
as gasoline, diesel fuel, heating oil, and kerosene-
based jet fuel. However, some biofuels, known as
“drop-in biofuels,” do not require mixing with their
petroleum counterparts.
Both biofuels and fossil fuels (coal,
oil, and natural gas) originate
from deceased organic matter.
However, biofuels are made
from organic matter that
died relatively recently, while
fossil fuels are derived from
organic matter that perished
millions of years ago.
When considering climate change,
biofuels and fossil fuels have similar
emissions. However, the carbon dioxide released
from biofuels originates from recently absorbed
air, and it does not contribute to the overall carbon
content in the carbon cycle, which includes the
atmosphere, ocean, and biosphere. This is in
contrast to the finite carbon supply found in fossil
fuels.
Other Renewable Energy Resources
Categories of Biofuels
There are four main types, which are:
● Ethanol is a fuel made of alcohol that is mixed
with gasoline to power cars.
● Biodiesel is a biofuel that is usually blended with
diesel made from petroleum.
● Renewable diesel is a fuel chemically similar to
petroleum diesel fuel, used as either a drop-in
fuel or blended with petroleum diesel.
● Other biofuels include renewable heating oil,
renewable jet fuel (also known as sustainable
aviation fuel, alternative jet fuel, and biojet),
renewable naphtha, renewable gasoline, and
other new biofuels that are in various stages of
development and commercialization.
Green Hydrogen Energy
Green hydrogen is hydrogen that is produced by
using renewable energy to split water into hydrogen
and oxygen. This approach differs significantly
from both the grey and blue pathways.
At the COP26 UN Climate Conference, green
hydrogen was highlighted as a means to reduce
carbon emissions in heavy industry, long-distance
freight, shipping, and aviation. Both governments
and businesses concur that hydrogen plays a
pivotal role in achieving a net-zero economy.
Hydrogen has long been utilized as a raw material
in the chemical industry or metallurgy and as a fuel.
Since it cannot be extracted from nature in its pure
form, it needs to be manufactured.
When we refer to “green hydrogen,” we are
describing hydrogen that has been produced in a
25
manner that does not emit pollution into the air.
This is also referred to as “sustainable hydrogen.”
It is considered a fuel that is increasingly hailed
as the most effective means to reduce carbon
emissions globally and fulfill the commitments
made to combat climate change by 2050.
How is Green Hydrogen Achieved?
Green hydrogen is generated through a process
called electrolysis, which is powered by renewable
energy sources such as the sun or the wind. Utilizing
electrodes and an electric current, electrolysis
separates the water molecule into oxygen and
hydrogen.
Green Hydrogen Working
When energy is required, hydrogen stored in specific
tanks is transferred to a fuel cell. In the fuel cell,
it combines with oxygen from the air, generating
electricity. As a result, the only byproduct of
this process is water. This creates a clean and
sustainable system that does not emit any CO2
during energy production.
Green hydrogen has the potential to be a crucial
component of the world’s transition towards
sustainable energy and economies with net-
zero emissions. When discussing hydrogen
technologies, the terms “grey,” “blue,” and “green”
Other Renewable Energy Resources
may be used in conjunction. The distinction lies in the method of production.

Hydrogen only produces water when burned, but its production requires a significant amount of carbon.
Depending on the production method, hydrogen can be classified as grey, blue, green, or even pink, yellow, or
turquoise. However, green hydrogen is the only type that can be produced without impacting the climate. This
highlights its importance in achieving net-zero emissions by 2050.

An increasing number of people acknowledge that green hydrogen can be utilized in nearly every industry
that currently relies on fossil fuels and faces challenges in terms of environmental cleanup.Therefore,
spreading awareness about green hydrogen is crucial if we aim to meet the climate goals outlined in the
Paris Agreement and address the climate emergency’s zero-emissions objectives.

Europe is already engaged in projects along the entire hydrogen value chain, including the development
of cost-effective electrolyzers, the establishment of a transportation network, and the implementation of
hydrogen-based road transportation solutions.

Over time, the installation cost of hydrogen systems is projected to decrease by 40% to 80%, according to a
report by the International Renewable Energy Agency (IRENA). Coupled with the declining prices of renewable
energy, this indicates that green hydrogen could become profitable by 2030.

Summary

● Energy is important in our everyday lives because it facilitates growth and development, benefiting the
economy and enhancing people’s productivity.

● The return-to-renewables plan is an excellent approach to combat climate change, but it must have long-
term viability to assist future generations in meeting their energy requirements.

● Despite these opportunities, there are still challenges that hinder renewable energy from becoming a
lasting solution to climate change.

● Market failures, lack of information, limited access to raw materials for future utilization of renewable
resources, and our daily carbon footprint are among the issues that contribute to this challenge.

26 Other Renewable Energy Resources

 Unit 4

Carbon Emissions

Learning Objectives Introduction

By the end of this unit, you will be

We derive numerous benefits from landforms, including
able to understand:
mountains, hills, plateaus, and plains. We obtain oxygen,
● Climate change and
food, and water from these landforms. Additionally, a
sustainability
significant portion of the world’s wildlife inhabits land-
● Hazardous waste based ecosystems.

● Energy efficiency and

Land serves as a crucial carbon sink and plays a pivotal
technologies employed
role in the climate system. Its surfaces, such as forests,
● Carbon credits help maintain the planet’s temperature stability and store
carbon. Over the past decade, land-based ecosystems
have absorbed approximately 30% of the carbon dioxide
emitted by human activities, including the burning of
fossil fuels.

However, landforms are currently facing challenges due

to deforestation, urbanization, industrial development,
agricultural expansion, and unsustainable farming
practices. These factors pose obstacles to land’s ability
to continue producing food, maintaining fresh water and
forest resources, and regulating climate and air quality.

Conversely, a changing climate exacerbates land

degradation by increasing the frequency and intensity
of droughts, desertification, and other extreme weather
events as the planet warms. The rise in greenhouse
27 Carbon Emission
gas emissions caused by human activities is
responsible for this phenomenon, leading to health,
environmental, and humanitarian crises.
Nevertheless, the fight against climate change
presents a genuine opportunity to transition
towards a low-carbon society, which will foster job
creation, innovative ideas, and social justice on
both local and global scales.
Since the onset of the industrial revolution, carbon
dioxide emissions have significantly increased,
primarily due to increased combustion of fossil
fuels. A small group of countries is responsible
for the majority of greenhouse gas emissions
worldwide. In terms of total emissions, China, the
United States, and the countries comprising the
European Union are the three largest emitters.
The release of CO2 into the atmosphere is a
primary driver of global climate change. Reducing
emissions is crucial for mitigating global warming
and addressing climate change. However,
discussions surrounding the responsibility and
initiatives for emission reduction remain ongoing.
Climate Change
Changes in temperatures and weather patterns
that last for a long time are called “climate change.”
These changes could be natural, like when the
sun’s cycle changes. The human population is
28
responsible for climate change. Humans burn
fossil fuels like coal, oil, and gas. Greenhouse gas
emissions are made when fossil fuels are burned.
These gases act like a blanket wrapped around the
Earth, trapping the heat from the sun and causing
temperatures to rise.
Climate change is caused by things like the release
of greenhouse gases, including:
Carbon Methane
Dioxide
Figure 4.1: Green House Gases
These gases are produced by activities such as
driving a car using gasoline or heating a building
with coal. Carbon dioxide can also be generated
when land and forests are cleared. Most of the
methane that enters the air comes from garbage
dumps. The main sources of pollution are energy,
industry, transportation, buildings, agriculture, and
land use.
Impact of Climate Change
Extreme weather is already worsening worldwide,
endangering lives and livelihoods. Moreover,
emissions continue to rise. As a result, the Earth is
now approximately 1.1°C warmer than it was in the
1800s. The period from 2011 to 2020 marked the
warmest decade ever recorded.
● Climate changes have resulted in severe
droughts, water scarcity, large-scale fires, rising
sea levels, floods, polar ice melting, severe
storms, and species loss.
Carbon Emission
● Additionally, extreme heat can increase the to heavy rain.
likelihood of wildfires, as observed in Europe
● The Middle East will likely face extreme
this summer. France and Germany experienced
heatwaves and widespread drought.
approximately seven times more land burned
● Island countries in the Pacific could be submerged
than the average between January and the
by rising sea levels.
middle of July 2022.
● Numerous African countries are at risk of
● When temperatures rise, the frozen ground in
droughts and food shortages.
regions like Siberia will thaw, leading to the
release of greenhouse gases that have been ● The western US is likely to experience drought,
trapped for hundreds of years. This further while other regions of the country may witness
exacerbates climate change. stronger storms.

● In other areas such as China, Pakistan, and ● Australia is expected to have prolonged periods
Nigeria, extreme rainfall is causing unprecedented of hot weather, resulting in an increase in wildfire-
flooding. related deaths.

Climate change profoundly affects Climate Change Solutions

various aspects of our lives,
including health, agriculture, There are many ways in which
infrastructure, and livelihoods. we can deal with climate
Individuals in developing change and improve our
countries and small islands lives. This will not only
are particularly vulnerable. The protect the environment but
rise in sea levels and saltwater also contribute to economic
intrusion has reached such development. Several global
severity that entire communities agreements and frameworks, such
have had to relocate, while long-lasting as the Sustainable Development Goals,
droughts put people at risk of starvation. In the the UN Framework Convention on Climate
future, more individuals are likely to be displaced Change, and the Paris Agreement, help guide our
from their homes due to climate change. progress.

How will Climate Change Affect the World? There are three main types of actions:

The effects of climate change will vary across ● Cutting emissions.

different parts of the world. According to the ● Adapting to climate impacts.
IPCC, which is part of the UN, if the rise in global
● Financing necessary adjustments.
temperature cannot be limited to 1.5C, the following
consequences may occur:
By transitioning from fossil fuels to renewable
energy sources like solar and wind, we can slow
● The UK and Europe may experience flooding due
down climate change. However, we need to start

29 Carbon Emission
immediately. While most countries plan to achieve
net-zero emissions by 2050, efforts must be made
to reduce emissions by at least 50% by 2030 if we
are to limit warming to below 1.5°C. Between 2020
and 2030, the use of fossil fuels needs to decrease
by approximately 6% annually.
Preparing for the effects of climate change
will not only protect people but also safeguard
the ecosystem. It addresses both current and
anticipated impacts. Adaptation will be necessary
worldwide, but priority should be given to the most
vulnerable individuals who have limited resources
to cope with climate hazards.
What are Governments Doing?
Countries agree that the only way
to address climate change is
by working together. In a
historic agreement in Paris
in 2015, they pledged to
make efforts to limit global
warming to 1.5C.
In November, Egypt will host COP27,
a meeting of world leaders where
countries will collaborate on more
ambitious plans to reduce emissions, including a
reduction in the use of fossil fuels.
Many countries have committed to achieving “net
zero” emissions by 2050. This entails significant
reductions in greenhouse gas emissions and
compensating for the remaining emissions by
removing an equal amount from the atmosphere.
What can Individuals Do?
Governments and businesses need to make
30
significant changes, but scientists suggest that we
can reduce our impact on the climate by making
some small changes in our own lives:
● Reduce air travel.
● Avoid owning a car or opt for an electric vehicle.
● Consider consuming less meat and dairy
products.
● Conserve electricity.
● When replacing household appliances, such
as a washing machine, choose energy-efficient
models.
● Enhance home insulation.
● Transition from a gas heating
system to an electric heat pump.
Sustainability
Sustainability is a concept
that encourages us to
consider the bigger picture
of our interactions with the
Earth and the long-term impact of
our actions on future generations.
Climate action is just one component
of sustainability.
In the context of climate change, a sustainable
energy system typically involves making changes
to our energy, transportation, and other systems
to prevent further warming of the planet. However,
sustainability encompasses more than just
mitigating climate change.
“It encompasses people and the environment,
including extraction, disposal, and usage. It
examines how individuals engage with the world
and the inherent complexity of these interactions.”
Carbon Emission
From an environmental standpoint, sustainability
revolves around responsibly utilizing Earth’s
resources and avoiding their depletion.
One common thread among all sustainable
practices is considering the consequences of our
actions today on the world tomorrow. This concept
is also reflected in “sustainable development,” a
term employed by the United Nations to establish
global goals and allocate international aid.
The UN defines “sustainable development”
as “development that meets the needs of the
present without compromising the ability of future
generations to meet their own needs.”
The increasing global temperature poses a
significant challenge to sustainability. Human
activities that contribute to climate change are
unsustainable because they alter the planet, which
we rely on for meeting our diverse needs. Moreover,
climate change complicates long-term solutions to
other challenges.
“Changes in biodiversity and climate impact our
food sources, sea levels, urban planning, and more.”
Many sustainability-related issues are both caused
by and influenced by climate change. For instance,
a warmer Earth makes it more difficult to ensure
sufficient food production, and deforestation for
agriculture contributes to climate change.
31
Sustainability encourages individuals to consider
their choices and actions in the same way that
climate action does. However, it’s important to
recognize that living sustainably is not possible in
isolation.
To create a system capable of meeting the needs
of its people, governments, communities, and
businesses must collaborate towards the goals of
zero waste and zero carbon emissions.
Sustainability involves striking a balance that
ensures people have adequate resources to lead
fulfilling, healthy lives without jeopardizing the
future of humanity.
An ecological perspective is crucial when
contemplating sustainability. While striving to
combat climate change, it is helpful to bear in mind
the essence of sustainability.
A pertinent question to ask before making decisions
regarding climate change could be: Will this action
hinder future generations’ ability to live well?
Hazardous Waste
When you consider the fight against climate change
and reducing your carbon footprint, you likely think
of actions such as driving less and turning off
lights. However, it is important to recognize that
the organic and inorganic waste we generate also
significantly contributes to global greenhouse gas
emissions.
The increase in greenhouse gases in the Earth’s
atmosphere is already causing changes in our
weather patterns. Some of these increases can
be directly attributed to the amount of waste we
dispose of.
Carbon Emission
Solid waste is a direct source of greenhouse gas
emissions due to the following reasons:
● Methane is produced when waste in landfills
decomposes in the absence of oxygen.
● Nitrous oxide is released from facilities that
incinerate trash.
Both methane and nitrous oxide contribute
significantly to global warming. Methane has 21
times the warming potential of carbon dioxide,
while nitrous oxide has 310 times the warming
potential.
Classification
Hazardous wastes are categorized into different
groups based on their biological, chemical, and
physical properties. These properties determine
whether materials are:
1 Toxic
Reactive
3 Ignitable
Corrosive
5 Infectious
Radioactive
Figure 4.1: Hazardous Wastes
32
Toxic Wastes: These substances can be hazardous
regardless of the quantity. They have the potential
to cause death, severe illness, or significant damage
to organs.
● Some are carcinogenic, leading to cancer after
prolonged exposure.
● Some are mutagenic, causing significant
biological changes in the offspring of humans
and animals exposed to them.
Reactive Wastes: These materials are chemically
unstable and react vigorously with air or water. They
can cause explosions or release poisonous gases.
Ignitable Wastes: These substances have low
ignition points and can start fires easily.
Corrosive Wastes: This category includes highly
acidic or alkaline materials that, upon contact with
solid objects or living organisms, cause chemical
reactions that lead to destruction.
Infectious Wastes: These wastes encompass used
2 bandages, hypodermic needles, and other materials
generated in hospitals or laboratories.
Radioactive Wastes: These materials emit ionizing
4 energy that can be harmful to living organisms. Due
to the long-term persistence of certain radioactive
materials in the environment, taking thousands of
years to fully decay, their proper disposal raises
6
concerns.
Carbon Emission
The Science
● Carbon dioxide and methane gas are produced
when organic waste breaks down. Methane is
generated in the absence of air, while carbon
dioxide is produced when organic matter breaks
down in the presence of air.
● To produce and incinerate inorganic waste,
natural resources such as water, fuel, metal,
and wood are utilized. This process releases
greenhouse gases, particularly carbon dioxide,
and other pollutants into the air.
● At every stage of its lifecycle, plastic waste
contributes to greenhouse gas emissions. Oil,
gas, and coal are extracted and utilized in
the production and transportation
of plastic.
● Furthermore, significant
amounts of carbon
emissions are released
during the manufacturing
and disposal of plastics.
Challenges
Climate change and the loss of
biodiversity, resulting from increased pollution
from chemicals and waste, do not appear to be
diminishing.
Climate change and the management of hazardous
chemicals and waste are two among many
issues that policymakers and decision-makers
must address in order to achieve the Sustainable
Development Goals, as outlined in the 2030 Agenda
for Sustainable Development.
33
Ways
When implemented in conjunction with efforts to
combat climate change, effective management of
chemicals and waste, including plastic waste, will
mitigate the rise of greenhouse gases.
It will also enhance environmental quality by
restoring nature and ecosystems, among other
benefits. This will positively impact livelihoods and
foster a dignified existence for all. Additionally, it
will contribute to the development of a greener,
more inclusive economy based on circularity and
resource utilization throughout their entire life
cycles.
The Basel Convention on the Control
of Transboundary Movements of
Hazardous Wastes and Their
Disposal (1989), the Rotterdam
Convention on the Prior
Informed Consent Procedure
for Certain Hazardous
Chemicals and Pesticides in
International Trade (1998), the
Stockholm Convention on Persistent
Organic Pollutants (2001), and the
Minamata Convention on Mercury (2013) all strive
to safeguard human health and the environment
from hazardous chemicals and waste.
The United Nations Framework Convention on
Climate Change aims to maintain stable levels of
greenhouse gases (GHGs) in the atmosphere and
prepare for future climate change impacts.
Energy Efficiency
Even though it seems like energy is important for
progress, a lot of the energy we use is made in
Carbon Emission
ways that hurt the environment. Coal, oil, and gas
produce a lot more CO2 per unit of electricity than
other energy sources like nuclear, wind, solar, and
hydro.
Energy efficiency is good for the environment in
many ways. It cuts GHG emissions by a lot, both
direct emissions from burning or using fossil fuels
and indirect emissions from making electricity.
The recent Intergovernmental Panel on Climate
Change (IPCC) special report on Global Warming
of 1.5oC shows that energy efficiency can help
fight climate change. The importance of energy
efficiency can be viewed from the fact
that the emission of harmful gases
into the atmosphere has risen, and
there is limited time to attain the
specified goals in this direction.
Energy efficiency is one of
the most important ways for
the world to meet its energy
service needs while using
less energy. This is important in
most of the IPCC GHG emissions
pathways for keeping global warming
to 1.5oC (IPCC, 2018).
In 2017, energy-related greenhouse gas (GHG)
emissions went up by 1.4% to more than 32.5
gigatonnes of CO2 equivalent (Gt CO2-eq). This was
the first increase since 2014 when the use of fuels
was high due to strong global economic growth.
This produced a lot of emissions. But, with the help
of energy efficiency measures, the emissions were
prevented. If efficiency hadn’t gotten better since
2000, emissions would have been nearly 4 Gt CO2-
eq, or 12%, higher in 2017.
34
Models made as part of Energy Efficiency 2018
show that if the world implemented all of the cost-
effective energy efficiency measures based on
current technology, it would cause GHG emissions
related to energy to peak before 2020 and by 2040.
According to this prediction, which is outlined in our
Efficient World Scenario (EWS), energy efficiency
could reduce annual energy-related emissions by
3.5 Gt CO2-eq (12%) compared to 2017 levels. This
would be more than 40% of the reductions needed
to meet the goals of the Paris Agreement.
Together with renewable energy and other steps,
energy efficiency is therefore a must if
we want to meet global climate goals.
Resource Management and
Efficiency
One way to lessen the
effect of the growing need
for materials on energy
consumption is to improve
material efficiency. This means
obtaining the same level of service
from materials while using fewer
overall.
Promoting a higher level of efficiency in the
production and use phases of the value chain,
while ensuring the same service is provided to the
consumer, can be achieved in several ways:
● Making products lighter while still delivering the
same level of service (light-weighting).
● Reducing yield losses in the production process.
● Exploring alternative uses for scrap metal without
resorting to melting it down again.
Carbon Emission
● Reusing and recycling parts.

● Designing product parts with longer lifespans.

● Increasing the frequency or extent of product

usage.

Energy demand decreases when there is less

demand for materials that require significant energy
consumption, and when products are recycled.
Utilizing recycled scrap to produce metals such
as steel, aluminum, and copper consumes 60-90%
less energy compared to manufacturing them from
metal ores.
Both energy efficiency and material efficiency
are interconnected as they contribute to a higher
level of efficiency throughout the production value
chain. The distinction between material efficiency
and energy efficiency lies in the amount of effort
involved in creating something.
In most cases, material efficiency aligns well with
energy efficiency, and the two concepts mutually
reinforce each other.
For instance, a car with reduced steel content
conserves energy since less steel needs to be
produced. Additionally, the lighter weight of the car
results in lower fuel consumption during operation.
However, there are trade-offs between energy
efficiency and material efficiency. For example, if
appliances made of steel have longer lifespans,
consumers may delay upgrading to more efficient
devices.
Technologies and end users.
Since the writing of the Convention, discussions
and debates regarding technology and collaborative
efforts in this regard have taken place at international
climate change talks. Both the UN Framework
Convention on Climate Change (UNFCCC) and the
Kyoto Protocol explicitly mention these issues in
their texts.
Technology cooperation can significantly contribute
to global efforts to reduce greenhouse gas (GHG)
emissions and adapt to the impacts of climate
change.
A significant milestone in technology cooperation
occurred during COP 16 in Cancun, where the
Technology Mechanism was established with the
following objectives:
● Facilitate the transfer of technology to support
climate change mitigation and adaptation.
Among other aspects, the Mechanism aims to:
● Facilitate the sharing of technology and know-
how at reasonable prices between developers

● Ensure that publicly available technologies are

Climate change and sustainable development are shared among end users at minimal cost.
global problems that can only be addressed with
the assistance of technology.

35 Carbon Emission
The evolution of the technology issue over time
demonstrates that while progress has been made,
there is still a long way to go to achieve effective
technology cooperation. The establishment of the
Technology Mechanism is a positive and welcome
step towards addressing these challenges.
However, it is also crucial to consider the
implications of such a system for developing
countries like India in this case.
● Firstly, each country must take a proactive stance
in global negotiations by addressing the most
critical climate technology needs, especially for
developing nations. Examining existing models
and institutional arrangements for
technology cooperation can
provide valuable lessons
and ideas for national and
global discussions on the
Technology Mechanism.
● Secondly, the Mechanism
may have implications for
South-South cooperation
and regional collaboration.
Technology cooperation among
developing countries, particularly in
the South Asian region, is gaining increased
attention. The question arises as to how the
Technology Mechanism might influence the
collaborative efforts of developing countries in
utilizing technology to address climate change.
● Thirdly, there are potential implications at the
national level. How will the objectives of such
a mechanism be met through actions and
incentives within each country? For instance, what
could be the effects on technology development
institutions and collaborative efforts in India
if there are decentralized nodesnot under the
36
control of the central government?
In order to transition towards a low-carbon
and climate-resilient future, it is essential that
climate technologies are accessible across
all countries and sectors, and that they are
effectively utilized. Collaborative actions and
partnerships are necessary to ensure the creation
and accessibility of climate-related technologies
at global, regional, and national levels. This can
be achieved by enhancing individuals’ capacities
and providing additional resources to cover the
costs of integrating climate change considerations
into the development process and independently
implementing initiatives.
Carbon Credits
We need to cut carbon emissions
and decarbonize economies
as soon as possible, but time
is running out, and we don’t
always have the necessary
technology to do so. Carbon
credits play a crucial role in
addressing this challenge.
Companies and individuals can compensate for
their unavoidable emissions by purchasing carbon
credits from certified activities that promote
community development, protect ecosystems,
or implement efficient technologies to reduce or
eliminate emissions from the atmosphere.
Carbon markets can contribute to the effectiveness
of climate action in three primary ways:
● Accelerating the reduction of emissions at the
earliest opportunity.
● Preserving and managing carbon sinks in nature.
Carbon Emission
● Removing carbon dioxide from the air.
By implementing these measures, carbon markets
can play a significant role in advancing climate
action and mitigating the impacts of greenhouse
gas emissions.
Goals
Reduce Emissions by 50% by 2030: The primary
objective is to rapidly decrease fossil fuel emissions
worldwide across all sectors of the economy. By
2030, a target of reducing these emissions by 50%
should be achieved.
Protect Natural Carbon Sinks: The
second climate goal is to safeguard
natural carbon sinks, promote
biodiversity and wildlife
conservation, and support
the communities residing
in and around these
ecosystems.
Remove CO2 from the
Atmosphere: The third advantage
of carbon markets for the climate
is their ability to help offset emissions
that currently lack solutions or are projected to be
difficult to eliminate in the long term.
Scientists at the IPCC have demonstrated that
the planet is experiencing warming due to
increased levels of greenhouse gases (GHGs)
in the atmosphere. This global phenomenon
results in significant weather changes worldwide.
Recognizing the urgency, the countries of the world,
under the UN and the Paris Agreement, have united
37
in the pursuit of immediate emission reductions to
ensure a habitable Earth for future generations.
The latest research indicates the pressing need
to take prompt action to protect vulnerable
ecosystems and communities across the globe.
Carbon credits represent quantifiable and verifiable
reductions in emissions. These credits originate
from certified climate action projects that actively
reduce, eliminate, or prevent the release of
greenhouse gases (GHGs). There are three main
approaches through which these projects achieve
emission reductions:
● The first approach focuses on
reducing greenhouse gas emissions
by transitioning to alternative
energy sources, thereby
minimizing reliance on fossil
fuels.
● The second approach
involves the removal of
emissions from the atmosphere.
For instance, planting more trees
allows for the sequestration of
carbon from the air, storing it in solid
or liquid form.
● The third approach captures and eliminates
emissions, such as through the removal of
methane from wastewater, a potent GHG that
surpasses the impact of carbon dioxide.
Moreover, these projects yield numerous additional
benefits, including empowering communities,
protecting ecosystems, restoring forests, and
reducing dependency on fossil fuels.
Carbon Emission
Summary

● Getting rid of fossil fuels is the primary action to combat climate change. Additionally, utilizing renewable
energies such as solar, wind, biomass, and geothermal sources can contribute significantly to the cause.

● While producing clean energy is crucial, it is equally important and cost-effective to reduce energy and
water consumption by employing efficient devices such as LED light bulbs and advanced shower systems.

● Promoting public transportation, carpooling, electric and hydrogen vehicles, and exploring alternative
modes of transportation can effectively reduce CO2 emissions and combat global warming.

● To decrease CO2 emissions from buildings, which result from heating, cooling, hot water, and lighting
systems, it is essential to construct energy-efficient buildings and retrofit existing structures.

● Priorities should also include promoting responsible use of natural resources, halting extensive
deforestation, and adopting greener and more efficient agricultural practices.

● Responsible consumption of food (especially meat), clothes, cosmetics, and cleaning products is crucial.
Additionally, recycling is indispensable for effective waste management.

● Multiple UN reports, backed by thousands of scientists and government reviewers, have emphasized the
significance of limiting the global temperature rise to 1.5°C to mitigate the severe impacts of climate
change and maintain a habitable climate. However, the current policies indicate that the temperature is
projected to increase by 2.8°C by the end of the century.

● Greenhouse gas emissions contributing to climate change originate from various regions and impact
the entire world. However, some countries are responsible for a disproportionate amount of emissions.
The 100 countries with the least pollution generate only 3% of total emissions, while the top 10 polluting
countries account for 68% of the pollution. Addressing climate change is a collective responsibility, but
greater emphasis should be placed on the actions of high-emitting countries and individuals.

38 Carbon Emission
 Unit 5

Law of Energy Consumption

Learning Objectives Introduction

By the end of this unit, you will be Energy consumption is the total amount of energy used
able to understand: for various purposes, including activities, manufacturing,
● Energy conversion act -2001 and residential or commercial use. It is crucial to

● Energy conservation recognize that energy is derived from diverse sources. In

(amendment) bill-2022 fact, assuming that saving electricity is the most effective
way to conserve energy is a common misconception,
as different energy types may have varying impacts on
specific processes.

If you aim to save energy, understanding your energy

usage can provide two valuable insights:

● Determining the potential cost savings over time

by investing in an energy management system and
substantiating its effectiveness.

● Identifying areas within your living or working space

where energy savings can be achieved and determining
the best starting point.

Energy laws encompass regulations pertaining to both

renewable and non-renewable energy sources. These
laws play a critical role in governing energy-related
matters. They encompass case law, statutes, rules,
regulations, and decrees. In the field of energy law,

39 Law of Energy Consumption

specific regulations focus on aspects like oil, gas,
and “extraction taxes.”
Energy law also covers contracts related to
dredging, oil and gas extraction, licenses for pre-
and post-discovery acquisition of oil and gas, as
well as determining ownership rights to oil and gas
reserves.
India heavily relies on fossil fuel imports to meet its
energy demands. It is projected that by 2030, more
than 53% of India’s total energy consumption will
be fulfilled through energy imports.
The Bureau of Energy Efficiency, along with the
State Government and the Central Government,
primarily carries out the provisions of the Act. The
primary objective of the BEE is to formulate policies
and plans based on self-regulation and market
principles, promoting reduced energy consumption
across the Indian economy. This collective effort
involves all stakeholders and aims for the swift and
long-term adoption of energy efficiency practices in
all sectors.
Salient Features of the Energy Conservation Act,
2001 (Amended in 2010)

India’s energy policy seeks to augment As a result of this act, both the Central
domestic energy resources while and State governments have the
combating energy poverty. The authority to:
country aims to prioritize the
development of alternative ● Promote efficient and
energy sources, particularly responsible energy use
nuclear, solar, and wind
● Identify industries,
energy. In 2017, India met
businesses, and commercial
63% of its total energy needs
buildings with high energy
through indigenous resources
consumption as “designated
consumers”
The Energy Conversion Act

●Establish regulations and standards
-2001
for energy usage by specific consumer

India’s government enacted the Energy categories

Conservation Act (EC Act) in 2001 to establish a

In 2010, the law underwent an amendment.
legal framework and institutional arrangements
This amendment introduced stricter energy-
aimed at enhancing energy efficiency. To implement
saving regulations for buildings, appliances, and
the Act’s regulations, the following entities were
equipment. It also established a framework for
established:
trading energy-saving credits between:

● The Bureau of Energy Efficiency (BEE) as the

● Industries that demonstrate reduced energy
central agency
consumption
● State-level State Designated Agencies (SDAs)
● Industries that exceed the government-set
energy usage limits.

40 Law of Energy Consumption

Furthermore, an Energy Conservation Appellate
Tribunal was established under this amendment
to handle appeals against decisions made by
the Central/State government or any authority
operating under the Energy Conservation Act.
Powers and Functions of Bureau
In carrying out the tasks assigned to it by or under
this Act, the Bureau must effectively coordinate
with designated customers, designated agencies,
and other relevant agencies. It is also required to
recognize and utilize existing infrastructure and
resources.
The Bureau is empowered to fulfill its duties and
exercise the powers granted to it by or under this
Act. These duties and powers include, for example,
the following:
● Recommend to the Union Government the
standards for processes and energy use that
should be announced under Section 14A.
● Recommend the issuance of energy savings
certificates by the Union Government.
● Provide suggestions to the Central Government
regarding the labeling and display of equipment
or appliances as mandated by clause (d) of
section 14 of the Act.
● Propose to the Union Government the designation
41
of any energy user or group of energy users as
“designated consumers” under section 14(e).
● Establish regulations for energy-efficient building
codes under section 14 clause (p).
● Undertake efforts to raise awareness and
disseminate information on energy-efficient
practices and energy conservation.
● Organize and conduct training sessions for staff
and experts on energy-efficient practices and
energy conservation.
● Enhance the quality of consulting services
related to energy conservation.
● Promote research and development in the field
of energy conservation.
● Develop a procedure for testing and certifying
equipment and appliances for energy use and
raise awareness about testing facilities.
● Initiate and support pilot projects and
demonstration projects that showcase energy-
efficient practices and energy conservation
methods.
● Encourage the adoption of energy-saving
processes, equipment, devices, and systems.
● Promote innovative approaches to financing
energy-saving projects.
● Provide financial assistance to organizations for
energy-saving initiatives and improved energy
utilization.
● Impose fees for services aimed at assisting
individuals in using energy more efficiently and
saving it.
● Maintain a list of certified energy auditors as
required by regulations.
● Establish in regulations the qualifications, criteria,
and conditions for certification as an energy
auditor, as well as the certification process.
Law of Energy Consumption
● Specify in regulations the guidelines for under clause (b) if they do not meet the prescribed
conducting energy audits and the frequency of energy usage standards.
such audits.
● However, no notice banning the aforementioned
● Define the certification requirements for energy activities shall be issued within six months from
managers and energy auditors employed by the date of the notice.
designated consumers in accordance with
● Additionally, the Union Government, taking into
regulations.
consideration market share and technological
● Develop educational lesson plans on energy- advancements related to the concerned
efficient practices and energy conservation for equipment or appliance, may, for reasons
educational institutions, boards, universities, recorded in writing, extend the initial six-month
or other independent bodies and collaborate period for an additional duration of no more than
with them to integrate these lessons into their six months.
curriculum.
● Mandate the display of relevant information
● Evaluate capacity building and services related on labels attached to appliances or
to energy conservation, as well as the equipment, as determined by
certification of energy managers and regulations.
energy auditors. Conduct overseas
● Designate energy-
cooperation programs related to
intensive industries and
efficient energy utilization and
other establishments as
conservation as directed by the
“designated consumers”
Union Government
based on factors such
as energy consumption,
Power of Central Government to
investment requirements for
Facilitate and Enforce Efficient Use of
transitioning to energy-efficient
Energy and its Conservation
equipment, industry capacity
for investment, and the availability
In consultation with the Bureau, the Union
of energy-efficient machinery and equipment
Government has the authority to issue notifications
required by the industry.
that include the following provisions:
● Modify the list of industries classified as high
● Establish standards for the operation and energy energy consumers as outlined in the Schedule.
usage of equipment and appliances involved ● Establish rules and standards governing the
in the utilization, generation, transmission, or allowable energy usage for specific consumers
supply of energy. as deemed necessary by the Union Government.
● Identify specific appliances, equipment, or ● It is important to note that the Union Government
groups thereof for the purposes of this Act. may establish different rules and standards for
● Prohibit the manufacturing, selling, purchasing, different consumers based on specified factors.
or importing of equipment or appliances listed ● Direct energy-intensive industries listed in the

42 Law of Energy Consumption

 Schedule to undergo energy audits conducted Bureau is responsible for defining the qualifications
by accredited energy auditors, with regulations required for energy auditors who assess the energy
determining the manner and frequency of such consumption of various industries.
audits.
Energy Trading: The government has the authority
● Instruct designated consumers to obtain energy
to issue energy savings certificates to businesses
audits from certified energy auditors if it is
that consume less energy than their allocated limit.
believed that doing so would enhance energy
These certificates can then be traded to customers
efficiency and conservation.
who exceed their maximum energy threshold,
● Enumerate the elements to be assessed during
thereby establishing an energy trading system.
the energy audit process.

Prohibition until Conforming to Specified Norms:

The Energy Conservation (Amendment) The Act empowers the Union to impose a ban
Bill-2022 on the production, sale, purchase, or import of
specific equipment that fails to meet the
The bill proposes amendments to the
prescribed standards set six months
Energy Conservation Act of 2001,
or a year prior.
which was previously modified in
2010, with the aim of introducing
Penalty: Individuals who
certain changes. One of
exceed their designated
the key modifications
energy consumption limits
involves the introduction
will be subject to a penalty.
of carbon saving certificates
The Electricity Act of 2003
to incentivize the adoption of
already provides for a court
clean energy by individuals.
to handle appeals against such
orders issued by the Central or state
Provisions of the Energy
government.
Conservation Act 2001

Proposed Changes in the Act

Energy Efficiency Norms: The Act empowers
the Union to establish regulations and quality
Share of Renewable Energy: The Act determines
standards for energy efficiency in devices, industrial
the minimum proportion of renewable energy
equipment, and buildings with a connected load
that businesses or industrial units must utilize.
exceeding 100 kilowatts (kW) or a contractual
This energy can be obtained either directly from
demand surpassing 15 kilovolt-amperes (kVA).
renewable sources or indirectly through the grid.

Bureau of Energy Efficiency: The Act established

Incentivizing Clean Energy: By granting carbon-
the Bureau of Energy Efficiency (BEE). The 2010
saving certificates, we can motivate individuals
amendment extended the tenure of the Director
to adopt clean energy practices. Incentives such
General of BEE to five years, up from three. The
as carbon credits for utilizing clean energy could

43 Law of Energy Consumption

be employed to compel the private sector to take ● India has also pledged to obtain more than 40%
action against climate change. of its electricity from non-fossil fuel sources by
2030.
Strengthening Related Institutions: Institutions
● India aims to decrease its CO2 emissions to 550
established under the Act, such as the Bureau
metric tonnes (Mt) by 2030. To achieve this, it
of Energy Efficiency, should be reinforced and
has agreed to enhance its tree and forest cover,
empowered.
which will absorb an estimated 2.5–3 billion
tonnes of CO2.
Promoting Green Hydrogen: Encouraging the
widespread adoption of Green Hydrogen as a
India revised its NDCs during the COP26 Summit
substitute for the fossil fuels utilized by businesses.
held in Glasgow in November 2021. India has
established five new environmental goals:
Applicability to Residential Buildings: To foster
sustainable habitats, energy conservation
● To increase its non-fossil energy capacity to 500
standards should also be applicable to larger
GW by 2030.
residential buildings. Currently, the Act only applies
● To fulfill 50% of India’s electricity requirements
to large businesses and their premises.
through renewable energy sources.

Objectives of the Proposed Amendments ● To decrease the carbon intensity of the Indian
economy by 45%.
● To decrease India’s reliance on fossil fuels for
● To reduce India’s carbon emissions by one billion
electricity generation, thereby reducing the
tonnes between 2021 and 2030.
country’s carbon footprint.
● To achieve the objective of net zero carbon
● To promote the expansion of India’s carbon
emissions by the year 2070.
market and encourage broader adoption of clean
technologies.

● To fulfill India’s Nationally Determined

Contributions (NDCs) outlined in the Paris
Climate Agreement before 2030.

India’s climate change commitments

● Under the Paris Climate Agreement, India has

committed to reducing its economy’s carbon
intensity by 33–35% by 2030 compared to the
levels in 2005, as part of its Nationally Determined
Contributions (NDCs).

44 Law of Energy Consumption

Summary

● India’s energy policy is based on trade-offs among four main factors:

» The rapidly growing economy requires a consistent supply of electricity, gas, and oil products.

» Limited domestic fossil fuel reserves necessitate significant imports of natural gas, crude oil, and, more
recently, coal.

» The need for cleaner fuels and technologies due to indoor, urban, and regional environmental impacts.

● These challenges have prompted substantial reforms, reorganizations, and a focus on energy conservation
in recent years.

● In general, India’s strategy involves offering financial incentives from both federal and state governments
to promote the development of renewable energy sources.

● India’s abundant solar energy resources and substantial potential for high head pumped hydroelectric
energy storage enable it to meet the energy demands of its peak population solely through renewable
sources.

● In 2021, the government increased India’s target of achieving 500GW of renewable energy by 2030. The
country’s energy production needs to be reevaluated as energy consumption rises, primarily driven by
transportation, mining, and manufacturing sectors.

45 Law of Energy Consumption

 Unit 6

Distributed Energy Resources

Learning Objectives Introduction

By the end of this unit, you will be Many utility customers are looking for multiple sources
able to understand: of high-quality, reliable electricity because of increased
● Virtual distributed energy demand on the nation’s electrical power systems, power
resources (DERs) shortages, rolling blackouts, price spikes, and power

● Distributed energy resources quality problems.

(DERs)
DERs (Distributed energy resources) are small-scale
● Features of distributed energy
sources or users of electricity that are connected to
resources (DERs)
the electric grid. They are power-making resources that
● Electric vehicles, solar panels, are usually near load centers and can be used alone or
and more as DERS together to make the grid more valuable.

These systems can either be hooked up to the local

electric power grid or used on their own, away from
the grid. A few examples of DER technologies are wind
turbines, cogeneration, fuel cells, photovoltaics (PV),
microturbines, combustion turbines, reciprocating
engines, combustion turbines, and energy storage
systems.

DERs are made up of both real and digital assets. Physical

DERs usually have a capacity of less than 10 MW and
can include generators that operate on fossil fuels, solar
arrays, microturbines, battery energy storage systems,
small wind farms, and more.
46 Distributed Energy Resources
DERs can be owned and operated by the electric
company, autonomous power producers,
corporations in the area. The utility controls how
they work in the same way it controls how big
central power plants work, by asking them to start
and stop as needed.
DER is a faster and cheaper alternative to building
big power plants and high-voltage transmission
lines. They offer customers lower costs, more
reliable service, high-quality power, more efficient
use of energy, and energy independence.
Renewable distributed energy generation
technologies and “green power” like photovoltaic,
wind, tidal, biomass, geothermal, or hydroelectric
power can help the environment in a big way.
Virtual Distributed Energy Resources
(DERs)
When energy is generated from renewable sources
near its intended location, it is referred to as
distributed generation. Embedded generation and
local generation are alternative terms for the same
concept.
Distributed generation, also known as embedded
generation or local generation, occurs when
electricity is produced from sources,
renewable energy sources, in close proximity to
47
where it is consumed rather than at centralized
or power plants.
Distributed energy resources (DERs) are small-scale
power plants typically located on the customer’s
side of the meter. These DERs can be aggregated
to form Virtual Power Plants (VPPs). VPPs can
then participate in the Demand Response market,
helping to maintain grid stability and incorporate
more renewable energy into the energy mix.
Virtual DERs consist of multiple physical assets
that are combined and made accessible to the
utility company. From the utility’s perspective, they
appear as a single resource, similar to a power
station. Virtual DERs can comprise a single type
of asset or a combination of different types, such
as diesel generators, solar panels, and batteries,
tailored to function as a cohesive unit.
When the combined capacity of virtual DERs
reaches several megawatts, they are sometimes
referred to as virtual power plants (VPPs). Demand-
response resources are often utilized to create
virtual DERs, with demand-response resources
referring to electric loads that can be modified,
reduced, or shut down when necessary.
The utility’s objective is to ensure that electricity
generation matches electricity consumption at
all times. In this regard, reducing demand has the
same effect as increasing production.
What do DERs have to do with Virtual Power Plants?
The concept of Virtual Power Plants (VPPs) is
relatively new. Essentially, they are a group of
Distributed Energy Resources (DERs) that can
often
be collectively managed while still functioning
Distributed Energy Resources
independently. In practice, VPPs can be comprised
of a single type of asset, such as electric vehicles
(EVs), or a combination of various assets, including
batteries, EVs, and CHP (Combined Heat and
Power) facilities.
The DERs that constitute a Virtual Power Plant
(VPP) are all connected to the grid and have the
ability to operate autonomously outside of the VPP.
The operation of VPPs is centrally controlled. An
important aspect of resilience and reliability is the
VPPs’ capacity to leverage DERs to enhance grid
flexibility.
Distributed Energy Resources (DERs)
● Biomass generators fueled by waste gas or
industrial and agricultural by-products
● Open and closed cycle gas turbines
● Reciprocating engines (diesel, oil)
● Hydro and mini-hydro schemes
● Fuel cells
Usage
There are various ways to utilize DER systems:
● They can assist in managing energy costs
and ensuring a continuous power supply by
complementing existing energy services.

● DER systems enable buildings to

DERs are small, modular
operate independently from the
technologies that can generate,
electric power grid, either by
store, and distribute energy
choice or out of necessity.
where it is needed.
● Certain DER systems have
DER systems typically have a the ability to reduce emissions
power capacity of less than and optimize on-site fuel usage.
10 megawatts (MW) and can ● Utilities can utilize DER
be customized and installed technology to defer, decrease, or
on-site to meet specific energy potentially eliminate the need to invest
requirements. in additional equipment and infrastructure
for electricity generation, transmission, and
Here are some examples of distributed energy
distribution.
resources that can be implemented:
● DER systems can contribute to voltage regulation
and enhance the reliability of a location.
● Rooftop solar photovoltaic units

● Wind generating units

Selecting a DER technology
● Battery storage systems
DER (Distributed Energy Resources) systems can
● Electric vehicle batteries used for exporting
consist of one or multiple primary technologies,
power back to the grid
such as wind turbines, combustion turbines, fuel
● Combined heat and power units (also known as
cells, internal combustion engines, photovoltaics,
tri-generation units) that utilize waste heat for
and batteries. These systems may also incorporate
cooling

48 Distributed Energy Resources

additional technologies like power conditioning
equipment, communications, controls, CHP
(Combined Heat and Power) systems, fuel handling
and storage systems, and emission controls.
Here are some examples of available DER
technologies:
Diesel Engine Generator Sets: Diesel generator
sets utilize a diesel-powered reciprocating engine
as the primary power source, coupled with an
electric generator for power output. These engines
operate at low RPM and high compression ratios.
They are widely used and cost-effective,
ranging in size from 1 kW to 10 MW.
Diesel engine gensets can be
switched on and off frequently
to serve as peak-load or load-
following power plants.
However, they have
drawbacks such as high
emissions, particularly nitrogen
oxides, and the need for sound
attenuation to reduce engine noise.
They can also operate in baseload
mode in off-grid systems.
Diesel engines may not be suitable for most Federal
buildings and should only be considered when other
technologies are not feasible. The installation cost
is approximately $810/kW, making them one of the
least expensive forms of DER.
Dual-Fuel Engine Gensets: These systems
feature a diesel-cycle engine modified to run on a
combination of natural gas and diesel fuel, typically
with a small percentage of diesel (between 5%
and 10% by volume). The engine is connected to
49
an electric generator. Due to the limited amount of
diesel fuel, compression ignition can be used, and
the significant presence of natural gas in the mix
results in lower emissions (though slightly reduced
power output) compared to a pure diesel engine.
Dual-fuel engines share similarities with diesel
engines in terms of operation and cost. They range
from a few kilowatts to approximately 10 MW in
size and have an installation cost of around $875/
kW.
Natural Gas Engine Gensets: Natural gas engine
gensets employ a natural gas-fueled engine with
a spark-ignition system, combined
with an electric generator. They
operate similarly to diesel and dual-
fuel engines but exhibit lower
emissions.
These systems are
available in sizes ranging
from a few kilowatts to about
5 MW, and their installation
cost is approximately $825/kW,
comparable to diesel and dual-fuel
engines.
Combustion Turbines: Combustion turbines, also
known as gas turbines, utilize gas or liquid fuel.
The combustion process generates hot gases
that expand against the blades of a rotating shaft,
creating high-speed rotary motion that drives an
electric generator. While combustion turbines
may have a longer startup time compared to
reciprocating engines, they are well-suited for peak,
load-following, and baseload operations in larger
sizes. The installation costs for combustion turbines
are slightly higher than those for reciprocating
engines, but the maintenance costs are lower.
Distributed Energy Resources
Turbines are efficient and have relatively low
emissions. They can be equipped with pollution
control equipment, further enhancing their
cleanliness. Available in sizes ranging from
approximately 300 kW to several hundred
megawatts, they have installed costs ranging from
$910/kW to $1,400/kW.
Microturbines: Microturbines are smaller versions
of combustion turbines with lower efficiency. They
typically have a power range of 30 to 250 kW and
operate at high speeds using natural gas (typically
around 90,000 rpm). In most cases, the generator’s
60 Hz AC power is converted through an inverter,
also known as a power conditioning unit or PCU,
which is an electronic power converter.
Microturbines designed for small industrial and
commercial applications prioritize small size,
affordability, reliability, modularity, and ease of
installation. The latest models have very low
emissions. Microturbines are currently available for
purchase at approximately $1,000/kW.
Fuel Cells: Fuel cells employ a thermochemical
process in which hydrogen (H2) passes over an
anode and air flows over a cathode in an electrolyte
bath. This process produces DC electricity, which is
then converted into AC power for grid use. Fuel cells
are among the cleanest energy sources, as they
only generate heat, water, and carbon dioxide as
waste. Hydrogen is typically produced by reforming
fuels like natural gas or propane, which may cause
environmental pollution unless proper measures
are taken.
Commercially available fuel cells initially used
phosphoric acid as the electrolyte, but other
technologies like solid oxide, molten carbonate,
and proton exchange membrane (PEM) are now
50
emerging.
Fuel cells are known for their efficiency, quiet
operation, and modularity. They come in sizes
ranging from a few watts to 200 kW, which is the
largest commercially available size for stationary
power applications. Currently, fuel cells are one of
the more expensive DER technologies, with installed
costs starting at approximately $5,500/kW.
Photovoltaic Cells: These are thin layers of
semiconductor material, typically crystalline
silicon, that convert sunlight into direct current (DC)
electricity. The DC power is then converted into
standard alternating current (AC) power, which can
be connected to utility systems using an inverter.
Photovoltaic panels range in power from a few
watts to about 100 W and are composed of smaller
pieces that can be assembled to create larger
arrays to meet different power needs. They do not
produce noise or pollution and have no moving
parts, making maintenance simple.
Photovoltaic systems have been in use for a long
time and are manufactured by various companies.
The installation cost can range from $8,000/kW to
$13,000/kW, depending on the intended use, with
grid-connected systems typically costing less than
those with battery storage.
Distributed Energy Resources
Wind Turbines: These are another form of
renewable energy technology that utilize blades
resembling propellers to convert the energy of the
wind into electricity using a generator.
Most wind turbines are asynchronous, meaning
they rotate at varying speeds. The output of the
generator must be converted to 60Hz AC power
through an inverter. Wind turbines can generate
anywhere from a few watts to over 1 MW of
electricity.
They can be used for remote power systems, small-
scale or residential electricity production, and large-
scale power generation. The installation cost
can range from $1,000/kW to $3,000/
kW, depending on the intended use.
Storage Devices: These devices
store energy from an electric
grid or other sources, such
as a renewable DER, to be
used when needed. There are
various storage technologies
available, each suitable for
different purposes.
The most commonly used method of storing
electric energy is batteries. They can be utilized
for low-power applications, such as remote
communications, or high-power applications, such
as supporting the utility grid, which requires an
inverter.
Another popular storage system is an uninterruptible
power supply (UPS), which typically consists of
batteries connected to control electronics that
convert stored energy into AC electricity and direct
it to where it is needed, such as providing full power
during an outage or smoothing out power quality
51
issues. Flywheels, on the other hand, convert
electric or mechanical energy into rotational energy,
which can be converted back into electricity when
needed.
Superconducting magnetic energy storage (SMES)
uses a magnetic coil cooled to extremely low
temperatures to store electricity with minimal loss.
Like other DC devices, it requires an inverter to
convert DC into AC that can be sent to a utility grid.
All of these storage technologies are commercially
available and are becoming more affordable as
their usage increases. Energy storage systems
can cost between $1,100/kW and $1,300/kW to
purchase and install.
Hybrid Systems: These systems
are combinations of different
technologies designed to
meet specific or unique
needs. Renewable energy
technologies, such as wind and
solar systems, are dependent
on unpredictable energy sources,
making it necessary to combine
them in a hybrid system, like a PV system
with backup batteries, to store energy for use when
needed.
Hybrid DER systems that do not rely on renewable
energy sources are also utilized. For instance, a
battery system paired with a microturbine can
handle short power outages with the batteries and
long outages with the microturbine.
Depending on the needs, it may be beneficial to
use multiple technologies and systems to create a
customized solution that maximizes efficiency and
performance.
Distributed Energy Resources
Fuel Options
The fuel you use to power your DER system should
be easy to obtain, cost-effective, and simple to
store.
Diesel Fuel: It is readily available and relatively
affordable, but it requires an on-site storage tank
and regular deliveries, and it can potentially leak or
emit fumes.
Biodiesel Fuel: In places where it is available, it can
be used as an alternative to diesel engine generator
sets. Biodiesel is produced by mixing natural oils
and fats with alcohol. Typically, it is
sold as a 20% mix with diesel fuel.
Biodiesel can significantly reduce
CO2, SO2, and particulate matter
emissions, but in some cases,
it may lead to increased NOx
emissions.
Natural Gas: Natural gas is
a cleaner and cost-effective
alternative to diesel. If gas utilities
have existing pipelines in the area,
an extension may be required at an
additional cost, but there is no need
for a storage tank. However, if installing a gas line
is not feasible or too expensive, gas delivery and
a storage tank may be necessary. In cases where
natural gas is not accessible, propane can be used
as an alternative to diesel. The pollution level of
natural gas and propane compared to biodiesel
may vary depending on the application.
Biomass: Some fossil fuels can be replaced with
plant matter, such as trees, grasses, crops, or other
organic materials. Often, waste from the food, fiber,
and forest products industries is used to generate
52
electricity. However, garbage dumps and sewage
treatment plants can also produce fuel that can
power DER technologies.
PV Systems: They are dependent on the amount
of sunlight in a specific location. To optimize the
performance of your solar installation, attention
should be paid to the panel manufacturing process,
proper placement, and the addition of energy
storage batteries, usually of the deep discharge
type.
Wind Energy: It also relies heavily on the wind speed,
particularly the average speed and its variations
throughout the day and season in a given
location. Again, adding storage can
enhance the overall performance of
a wind system.
Hybrid systems, such as a
combination of wind or PV
with storage and a small
diesel backup generator, can
be a cost-efficient solution in
scenarios where a high degree of
reliability or autonomous operation
is required.
Benefits of Distributed Energy Resources
Distributed energy resources (DER) can provide
consumers with several benefits, including:
● Customers who install DER units can save money
on their electricity costs or experience improved
reliability.
● DER can help reduce the expense of expanding
the power grid, resulting in overall lower power
costs for consumers.
Distributed Energy Resources
● Increased utilization of distributed
resources can contribute to a decrease in
pollution levels within the National Electricity
Market (NEM) by replacing other sources that
produce higher levels of pollution.
While DER offers numerous advantages,
also encompasses many new or developing
technologies. The impact of these new technologies
must be considered by power systems and
networks. It is crucial to acknowledge and address
these initial challenges to fully harness the benefits
that DER has to offer.
Environmental Issues
When choosing a DER technology, it’s
important to consider its impact
on the environment. Some DER
systems can help reduce air
pollution, particularly NOx
and SOx, which are produced
during the combustion of fossil
fuels and contribute to smog
formation.
CO2 and NOx emissions are the only
ones regulated for DER technologies. Since most
DER technologies use natural gas as fuel, SOx
emissions are typically very low.
Due to the proximity of DER systems to residential
and commercial areas, noise levels should also be
taken into account when selecting a technology.
Many cities and suburbs have regulations
concerning noise, so the use of mufflers or other
noise-reducing measures may be necessary.
Additionally, visual and aesthetic concerns should
be addressed. Landscaping, enclosures, or other
53
energy measures may be required to mitigate any potential
visual impacts caused by DER installations.
Also, the visual and aesthetic effects can be a
problem, so landscaping, enclosures, or other steps
may be needed.
it
Features of Distributed Energy
Resources (DERs)
No matter what the primary asset is—whether
it’s generators, solar panels, batteries, demand-
response resources, or something else—most
DERs require the following elements:
A Communications and Controls
Infrastructure: This infrastructure
enables the grid operator to
remotely control the start and
stop times of each resource.
Since DERs are typically not
monitored on-site 24/7, the
control system needs to be
fully automated. Control signals
can be transmitted through wired
internet, wireless cellular networks,
or even power lines.
Synchronization and Connection Equipment: This
equipment ensures that the electricity generated
by DERs is synchronized with the grid. For example,
solar inverters convert DC current from solar panels
into AC current and generate a smooth, sinusoidal
AC wave that matches the grid’s frequency. Transfer
switches also ensure that generation resources are
completely disconnected from the grid when not
needed.
Metering Equipment: Metering equipment is
essential to accurately measure and compensate
Distributed Energy Resources
DER owners for the supply and demand of their
resources. Smaller DER assets in homes and
businesses, such as solar panels, typically use the
main utility meter for metering.
However, larger and more complex DERs often
require smart meters capable of two-way metering
and time-of-day metering.
Smart meters can detect power quality issues and
enable features like solar net-metering programs,
where homeowners receive credits for excess
electricity sent back to the grid.
Aggregation Software: This software is vital for
effective management and operation of virtual
DERs. Controlling thousands of individual resources
can be challenging for utilities and grid operators.
Aggregation software provides an intuitive
interface that simplifies working with the unique
constraints and characteristics of each aggregated
asset. For instance, the software can ensure that
participants in a demand-response program do not
experience extended or frequent periods without
air conditioning. It can also select specific homes
or businesses to achieve specific load-reduction
goals.
Electric Vehicles, Solar Panels, and
more as DERS
DERs are abundant and can often be found in
unexpected places. Electric cars, residential solar
panels, commercial backup generators, and more
can all be “harvested” by an aggregator. With
54
the right regulations and appropriate features,
assembling a collection of 100 megawatts of
distributed energy resources (DERs) can be a more
efficient, cost-effective, and rapid alternative to
constructing a traditional power plant of the same
size.
The field of virtual power plants and virtual DERs is
rapidly evolving. Vehicle-to-Grid (V2G) technology
will be a significant step forward for the sector once
it figures out how to connect electric cars together
to create virtual power plants.
Most EVs spend the majority of their time plugged
in, parked, or connected to the power grid. Therefore,
the idea is to utilize EV batteries to create DERs.
Since the number of lithium-ion batteries in electric
cars is significantly higher than the number of
batteries used in stationary power applications,
harnessing EVs could have a tremendous impact.
Before DERs can be fully utilized, there are still
many problems to solve. However, they present
one of the best opportunities to meet the power
industry’s future needs.
Distributed Energy Resources
Summary

● Distributed energy resources (DERs) can take many different forms and encompass a wide range of
technologies. However, they are all characterized by their proximity to where they are utilized on the grid.

● In the past, DERs were primarily considered as assets that generate electricity, such as solar, wind, and
combined heat and power (CHP) technologies. With advancements in technology and grid flexibility, DERs
now include assets that aid in balancing and controlling grid demand. These assets include thermostats,
electric vehicles, batteries, and hot water heaters.

● DERs enhance grid reliability and reduce the likelihood of breakdowns. By producing electricity in close
proximity to its consumption, DERs minimize energy wastage that occurs during long transmission lines.

● Solar panels, batteries, electric vehicles, and other renewable energy sources constitute the majority of
DERs. These flexible renewable energy sources can be easily and cost-effectively integrated into the grid.

● DERs offer reliability and resilience due to their close proximity to usage points. Instead of extensive
transmission wires and cables spanning miles, DERs only require a few hundred feet.

55 Distributed Energy Resources


Affordable and Clean Energy
Learning Objectives
By the end of this unit, you will be
able to understand:
● Universal access to modern
energy
● Increasing global percentage of
renewable energy
● Bringing improvement in energy
efficiency
● Promoting access to research,
technology and investments in
clean energy
56
Unit 7
Introduction
In 2021, four crucial indicators of climate change -
atmospheric levels of greenhouse gases, sea level
rise, ocean warming, and ocean acidification - broke
new records. This highlights the undeniable fact that
human activities are driving significant changes to the
land, oceans, and air, resulting in severe and long-term
consequences.
The best way to deal with this predicament is to stop
using fossil fuels to generate energy, which is the main
cause of climate change.
Essential technologies like battery storage systems make
it possible to store and utilize renewable energy from
sources like solar and wind when people, communities,
and businesses need power. The International Renewable
Energy Agency (IREA) states that, due to their unique
ability to quickly intake, store, and release electricity,
battery storage systems help to make the energy system
more flexible.
Battery storage technologies, when combined with
renewable generators, can provide reliable and cost-
effective electricity to areas that are not connected to the
main grid and to communities that do not have access
to it. Affordable and Clean Energy
To ensure that renewable energy technology is
accessible to everyone and not just the wealthy,
it is important to remove barriers to the sharing
of knowledge and technology transfer, such as
intellectual property rights.
While global cooperation and coordination are
important, it is also necessary to immediately reform
domestic policy frameworks to make it easier and
faster to implement renewable energy projects and
to encourage private sector investment.
The technology, capacity, and funding needed to
transition to renewable energy already exist, but
policies and procedures are required to reduce
market risk, facilitate investment, and incentivize
it. This can be achieved by simplifying the
planning, permitting, and regulatory processes and
eliminating unnecessary bureaucracy. This could
include providing designated areas specifically for
large-scale renewable energy development, known
as Renewable Energy Zones.
Universal Access to Modern Energy
Every day, renewable energy sources become
cheaper, more reliable, and better at their
functions. We cannot continue relying on fossil
fuels indefinitely, as they are detrimental to the
environment. Therefore, we need to change our
approach to energy production and consumption.
The first crucial step towards addressing climate
change is to swiftly adopt new energy solutions.
Ensuring universal access to affordable, reliable,
and sustainable energy services is essential in
the battle against climate change. This involves
expanding electricity access, promoting the use of
clean cooking fuels and technologies, improving
energy efficiency, and increasing the share of
57
renewable energy sources in our energy mix.
However, progress in these areas falls short of what
is needed to achieve the goal by 2030. It requires
greater financial resources, more ambitious policies,
and a willingness from countries to embrace new
technologies on a larger scale.
In the past decade, more people around the world
have gained access to electricity than ever before.
However, the number of people in Sub-Saharan
Africa without electricity has increased. Unless
countries with the most significant energy deficits
take significant action, it will not be possible to
ensure universal access to affordable, reliable,
sustainable, and modern energy by 2030.
According to the International Energy Agency’s
(IEA) Tracking SDG 7: The Energy Progress Report,
substantial progress has been made in various
aspects of Sustainable Development Goal (SDG)
7 since 2010. However, progress has been uneven
across regions. Over the past decade, more than
a billion people worldwide have gained access to
electricity. Nevertheless, the financial repercussions
of COVID-19 have made basic electricity services
unaffordable for an additional 30 million people,
primarily residing in Africa. Nigeria, the Democratic
Republic of the Congo, and Ethiopia had the highest
number of people without access to electricity.
Affordable and Clean Energy

Figure 7.1: Number of people without access to electricity in rural
and urban areas in the New Policies Scenario (million)
In 2010, the world had 1.2 billion people without
access to electricity. By 2019, that number had
decreased to 759 million. Electricity became
more prevalent, particularly through decentralized
solutions based on renewable energy. However,
based on current and planned policies and the
impact of the COVID-19 crisis, an estimated 660
million people, mostly in Sub-Saharan Africa, are
still projected to lack access by 2030.
Simultaneously, approximately 2.6 billion people,
accounting for one-third of the global population,
still lacked access to clean cooking facilities in
2019.
The report examines various approaches to bridge
the gaps between SDG7 and the current situation.
One of the most crucial aspects is the substantial
expansion of renewable energy, which has exhibited
greater stability compared to other segments of the
energy sector during the COVID-19 crisis.
Improvements in energy intensity, serving as a
proxy for energy efficiency, are diverging further
from the SDG7 target for 2030. In 2018, the world’s
primary energy intensity improved at a rate of
1.1% compared to 2017, representing the slowest
average annual rate of improvement since 2010. To
achieve the goal, an average annual improvement
of 3% will be necessary until 2030.
58
To expedite progress across all regions and
indicators, a stronger political commitment,
long-term energy planning, and sufficient policy
incentives and scalability are required to encourage
the faster adoption of sustainable energy solutions.
Key Highlights on SDG7 Targets
Access to Electricity: Despite recent progress, over
759 million people still lack access to electricity,
with many residing in unstable or war-torn regions.
The SDG’s goal of achieving universal access by
2030 may not be met, and the electrification efforts
could face further hindrances due to the COVID-19
pandemic.
Clean Cooking: In 2019, approximately 66% of the
global population, equivalent to nearly 3 billion
people, did not have access to clean cooking fuels
and technologies.
Renewables: The COVID-19 crisis has resulted
in a 7% annual increase in renewable electricity
generation. However, the renewable energy sector
requires more ambitious targets and government
support to sustain its growth.
Energy Efficiency: In 2018, the world’s primary
energy intensity increased by 1.1%. This measure
indicates the amount of energy used by the world’s
economic activities. It marked the slowest average
annual growth rate since 2010. To achieve the SDG
7 goal, an average annual improvement rate of 3%
will now be necessary until 2030.
International Financial Flows: In 2018, the
international public sector provided $14 billion to
support clean energy in developing countries. This
figure represented a 35% decline from the previous
year’s record high of $21.9 billion.
Affordable and Clean Energy
During the ongoing COVID-19 pandemic, investor ● Global CO2 emissions have increased by over
risk perception has significantly shifted, and public 46% since 1990.
funding priorities in developing nations have been
● Hydropower is currently the most significant
altered. In this context, international public financial
renewable source of electricity, supplying 16%
support is crucial to mobilize the necessary
of the world’s electricity at competitive prices.
investment levels and achieve the SDG 7 goal.
It serves as the primary electricity source in
numerous countries, regardless of their level of
UN Environment Programme’s Contributions to
development.
SDG 7
● Bioenergy, the largest renewable energy source

People and economies cannot thrive without today, accounts for 10% of the world’s primary

access to energy resources and means to harness energy.

them. Solar, wind, hydropower, geothermal, biofuels,

Targets Linked to the Environment:
natural gas, coal, petroleum, and uranium are all
examples of energy sources that can be utilized
● Goal 7.1: Ensure universal access
repeatedly.
to affordable, reliable, and modern
energy services for everyone by
To mitigate the consequences
2030.
of climate change, it is vital
to diminish our dependence ● Goal 7.2: Increase the share
on fossil fuels and enhance of renewable energy in the
the adoption of renewable global energy mix by 2030.
energy sources. This can be
● Goal 7.3: Double the global
accomplished through energy
rate of improvement in energy
conservation measures and the
efficiency by 2030.
implementation of sustainable
● Target 7.a: By 2030, enhance
energy practices. Furthermore, the
international cooperation to facilitate access to
preservation and effective management of
clean energy research and technology, including
natural ecosystems offer opportunities for the
renewable energy sources, energy efficiency
advancement of clean energy sources, such as
measures, and advanced and cleaner fossil
hydropower and bioenergy.
fuel technology. Promote investment in energy
infrastructure and clean energy technology.
Facts:
● Target 7.b: By 2030, improve infrastructure and
● Approximately 3 billion people rely on wood, upgrade technology to ensure universal access
coal, charcoal, or animal waste for cooking and to modern and sustainable energy services for
heating their homes. all people in developing countries, particularly

● Energy is the primary contributor to climate the least developed ones.

change, accounting for around 60% of all

greenhouse gas emissions.

59 Affordable and Clean Energy

Increase Global Percentage of rapid deployment and continuous cost reduction is
Renewable Energy imperative.

Over the past decade, the growth of renewable
energy has consistently exceeded almost everyone’s
expectations, demonstrating a significant and
remarkable progress. As countries strive to achieve
ambitious targets for reducing carbon emissions,
renewable energy, led by wind and solar power, is
poised to become the world’s primary source of
energy.
With the increasing demand for renewable energy
and the electrification of vehicles, established
energy providers are expanding their
capacity while new players are
entering the market. These new
participants include major oil
and gas companies adapting
their business models to
capitalize on this growing
Governments should establish goals and mandates
for the utilization of energy derived from natural
sources. Currently, these sources are predominantly
employed in the power sector, but their application
should be extended to heating and cooling, industry,
and transportation. Additionally, governments will
need to enhance the flexibility of the electricity grid
to accommodate renewable energy sources, such
as investing in long-distance transmission lines and
implementing innovative energy storage solutions.
Benefits of Renewable Energy
Environmental and economic
advantages of using renewable
energy include:
● Obtaining energy

trend, as well as private from renewable sources,

equity firms and institutional which do not release

investors who are integrating greenhouse gases and reduce

renewable energy as a key certain types of air pollution.

component of their investment ● Diversifying the energy mix

strategies. and reducing reliance on imported
fuels from other countries.
When we examine the past growth of renewable
● Stimulating economic growth and creating job
energy, it instills hope for its potential to accelerate
opportunities in manufacturing, installation, and
in the future and aid in achieving our climate
related industries.
objectives. However, it is evident that the growth
of renewables needs to accelerate, although the
The utilization of energy resources can have
extent of acceleration remains unclear.
significant environmental impacts, including
emissions from fuel combustion that contribute
To ensure that renewable energy adoption follows
to local, regional, and global pollution, as well as
an S-curve and progresses rapidly enough to meet
the potential for climate change and disruption
the goals of the Paris Agreement, greater policy
to various ecosystems. The specific outcomes
support is necessary. Even for countries that are not
depend on factors such as:
currently leaders in this field, offering incentives for

60 Affordable and Clean Energy

● The primary energy source being used. materials and components is crucial for the growth
and advancement of renewable energy. This
● The conversion technology employed.
encompasses access to the necessary minerals for
● The size, location, and other relevant factors of
manufacturing wind turbines, electric vehicles, and
the energy system.
power infrastructure.

Five Critical Actions the World needs to Prioritize

To enhance and broaden the world’s manufacturing
capacity, international cooperation and investment
Energy is a major reason why people have health
in skills training, research and innovation, and
problems, mostly because burning fuels pollutes
sustainable supply chain development are crucial.
the air.

Level the Playing Field for Renewable Energy

There are five crucial things the world needs to
Technologies: To achieve a fair and equitable
do right away to change our energy systems and
environment for renewable energy technologies, it
transition faster to renewable energy.
is necessary to implement changes to domestic
policy frameworks that simplify the completion of
Make Renewable Energy Technology a Global
renewable energy projects and foster private sector
Public Good: Remove obstacles to the sharing
investments.
and transfer of knowledge on renewable energy
technology, making it accessible to all, not just
the privileged, by eliminating intellectual property
barriers.

Essential technologies like battery storage systems

enable the storage and utilization of energy from
renewable sources such as the sun and wind when
power is needed by individuals, communities,
and businesses. According to the International
Renewable Energy Agency, their ability to quickly
absorb, store, and release electricity enhances the
flexibility of energy systems.
Moreover, when combined with renewable
generators, battery storage technologies can
deliver reliable and more affordable electricity to
off-grid communities and isolated grids in remote
areas.
Improve Global Access to Components and Raw
Materials: Ensuring a consistent supply of raw
While there is available technology, capacity,
and funding to transition to renewable energy,
the establishment of appropriate policies and
processes is vital to mitigate market risks, enable
investments, and encourage their implementation.
This can be achieved through streamlining the
planning, permitting, and regulatory processes and
eliminating bottlenecks and bureaucratic obstacles.
Shift Energy Subsidies from Fossil Fuels to
Renewable Energy: Subsidies for fossil fuels pose
as one of the significant financial obstacles to the
global transition towards renewable energy. These

61 Affordable and Clean Energy

subsidies are not only wasteful but also unfair.
According to the IMF, in developing countries,
approximately half of the public funds allocated
to supporting the use of fossil fuels are directed
towards the wealthiest 20% of the population.
By redirecting subsidies from fossil fuels to
renewable energy, not only can emissions be
reduced, but it can also contribute to the growth of
the economy, job creation, improvement of public
health, and promotion of fairness, particularly for
the world’s poorest and most vulnerable individuals.
Triple Investments in Renewables: In order
to achieve net-zero emissions by 2050, it is
necessary to allocate a minimum of $4
trillion per year towards renewable
energy until 2030. This includes
investments in technology and
infrastructure.
Such investments are expected
to yield significant returns and
will not incur costs nearly as high
as annual fossil fuel subsidies. By
2030, the world has the potential to
save up to $4.2 trillion annually simply by
reducing pollution and mitigating climate change.
Double the Improvement in Energy
Efficiency Promote
Energy is the golden thread that connects economic
growth, fairness among people, and a healthy
environment, making the world a good place to live.
Energy efficiency is measured by the ratio of energy
used to the amount of money generated (GDP).
Typically, gross energy consumption is categorized
into five main types: solid fuels/biomass, oil, gas,
62
nuclear, and renewable resources.
Improving a business’s energy usage is one of
the most cost-effective measures it can take.
Energy-efficient technologies require less energy
to perform the same or even better work. Utilizing
such technologies can significantly reduce
greenhouse gas emissions. Energy efficiency also
offers additional benefits, including improving
the economy, creating jobs, reducing pollution,
promoting better health, and alleviating poverty.
In order to achieve these goals, certain actions
must be taken:
● Accounting for Sustainability
at Every Step: It is increasingly
crucial to be able to provide an
explanation of how products are
manufactured and the origins
of the materials used.
● Advancing the
Manufacturing of Smaller
Components: As electronic
parts become smaller and lighter
to accommodate new generations of
compact, advanced mobile, and wearable
devices, there is a need for new materials that
perform optimally in smaller configurations.
Access to Research,
Technology and Investments in Clean
Energy
There is no denying the importance of green energy
research for the survival of our planet. Governments
and private organizations are increasing funding
for research into renewable energy sources as
concerns over climate change and sustainability
continue to grow.
Affordable and Clean Energy
The goal is to enhance global collaboration by
2030, facilitating access to clean energy research,
technology, and innovations. This includes
advanced fossil fuel technology, renewable energy
sources, and energy efficiency measures.
The seventh Sustainable Development Goal aims to
achieve the generation of dependable, sustainable,
and reasonably priced renewable energy. To reach
this goal, the green energy sector needs to prioritize
research and innovation.
Green Energy Research
Green energy research focuses on finding
more effective and environmentally
friendly ways to produce energy,
utilizing existing energy sources
as well as renewable resources
such as solar and wind
energy.
This research is crucial for
developing renewable energy
options that can meet the growing
demand while minimizing negative
environmental impacts.
Key Areas of Green Energy Research
There are three main types of green energy research:
solar, wind, and hydro.
Solar Energy Research focuses on developing new
photovoltaic materials and advancing solar thermal
technologies to more effectively harness the power
of the sun.
Wind Energy Research aims to increase the
efficiency of turbines and explore new methods of
63
generating electricity from wind power.
Hydro Research primarily focuses on improving the
utilization of hydroelectricity while seeking more
effective ways to mitigate its negative impacts on
ecosystems and the environment.
Other Interesting Areas
Geothermal Energy Potential: Despite the presence
of numerous nations with hot geysers, only a few
have utilized them to generate energy. Researchers
must discover effective and affordable methods to
harness this power without causing harm to nearby
ecosystems.
Fossil Fuel-Free Engines:
Addressing the significant
contribution of transportation
to global greenhouse gas
emissions requires finding
sustainable alternatives
to traditional fossil fuel
engines in various vehicles,
including automobiles, aircraft,
ships, industrial machinery, and
others. According to a report by
UNEP, transportation accounts for
approximately 25% of total emissions worldwide.
Exploring research areas such as the development
of hydrogen fuel cells, improved automobile
batteries, and new materials for the production and
storage of clean energy are critical. An intriguing
topic is the recycling of battery components.
Sustainable Energy Storage: Discovering innovative
methods to store energy is a crucial aspect of green
energy research. This is essential because weather
conditions can impact the availability of renewable
Affordable and Clean Energy
energy sources like solar and wind energy. By
developing effective energy storage solutions, we
can utilize energy even when the sun isn’t shining
or the wind isn’t blowing.
Importance of Green Energy Research to Modern
Society
There are several reasons why green energy
research is so important.
Combatting Climate Change: Green energy
research is essential in the fight against climate
change. Conventional energy generation methods
are significantly less environmentally friendly
compared to clean, cost-effective, and sustainable
energy solutions. To meet climate change
commitments, there must be a significant increase
in renewable energy production.
Increased Global Energy Demand: Energy demand
rises in tandem with population growth and
technological advancements. The construction
of new structures, tools, and machinery amplifies
the need for energy generation. As energy demand
continues to escalate, it becomes imperative to
explore better and safer energy sources. Active
involvement in green energy research will help
bridge this gap.
Worsening Pollution: The continued reliance on
fossil fuels contributes to increasing environmental
pollution, leading to severe consequences such
as global warming, natural disasters, and long-
term damage to ecosystems. To combat these
effects, investing in research and development of
sustainable energy alternatives is crucial.
Abundance of Untapped Energy: The sun shines
every day, the wind blows, water flows rapidly, waves
64
crash on the shores, and the Earth’s soil contains
hot geysers. All of these potential energy sources
can fuel development and create job opportunities.
To effectively and affordably harness these energy
sources, extensive research is necessary.
Challenges and Future of GreenEnergy Research
Green energy research faces a number of obstacles:
● One of the major challenges is the higher cost
associated with developing and deploying
renewable energy solutions compared to
conventional technologies. This is particularly
true for wind and solar energy, which are still in
their early stages.
● Renewable energy sources are often intermittent,
meaning they cannot consistently produce
electricity. This makes integration into the grid
challenging and raises questions about energy
storage during periods of low production.
● Ensuring accessibility and affordability of these
technologies for everyone presents another
difficulty.
● Additionally, important considerations need to be
made regarding environmental impacts, as well
as social and economic repercussions. There
is still much work to be done to fully exploit the
potential of green energy technology.
Affordable and Clean Energy
Despite these challenges, the advantages of green energy research are evident. These technologies have the
potential to reduce our dependence on fossil fuels, thereby helping to mitigate climate change.

They can also contribute to improved air quality and create new job opportunities within the renewable energy
industry. Green energy research holds a promising future, and with continued funding and efforts, significant
progress can be made in this important field.

Summary

● Nearly every significant challenge and opportunity that the world faces today revolves around energy.
Access to energy for everyone is crucial for improving incomes, securing jobs, combating climate change,
and increasing food production. Given its interconnections with other Sustainable Development Goals,
achieving this objective is of utmost importance.

● It is essential to prioritize ensuring universal energy access, improving energy efficiency, and increasing the
utilization of renewable energy sources by creating new economic and job opportunities. This approach
aims to build more inclusive, sustainable, and resilient communities that can withstand environmental
challenges like climate change.

● Currently, around 3 billion people lack access to clean cooking methods and are at risk of harmful air
pollution. Furthermore, approximately 50% of the global population, which is nearly 1 billion people, live
without electricity, with the majority residing in Sub-Saharan Africa. Fortunately, the use of renewable
electricity from sources such as water, solar, and wind power has made significant progress in the past
decade, and energy intensity per unit of GDP is also decreasing.

● However, the issue is far from being resolved; there is a need for greater availability of clean fuels and
technologies, and further advancements are required in integrating renewable energy into end-use
applications in buildings, transportation, and industry.

● To transform global energy systems, it is necessary to increase both public and private energy investments,
while also focusing on innovative business models and regulatory frameworks.

65 Affordable and Clean Energy

 Unit 8

The World
Energy Trilemma
Learning Objectives Introduction

By the end of this unit, you will be

able to understand:
● Issues with current
system
● Current approaches to maintain
peak demand
● Smart grid compared
to traditional electricity
grids
● Decentralized energy generation
and the smart grid
Trilemma describes a difficult decision between three
options. This phrase may imply that affordability,
sustainability, and energy security are fundamentally at
odds. Finding a balance between the trilemma’s three
elements is crucial, but not at the expense of any of them.
The need for power, heat, and transportation is rising
along with the world population’s continued rapid growth
while becoming more urbanised and wealthy. By 2050, it
is anticipated that the world’s energy demand would likely
double.
Between now and 2050, energy infrastructure investment
needs to be close to US$50 trillion to keep up with
global energy demand. The distribution of resources is
extremely important given the size of the investment and
the growing importance of energy.

Many of the Sustainable Development Goals of the UN

centre on energy. To create a strong foundation for
prosperity and competitiveness, nations should strike a
balance among the three key aspects of the global energy
trilemma:

66 The World Energy Trilemma

● Energy affordability and access
● Energy security
● Environmental sustainability
The World Energy Council (WEC) specifies the
objectives to be met in the “Energy Trilemma” as:
● A reliable energy supply
● Affordability of energy
● Sustainability in energy production
consumption
The Energy Trilemma brings about a platform to
talk about the problems holistically by combining
three important characteristics of the energy
markets. The trilemma approach is more relevant
than ever with the demand for energy showing no
signs of slowing down and the urgent need for an
international effort to tackle climate change.
Energy Trilemma as an Important Tool - Three
distinct axes, each with its own scoring or weighting,
make up the trilemma. To address the energy
trilemma, each nation adopts a unique method.
A score that is higher on a certain axis will be
considered good.
Figure 8.1: Energy Trilemma
67
The best result is to get good marks on all three
axes because none of them is inherently more
significant than the other two. The issue then
becomes whether or not this is feasible.
The Energy Trilemma is a useful tool because it
effectively communicates the relative standing
against each of the three. Major energy consumers
and organisations can use the Trilemma Index
as a crucial tool and framework for an integrated
and
perspective and well-informed decision making.
Providing Energy Security
Energy security is the ability of a country to ensure
stable and reliable access to energy sources to
meet its present and future demands. It involves
managing internal and external energy sources,
maintaining the resilience and reliability of the
energy infrastructure, and being able to quickly
recover from any disruptions to supply with minimal
impact.
The term “energy dilemma” relates to the challenge
of balancing security, affordability, and sustainability
in our daily access to and use of energy. To do this,
we must ensure that we comprehend what energy
affordability, security, and sustainability imply for
the current global environment.
Security: When we talk about security, we’re talking
about having access to adequate energy when and
where we need it. This entails being able to access
energy continuously. This might refer to a short-
term energy system that can adapt to unexpected
shifts in supply and demand.
Long-term security is another component of energy
security. There is a finite amount of fossil fuels, such
as oil, gas, and coal, and ultimately these energy
The World Energy Trilemma
sources will run out. Long-term energy security can
be increased by utilising renewable energy sources
including wind, solar, and hydro power.
Energy security is described by the International
Energy Agency (IEA) as “the availability of an
uninterrupted energy supply at a reasonable price.”
It may be done by:
● Making good use of the natural resources that
are available.
● Using all available resource sources to ensure
the supply of energy
By creating more energy-efficient products, we can
likewise increase the affordability of electricity. By
reducing demand, devices that require less energy
to operate can assist in lowering energy prices.
By switching completely to LPG, electric, natural
gas, or biogas stoves by 2030, it can be further
improved.
Achieving Environmental
Sustainability
Environmental sustainability in energy systems
refers to the transition of a nation’s energy system
towards reducing and avoiding potential harm

Equitable Access to Energy to the environment and the impacts of climate

To heat our houses, power our cars and public
transportation, and illuminate our daily surroundings,
we require energy. It is critical that everyone can
pay and access the energy we consume.
change. This includes focusing on air quality,
decarbonization, as well as improving the efficiency
and productivity of transmission and distribution
systems.

Energy equity measures a nation’s capacity to

offer unrestricted access to a plentiful supply of
dependable energy for household and commercial
use. The dimension includes:

● Basic access to power, clean cooking fuels, and

technology

● Access to levels of energy consumption that

support prosperity Oil, coal, and natural gas account for the majority
of the energy we use globally. The majority of the
● The cost of electricity, gas, and fuel.
energy used in the globe comes from these fossil
fuels. These energy sources contribute significantly
The cheapest source of electricity in history,
to the climate crisis and have detrimental effects
according to the International Energy Agency’s
on our planet by releasing greenhouse gases into
2020 report, is solar power, with wind power not
the atmosphere.
too far behind. This is partially due to better energy
generation made possible by wind and solar power
plants with higher efficiency.

68 The World Energy Trilemma

Focus is placed on finding ways to supply today’s
energy needs without harming future generations.
Since they are derived from renewable resources,
hydro, solar, and wind power are all regarded as
more environmentally friendly energy sources.
There are still ongoing discussions regarding the
sustainability of other low-carbon solutions, such
nuclear power, which may make up a significant
portion of our energy mix in the future. However,
there are concerns about nuclear waste.

Summary

● Based on international and domestic data, the World Energy Trilemma Index assesses the energy
performance of 127 nations on the three dimensions and identifies areas for integrated policy innovation
and policy coherence that can be strengthened in order to create well-tuned energy systems.

● The Index aims to provide light on how a nation compares to other nations in terms of energy security,
equity, and environmental sustainability. By doing this, the Index draws attention to a nation’s difficulties in
balancing the Energy Trilemma and its chances to make progress toward achieving its energy goals now
and in the future.

● The Index intends to provide information to decision-makers in the policy, energy, and finance sectors. In
contrast to historical indexed scores, which offer information on each country’s performance trends over
time, index rankings allow comparisons between nations on each of the three aspects.

● The World Energy Trilemma ranking gives nations a good platform to highlight their policy accomplishments,
promising trends, and performance in comparison to their neighbours. National Member Committees can
create unique national and sub-national Trilemma models by cooperating with the Council.

69 The World Energy Trilemma

 Unit 9

A Smart Electric Grid

Learning Objectives Introduction

By the end of this unit, you will be Electricity was initially delivered from power plants
able to understand: through a wide variety of local grids during the early years
● Issues with current of the electrical age. These power stations were typically
system located near their fuel sources and clients, and power

● Current approaches to maintain was delivered to clients using short distances and low

peak demand voltages.

● Smart grid compared

to traditional electricity
grids
● Decentralized energy generation
and the smart grid
Although this method initially functioned fairly well,
it became unsustainable as demand for electricity
increased. As a result, these smaller grids expanded, and
a more complex system with voltage steps up and down
to aid transmission was developed.

The transmission and distribution of electricity is referred

to as the electricity grid. It is a complex network of
power lines, substations, and transformers that transport
electricity from the point of generation to end-users,
including households, businesses, and other facilities.
The grid is responsible for maintaining the reliability,
stability, and resilience of the power supply.

It is hailed as one of the greatest engineering feats of the

20th century because it allows customers hundreds of
kilometers from power plants to receive power instantly.
However, the underlying technology is deteriorating

70 A Smart Electric Grid

and may soon be unable to keep up with the fast
modernization and growing need for electricity in
our society.
The implementation of a smart grid system, which
enables two-way communication of electricity
and data, is seen as a step towards the digital
transformation of the power industry. This system,
known as smart metering, has been in development
for over a decade and is an essential component in
modernizing the electricity network.
The integration of advanced technologies, such as
big data analytics and IoT, into the infrastructure of
traditional power grids allows for more efficient and
responsive management of energy distribution and
consumption, known as smart grids. This concept,
which has been around for over a decade, is crucial
for the digital transformation of the power industry
and utilizes edge computing to analyze data at the
point of origin.
Smart grids can be used for various purposes, and
there are several reasons why traditional electric
grids are being replaced by smart grids.These
reasons include:
● The deregulation of the energy market
● Evolutions in metering
● Changes in electricity production
71
● Decentralization (distributed energy)
● The emergence of involved ‘prosumers’ (those
who both produce and consume electricity) •
Changing regulations
● The rise of micro-generation and isolated micro-
grids
Issues with Current System
Any electricity generated must be used immediately
because the current electrical infrastructure has
little or no storage capacity. The frequency of the
AC voltage may alter if supply and demand are out
of balance. Electrical apparatus or even a portion
of the grid itself may malfunction if it exceeds a
particular range.
Demand response (DR) is a set of strategies
that allows electricity customers to adjust their
consumption in response to changes in the price
of electricity over time or in response to signals
from the grid operator indicating the state of supply
and demand on the grid. This can be done through
the use of smart meters, automated controls, or
direct human intervention, and it allows for a more
efficient use of the grid and can help to reduce the
need for expensive peak generation capacity.
Therefore, it is up to the power plants to adjust their
output to precisely match surges in demand and
shortfalls. Utility companies must carefully plan for
this, and they must estimate power use extremely
precisely using past trends and weather reports.
It takes more than just forecasting demand to
get the proper amount of electricity from a power
plant. Nuclear and fossil fuel power plants are
good at generating a lot of electricity, but starting
one back up after a shutdown can frequently take
A Smart Electric Grid
hours. Additionally, they take a while to change
their output, and they are frequently built so that
it becomes inefficient if the plant’s output veers
outside of its typical operating margins.
Other types of power plants must be able to
compensate for demand changes in such a case.
Renewable energy sources that depend on weather,
like wind and solar, are also vulnerable to variations
based on regional conditions, which can further
destabilize the situation. A major barrier to the
widespread use of these renewable energy sources
is their instability.
When the grid is overloaded, alternative clean
technologies, like hydropower, are
frequently forced to reduce their
output, which is undesirable and
increases the carbon footprint.
Weather is another ongoing
issue for utilities. A hot day
would show an increase in air
cooling, while a snowstorm may
see a rise in heating, among other
short-term variations in demand.
However, weather can also harm the
electrical system.
Tree limbs falling on delicate equipment, such as
electricity wires and transformers, are the primary
cause of power outages. Although this is typically
a local issue, if power levels are not changed to
account for it, excess voltages for surrounding
systems may develop. This could ultimately lead to
their failure, endangering more neighboring units.
72
Current Approaches to Maintain Peak
Demand
Utility providers employ a variety of tactics to keep
up during times of peak demand. Energy providers
occasionally transmit extra energy to storage
facilities so that it can be used later when needed,
despite the grid’s lack of storage capacity.
The majority of these are “pumped-hydro” plants,
which run on the potential energy from pumping
water upward. Other techniques include heat
storage, pressurized air, or even batteries.
But none of these approaches is particularly
effective or economical. The most
popular method is to start up so-
called “peaker plants,” which are
gas-fired facilities that can be
swiftly switched on and off to
only work when demand is at
its highest. These are typically
more expensive to maintain,
older, less effective plants.
Utility companies frequently have
the choice of paying huge industrial
consumers to temporarily cut their consumption
until demand stabilizes or importing power from
their neighbors if peaker facilities are unable to
keep up with demand.
Utility companies can also impose “rolling
blackouts,” in which a portion of the grid completely
loses electricity for a while, to avert a major failure.
The electric utilities will make an effort to spread
out these blackouts quite equally for a while.
A Smart Electric Grid
Smart Grid allow them to interface with supply-side computers
and offer data on the system’s current energy
The term “smart grid” refers to a group of concepts, requirements. A smart device or appliance would
tools, business strategies, operational procedures, be able to temporarily lower its power during supply
and other factors that would enable a more effective shortages until demand and supply stabilize.
and dependable electrical system.
“Smart meterage” technology is another
The implementation of distributed power advancement that would be a part of the smart grid.
generation, particularly with a focus on renewable
and sustainable sources, is a key feature of a smart In the past, traditional metering methods only
grid. Additionally, the incorporation of information recorded basic information about total electricity
technology to monitor both supply and demand usage. To calculate a customer’s bill, utility
is essential to its functioning. The use of low-cost companies had to manually check each meter
energy storage solutions is also an important at the end of each month. Even though some
aspect of a smart grid. utilities have adopted more advanced
telemetric systems, this method is
The integration of local, still considered to be inefficient.
renewable energy sources such
as solar and wind power is a Smart meters might make
crucial aspect of distributed it possible for utility
generation in a smart grid. companies and customers
This not only promotes the to communicate in real-
transition to clean energy time, and they might also let
but also ensures a more customers keep track of their
dependable power supply for electricity usage.
local communities.
Smart meters might also make it
The concept of leveraging two-way possible for businesses to use dynamic
communication as a demand response system pricing models, charging customers more for
between utilities and smart devices/appliances is electricity when demand is at its highest and less
a promising area of focus. during periods of surplus.

In the conventional paradigm, electrical equipment
and appliances are “oblivious” to the electrical
grid’s requirements; they continue to draw the
same amount of power whether there is an excess
or a shortage of electricity.
In a smart grid, devices and appliances may be
fitted with cutting-edge technology that would
Customers could adjust their usage to take
advantage of cheaper electricity during periods of
reduced demand with the help of smart meters and
communication between utilities and customers,
creating economic pressure to balance power
consumption throughout the day. This might
increase dependability and lessen the need to
employ peaker plants to meet spikes in demand.

73 A Smart Electric Grid

A smart grid, in accordance with the EU, makes Usually, a distinction is made between:
use of cutting-edge goods and services as well as
intelligent monitoring, control, communication, and ● Communication (transmission grid: high and
self-healing technology to: extra-high voltage)

● Distribution (distribution grid: lower voltage),

● Make it easier for generators of all sizes and
technologies to connect to and run
● Enable users to contribute to system operation
optimization
● Give customers more alternatives and knowledge
about how to use their supply
● Significantly lessen the overall electricity delivery
system’s environmental effect
● Maintain and enhance the current high standards
of system dependability, quality, and supply
security
which involves a variety of wiring and cabling
systems
An electrical grid is used to ensure that power is
always available when and where it is required,
uninterrupted. Managing a grid is particularly
complex due to the intricacy and the numerous
difficulties that might occur, such as the effects of
extreme weather, damage from animals, human
sabotage, and other external and internal causes
(problems with equipment failure and essential
assets).

● Maintain and enhance the current services

Although smart grid includes renewable energy

sources like wind and solar, developing these
technologies is not regarded as moving the smart
grid forward. Here, the difficulty for grid researchers
is integrating and integrating these technologies
with current infrastructure.

Smart Grid Compared to Traditional

Here, a specific area for professionals to consider
Electricity Grids
is needed:

The traditional electrical grid system is designed to

meet the demands of consumers, with a hierarchical
structure and limited storage capacity. The voltage
level in the network is gradually decreased, starting
from the transmission level, to the distribution level,
and finally to the service level, in order to cater to
the needs of different users.
● The options for regulating energy
● Governmental sustainability programs
The market for electricity, the amount of power
consumed, laws, stakeholder expectations, and
even the process of producing electricity itself are
all evolving. Globally, there are smart grid initiatives,
albeit occasionally with distinct strategies and
objectives.

74 A Smart Electric Grid

The basic feature of a smart grid, two-way electricity ● Substations and distribution lines (substation
and data flow, makes it possible to provide data automation and, increasingly, digital substations)
and information to the many participants in the
● Tools and techniques for preventing power
electrical market, which can then be evaluated to:
outages and guaranteeing electricity quality
(availability, reliability, etc.)
● Improve the grid
● The integration of energy from different sources
● Anticipate probable problems
with a stronger emphasis on “green energy”
● React more quickly when difficulties arise
● Smart energy production
● Create new capabilities and services in light of
● Monitoring transmission line sensors
the evolving power situation
● Automation of power systems

The definition of a “smart grid” has evolved ● The addition of micro-generation, which enables
to include a broader range of capabilities and institutions and larger buildings to produce their
applications beyond just two-way data and own electricity and supply it to the network grid
electricity transmission. With the rise
● Improved and expanded power
of prosumers and organizations
storage capacities
producing their own electricity, the
● More effective ways to
use of advanced technologies
enhance security
in smart grid deployments
has opened up many new ● Utilize different
possibilities. transmission techniques to
conserve precious metals
This also includes:
● The creation of more
contemporary and reliable electrical
● IoT innovations
grids in nations and regions where
● Big data and sophisticated analytics outdated grids need to be replaced
with machine learning and artificial intelligence
on top Decentralized Energy Generation and
● Numerous communication protocols and the Smart Grid
technologies are utilized to transfer data between
The emergence of so-called decentralized energy
different locations (such as smart meters and
generation and microgrids/micro-generation is one
utility companies)
of the major trends in the power sector.

A smart grid today includes more than just smart

The shift towards decentralized energy generation
meters. Other components of the “smart grid”
means that more energy is produced and stored
include:

75 A Smart Electric Grid

closer to the end-user, reducing the reliance on
large-scale power plants and traditional energy
sources. This shift also results in changes to the
revenue streams for energy providers, as customers
may produce more of their own energy.
Figure 9.1: Energy Generations
“Closer” does not always refer to proximity in terms
of distance. If a business has access to power
generation where it is located, there is a good
possibility that nothing else is physically closer.
However, one may easily see scenarios in which a
power plant could also be located extremely close
by.
Integrating different resources is crucial, and
decentralized energy is generally defined as energy
produced closer to the point of use rather than at a
huge facility from which it is transferred across the
national grid.
A shift away from centralized power generation
towards decentralization is happening as new
technology enables more diverse methods of energy
production, storage, and transmission. This change
in the way energy is produced, stored, transported,
76
and consumed represents a significant shift in the
energy industry.
One of the difficulties is integrating all of this
while simultaneously adding any extra capacity
that might be generated decentralize to the grid,
allowing businesses and individuals to sell energy
in addition to purchasing it. Additionally, isolated
microgrids help to lessen the effects of possible
disruption.
Challenges to Address
The transition to a smart grid faces numerous
obstacles. Some of these consist of:
● Consumer concerns (privacy and personal data
protection)
● Cybersecurity
We frequently observe consumer opposition in
nations where smart meter programs have already
begun, which frequently results in the installation
of a smart meter ultimately being a choice; in other
nations, denial has financial repercussions.
Cybersecurity is a major concern in the digital age,
particularly in industries where digitization and
digital transformation are being adopted. With the
increasing importance of data and the integration
of IT and OT, ensuring the security of these systems
is crucial to protect against potential cyber threats
and breaches.
Additional difficulties with smart grids include:
● Regulatory adjustments
● The difficulty of incorporating sources
A Smart Electric Grid
● The systems and alliances between different participants in an unregulated market

● The fact that, in many local markets, a small number of dominant multinational enterprises exist

● Modifications in prosumer attitudes

Summary

● Because they boost the integration of electric vehicles, reduce energy costs, enable hosting of renewable
energy sources, and increase grid resilience, microgrids play a significant role in constructing a low-carbon
future.

● The idea of a “smart grid” is not new. Additionally, it is a journey and a lengthy process, encompassing a wide
range of potential alternative steps and difficulties. However, it is evident that we have made significant
progress from the early stages of advanced metering.

● Smart appliances, smart meters, renewable energy sources, and energy-efficient resources are just a few
of the operational and energy-saving features found in smart grids.

● The advantages of a smart grid include increased efficiency and dependability of the electricity supply,
incorporation of more renewable energy into the current network, support for the mass production of
electric vehicles, new ways for consumers to optimize their electricity consumption, and a decrease in
carbon emissions.

● The use of smart grid technologies, solutions, and approaches in areas with older electricity grids
that experience outages and poor power quality is currently a major focus for improving functionality.
These areas include self-healing grid capacities, microgrids, and distributed energy resources (DER), the
communication architectures and technologies in grids. These technologies and approaches are being
used worldwide.

77 A Smart Electric Grid

 Unit 10

Environmental Economics

Learning Objectives Introduction

By the end of this unit, you will be The study of cost-effective resource allocation, utilization,
able to understand: and protection is known as environmental economics.
● Origin and scope of The fundamental tenet of environmental economics is
environmental economics that there are costs associated with economic growth that

● Strategies and challenges are not taken into account in more conventional models,

in Environmental and that environmental amenities (or environmental

Economics commodities) have economic worth.

● Environmental Economics Vs
In its broadest sense, economics is the study of how
Ecological Economics
people create, use, and dispose of products and services.
Environmental economics is concerned with how
resources are used and managed to benefit people while
addressing environmental effect concerns. It supports
research on the effects of environmental policies and
develops solutions for issues brought on by them.

Environmental benefits include things like having access

to clean water and air, ensuring wildlife survival, and
maintaining a stable climate. Although it is difficult to
quantify the value of environmental goods, losing them
may incur significant costs. Typically, fully privatizing
environmental goods is challenging, and they are also
vulnerable to the tragedy of the commons.

78 Environmental Economics
Externalities are a key topic in environmental use of natural resources and the implementation of
economics, as it is either prescriptive-based or alternative policies to address environmental issues
incentive-based. The misuse or destruction of such as air and water pollution, toxic compounds,
environmental goods, such as pollution and other and global warming.
forms of environmental degradation, can be viewed
as a type of market failure due to the negative The field of environmental economics emerged in
externalities they impose. the 1960s as the negative effects of industrialization
and pollution became more apparent. Environmental
Environmental economists may conduct theoretical economists view the environment as a form of
studies or experiments to determine the potential natural capital that provides essential resources for
effects of specific economic policies aimed at human survival. The field is based on neoclassical
addressing such issues. They may examine the economics, which addresses issues such as poor
costs and benefits of such programs. resource management, market failures, negative
externalities, and the provision of public goods.
Furthermore, environmental economics
often requires a global perspective As the movement matured over
because some environmental time, other complex aspects
goods are not exclusive to of the connection between
a single nation. This helps the environment and the
governments weigh the economy emerged. Strong
benefits and drawbacks environmental arguments
of alternative actions and and proposals from the
develop sound environmental study gave rise to current
policies. environmental policies and
regulations around the world.
Origins and Scope This resulted in the creation of
new environmental organizations, the
Environmental economics examines the most notable of which was the United Nations
impact of environmental policies on economies Environment Programme (UNEP) in 1972.
worldwide, with a focus on the efficient use of
natural resources and the implementation of Scope of Environmental Economics
alternative policies to address issues such as air
pollution, water pollution, toxic compounds, solid The primary focus of the discipline is how
waste, and global warming. environmental economics can be used to design
and implement environmental policies.
Origins of Environmental Economics
Environmental economics raises three crucial
Environmental economics is a branch of economics issues:
that focuses on the impact of environmental policies
on the economy. It aims to promote the efficient

79 Environmental Economics
● What economic and institutional issues give rise satisfies present demands without compromising
to environmental challenges? the capacity of future generations to fulfill their
own requirements.” The idea examines how
The concept of market failure in environmental
economic growth aids in promoting sustainable
economics suggests that either there is a lack of
development. Economic development,
markets for environmental goods, such as clean
environmental conservation, social equity, and
air, a beautiful environment, and scenic views,
institutional capacity are the four pillars of
or that the markets for these goods are not fully
sustainable development.
developed, resulting in an inefficient distribution
of environmental resources. ● Market failure: Market failure occurs when the
market is unable to efficiently allocate resources,
● What is the monetary value of environmental
such as clean water, due to the absence of a
harm prevention and eradication advancements,
market for the specific good or an insufficiently
as well as environmental degradation caused by
developed market. This is exemplified by the
pollution and other agents?
lack of a marketplace for clean oceans, where
A key component of environmental economics is
the value of a clean sea cannot be accurately
the measurement and estimation techniques for
determined. This is a prime example of market
these variables.
failure in the context of environmental goods.
● How can environmental regulations and
● Externalities: Externalities are unintended
economic incentives be effectively created
effects of economic activity that have an impact
to raise environmental quality and prevent
on people other than those who are directly
environmental harm?
involved. Externalities are another instance of
To determine if environmental laws and a failing market. They may be detrimental or
regulations and economic incentives are beneficial.
achieving their intended goals, a critical analysis
of both is necessary.

By addressing these issues, environmental

economics provides insights and tools
to policymakers for developing effective
environmental policies, balancing economic
growth with environmental sustainability, and
promoting the efficient use of resources to address
environmental challenges.

An unintended consequence of a negative

The following concepts are included in
externality harms the environment or the general
environmental economics:
public directly. An illustration would be: An
industrial activity leads to pollution which causes
● Sustainable development: According to UNEP,
health issues. Even when their actions impair the
sustainable development is “development that
environment and have a harmful impact on the

80 Environmental Economics
neighborhood, the polluting entities will not incur
expenses to address the pollution.
An advantage that accrues to parties unrelated to its
creation is known as a positive externality. People
who come to visit relatives and friends nearby and
would not have helped fund the creation of the park
can gain from it. Such people are called ‘free riders,’
meaning they will avail the benefits of an economic
resource without contributing anything.
● Valuation: Assessing the value of environmental
and natural resources is a complex task, as
environmental economics places significant
importance on valuation to evaluate various
options for addressing issues related to
their use.
This is due to the difficulty in
assigning monetary value to
intangible benefits such as clean
air and a healthy ecosystem.
It is difficult to assign a value
to a resource that has numerous
benefits. For example, it is challenging
to assign a value to a mountain that has
many uses like scenic beauty, regulation of
river flows, flood prevention, etc.
Values can be attributed to environmental resources
based on techniques of use and non-use. It is
simpler to place value on an item that is already in
use by assessing the amount that customers and
users are willing to spend on it.
The “use” concept can be applied to opportunity
cost pricing, replacement cost pricing, and hedonic
pricing techniques. The “non-use” method employs
the contingent valuation technique to determine
81
what buyers are prepared to pay for a good they will
not use or enjoy.
● Cost-benefit analysis: The goal of cost-benefit
analysis (CBA) is to balance the actual and
perceived benefits of a policy. Therefore, the
most beneficial policy is the one with the largest
excess of benefits over expenses.
CBA begins with a basic policy that maintains the
current state of affairs. The predicted realization of
the perceived costs and benefits is chosen as the
temporal horizon. Benefits are situations in which
human well-being is increased, whereas costs are
situations in which it is decreased.
To account for the time value of
money, costs and benefits that will
be recognized in the future are
discounted using a discount
factor. Costs include
opportunity costs, internal and
external costs, and externalities.
Benefits include additional money,
an enhanced quality of life, clean water,
and beaches.
Examples of Environmental Economics
● The cap and trade system, in which businesses
buy carbon offsets from developing nations or
environmental groups to compensate for their
carbon emissions.
● Implementing a carbon price to penalize carbon-
emitting sectors.
● Corporate average fuel economy (CAFE) rules,
which are mandatory and specify the number
of gallons of gas needed per mile for vehicles
manufactured by automakers.
Environmental Economics
Strategies in Environmental The federal government can:
Economics
● Implement a carbon emissions cap.
The world is burdened with elevated environmental ● Utilize incentive-based strategies, such as
stress and ongoing ecological depletion due to imposing emissions charges based on quantity.
a growing population and rapid urbanization.
● Provide tax benefits to businesses that utilize
Despite scientific advancements transforming
renewable energy sources.
both the agricultural and industrial sectors, global
sustainability and equitable growth have remained
All of these tactics involve government intervention
elusive.
in the market, but the level of intervention can
vary. Environmental economic policy is politically
It is crucial for scientists, economists, and
influenced by the extent of allowable state action.
policymakers to collaborate in an integrated
and interconnected manner to promote
Environmental economics generally leads to
viable approaches to economic and
two different types of policies:
environmental development as
nations strive for self-sustaining
Prescriptive regulations: The
economies.
government prescribes
specific actions to reduce
Today, there is significant
environmental harm in
concern about the state of
a directive manner. For
the global environment. In
example, they may prohibit
affluent countries, where
highly polluting companies or
material output growth is often
mandate the use of emissions-
used as a measure of quality
controlling technology.
of life, pollution is viewed as a
particularly grave threat. Meanwhile,
Market-based regulations: Market-based
environmental degradation has significantly
policies utilize economic incentives to encourage
hindered economic growth.
desirable behaviors. For instance, cap-and-trade
policies impose financial penalties on polluters
When considering the interaction between humans
without explicitly prohibiting businesses from
and the environment, current perspectives have
polluting. These incentives motivate businesses
shifted towards proactive project and policy design
to reduce their emissions without imposing
to predict and minimize environmental damage.
restrictions on how they achieve it.

While environmental economics aims to identify

Since all resources, whether natural, financial, or
specific issues, there are various approaches to
human, are limited, these public policies work
addressing the same environmental problems. For
best when they maximize the benefits of resource
example, a state has several options if it intends to
efficiency. Policymakers must compare the
transition to renewable energy.

82 Environmental Economics
opportunity costs of different alternatives with The extent to which environmental economics’
their potential benefits to determine how resources conclusions have an impact on other industries
can be used most effectively to achieve the desired presents another difficulty. Because of the
goals. complexity of the global market, environmental
economists’ conclusions can give rise to dispute,
An important connection between traditional and their policy recommendations may be
decision-making methods and the emerging challenging to put into practice. Some examples
environmentally conscious management style include:
is the application of environmental economics.
It allows us to link ecological issues with the ● The existence of various carbon credit
established structures of human society. marketplaces is an illustration of the
haphazard global application of concepts from
Challenges of Environmental environmental economics.
Economics ● Another illustration of the balancing act needed
by policy ideas relating to environmental
Environmental economics typically necessitates a
economics is the fuel economy criteria issued by
global approach due to the nature and economic
the Environmental Protection Agency (EPA).
worth of environmental goods, which frequently
transcend national boundaries.
Some other Challenges are:

Due to the nature of these environmental concerns,

Addressing distributional issues and their effects:
non-governmental organizations (NGOs) like the
The entire society is impacted by the shift to a green
Intergovernmental Panel on Climate Change (IPCC),
economy, including technological advancements.
which hosts yearly gatherings for heads of state to
Therefore, it’s important to understand and
discuss global environmental policies, have grown
address the significant distributional implications
in prominence.
of technological development, in addition to
maximizing the performance of new technologies
and identifying effective regulations.

All cultural changes have winners and losers, and

unless this is acknowledged and addressed, the
desired green transition may lack legitimacy among
several important socioeconomic groups.

The state’s function is to create the right blend

of policies: Establishing the proper “framework
conditions” for the economy is a crucial
responsibility of government policy. This generally
pertains to the legal framework, such as contract

83 Environmental Economics
law, licensing procedures, and intellectual property in efficiency.
rights, which must be foreseeable and transparent.
Managing dispersed, increasingly global
The removal of environmentally detrimental environmental risks: Over time, environmental
subsidies, as well as conventional environmental issues are primarily concerned with various kinds
policy that controls emissions through taxes or of diffuse emissions. These come from several
performance standards, will continue to be crucial industries, including agriculture, shipping, aviation,
(where such exist). The purpose of such regulations and road transportation. Large areas are affected by
is to ensure that enterprises and families internalize diffuse source pollution, which may not be alarming
the external costs of environmental degradation. on its own but can be serious when combined with
other diffuse sources.
Emerging Green Capitalism: Economic and
environmental aims are thought to conflict, at least Addressing these challenges is further
since the 1960s when the current environmental complicated by the increasing importance of global
debate first began. It has been stated that business environmental concerns such as climate change,
decisions are based on maximizing as well as by globalization and the
profits; therefore, attempting to increased global trade of consumer
address environmental issues at goods. Addressing these issues
the same time will result in lower often requires international
earnings and less productivity. agreements and sharing of
responsibilities, which have
As concerns about the proven to be difficult to
environmental impact of achieve.
business practices increase, so
does the focus on sustainability in Difference between
commercial operations. This includes Environmental Economics
the growing popularity of organic and Ecological Economics
products, recycling initiatives for waste reduction,
and programs for offsetting carbon emissions. Ecological and environmental economics are two
subfields of economic theory that investigate
Realizing radical, as opposed to just incremental, how human activity and the environment interact.
technological change: The move to a green Environmental economics examines how the
economy depends on incremental improvements, environment and the economy interact, whereas
such as improved material and energy efficiency ecological economics views the economy as a
in current production processes. But we also need component of a larger ecosystem.
more significant, perhaps even radical, technical
innovation. For instance, replacing fossil fuels in the Environmental Economics
transportation industry and in the manufacturing
of iron and steel involves major technological A modified version of the neoclassical economic
transformations rather than merely small increases model serves as the foundation for the field

84 Environmental Economics
of environmental economics. This concept into an economic framework where doing so could
incorporates the environment into the financial be uncomfortable. However, ecological economics
system, borrowing vocabulary and a worldview from sees the flow of resources and income within an
theories of economic growth and development that economy as a component of the greater transfer of
already exist. It fully integrates theories’ notions resources and energy within the biosphere.
of capital and welfare while adapting them for
environmental goals. Although it is the source of its biggest vulnerabilities,
this could be considered ecological economics’
According to environmental economics, greatest strength. Ecological economics puts itself
development is measured as the accumulation at risk of exclusion from decision-making circles by
of social and economic capital minus the loss of choosing to deviate so far from the norm and not
environmental capital. In light of this understanding, using the current economic jargon.
growth is considered sustainable when overall
capital stocks do not decrease. This assumes that ● According to ecological economics, sustainable
these various forms of capital are highly development is a state in which the size
substitutable and complementary. of the economy does not exceed the
However, these assumptions planet’s carrying capacity.
may be contested in certain ● Ecological economics
circumstances upon close strict sustainability criterion
scrutiny. demands that natural capital
not decrease. Societies are
Nonetheless, environmental
permitted to exploit non-
economics has made
renewable resources as long
significant contributions
as other renewable resource
to raising environmental
stocks increase to compensate
awareness. It offers practical,
for this loss.
non-conventional solutions, such
● Ecological economics does not
as market-based approaches for resolving
view human, social, and natural capital as
environmental issues.
interchangeable. Therefore, a decrease in
environmental capital cannot be offset by an
Ecological Economics
increase in capital elsewhere.

The foundation of ecological economics is the idea

As we can see, ecological economics provides a
that the human economy is a component part of the
bold and precise definition of sustainability and a
larger ecological system. It boldly seeks to integrate
method for achieving it.
environmental management with economics, an
area where it has typically been disregarded.

Ecological economics has the advantage of not

attempting to include society and the environment

85 Environmental Economics
Commonalities

● The goal of environmental and ecological economics is to demonstrate how the two can work in harmony.
This is evident in areas like the management of natural resources and the application of market-based
methods.

● They can also be used to identify instances where economic activity negatively affects the environment,
such as pollution that imposes no costs on the polluter.

● Ecological economics and environmental economics both provide a framework for understanding the
factors that contribute to environmental and societal problems. Additionally, they offer techniques for
finding solutions to these issues.

● The importance of incentives in developing solutions to environmental challenges is highlighted by both

ecology and environmental economics.

Differences

● When viewed critically, it can be said that ecological economics is more pluralistic than environmental
economics, which is largely influenced by the neoclassical economics’ way of thinking.

● The values that guide these two schools of thought are very different from each other.

● The environmental component of the equation becomes more focused thanks to ecological economics.
According to this perspective, the economy must abide by the natural rules that govern the biosphere in
order to be incorporated into the natural economy.

● Environmental economics has a propensity to prioritize economic well-being when making decisions. It
assumes that the natural economy must be managed by the rules of the market system in order for the
economy to be integrated into it.

● Each has its strengths, and they both provide insightful assessments of the other. Despite having identical
objectives, they are built on different approaches and frameworks.

Summary

● Economics serves as a key instrument for decision-making regarding the use, conservation, and protection
of natural resources as it provides information on people’s choices, the costs and benefits of various
proposed actions, and the expected outcomes of environmental and other policies.

● The field of environmental economics focuses on the efficient utilization of environmental resources and
other resources.

● The economy and the environment are interconnected systems that involve numerous daily interactions,
as the environment provides both direct and indirect value (as raw material) for economic activities.

86 Environmental Economics
● Consequently, how the economy is managed can have an impact on the environment, which in turn can
affect both well-being and the efficiency of the economy.

● Environmental economics takes into account concerns such as the preservation and valuation of natural
resources, pollution prevention, waste management and recycling, and the effective establishment of
emission standards.

● The three fundamental pillars of society, environment, and economy form the basis of sustainable
development in the modern world. Successful implementation of environmental programs requires the
interaction of these three systems.

87 Environmental Economics
 Unit 11

Environmental Justice

Learning Objectives Introduction

By the end of this unit, you will be Everyone has the right to live in a healthy and safe
able to understand: environment. According to the environmental justice (EJ)
● Improving environmental quality theory, all people need to be protected from environmental

● Reducing diesel emissions contamination and should enjoy a clean and healthy

through clean energy technology environment. Environmental justice entails the fair

and efficiency distribution of environmental benefits and the equal

protection and meaningful participation of all individuals
● Greening the urban environment
in the development, implementation, and enforcement of
environmental laws, regulations, and policies.

The environmental justice movement has historically

been a form of grassroots activism that has focused on
advocating for the rights and freedoms of communities
of color and low-income individuals in relation to
the environment. It has particularly addressed the
disproportionate impact of industrial pollution and the
lack of regulatory enforcement in these communities.

In addition to promoting community participation in

planning and environmental decision-making processes
to uphold or improve the environmental quality of
their neighborhoods, environmental justice policies
aim to ensure their protection against environmental
contamination.

88 Environmental Justice
This involves:
● Including a wider range of people in outreach
efforts to involve environmental justice
populations in environmental decision-making.
● Reducing health risks through judicious
environmental regulation.
● Enhancing the quality of the environment in all
communities through programs that reduce
emissions and pollution, clean up and restore
contaminated properties, and fund urban parks
and green spaces.
Improving Environmental Quality equity are as follows:
When we talk about environmental quality, it
includes the entire surroundings and not simply the
natural environment. Environmental quality refers to
the state of the environment as a whole (including
the plants and animals it supports) as well as the
impact it has on the physical and emotional well-
being of those who live there.
The planet’s air, water, and land, as well as the
plants and animals that inhabit them, collectively
make up our environment.
Additionally, we need to think about:
● The constructed environment, or the space we
89
have created for ourselves, and how it influences
both our comfort and our ability to stay healthy.
● Our reliance on natural resources to maintain the
built environment.
● The recreational opportunities that the
environment’s natural setting offers.
● Aesthetics, which is the study of how our
relationship to the natural world is influenced by
its aesthetic appeal.
● When we talk about preserving environmental
quality, we take all of these things into account.
The two main frameworks for environmental
● Preventing environmental “bads,” including an
excessive amount of toxins.
● Promoting environmental “goods,” such as
ensuring access to parks, environmentally
friendly amenities, and leisure activities.
Need to Protect Environmental Quality
There are several justifications for preserving
environmental quality:
● To maintain the health of inhabitants and the
community. All of these environmental variables,
along with others, ensure that people are healthy
and help to create a healthy community. These
include clean air, water, and soil, enough open
space, ample resources, and clean air, water, and
soil.
● To protect local resources. Maintaining the
cleanliness of the community’s water supply,
such as lakes, rivers, streams, wetlands, etc., is
not only important for environmental reasons but
also for practical ones.
● To improve the quality of life and make it more
Environmental Justice
 enjoyable. The community’s physical appeal,
as well as its recreational and relaxation
possibilities, improve the quality of life for its
residents. A pleasant setting lowers stress levels
and promotes interaction, which eventually
improves communal life.
● To improve the neighborhood’s aesthetic appeal.
Living in a beautiful environment, both natural and
man-made, improves one’s physical conditions
and quality of life while also fostering pride in
and a sense of belonging to one’s neighborhood.
It offers people optimism and motivates them
to maintain the community’s physical and social
well-being.
it is particularly beneficial or appropriate to work to
safeguard it:
● When a specific threat exists. When the last
remaining green area in a community is up for
development or when a significant wetland is at
risk of contamination from an industrial facility,
it is crucial to highlight the negative effects of
putting off environmental issues.
● Whenever a community development project is
underway. This is an opportunity to get involved
early and incorporate environmental protection
into the development plan rather than waiting
until there is a threat to environmental quality.

● To maintain economic health and ● When a brand-new residential,

attract new, environmentally commercial, or industrial
responsible businesses. An development is just getting
e n v i ro n m e n t - c o n s c i o u s started. Through rewards and/
community is desired by or rules, a developer may be
all. Everyone wants to persuaded to use eco-friendly
live and work in a clean practices while selecting the
environment, especially sites, preparing the designs
“green” firms (those for building, choosing the
that care about, or whose materials, etc.
business itself is concerned ● When there is an
with, environmental preservation). environmental crisis. People are more
● To preserve ecosystems. Ecosystem likely to consider environmental quality
disruption typically results in unanticipated issues when the environment signals the same,
(typically detrimental) consequences, such as for instance, when aquifers begin to dry up,
global warming, erosion, and the extinction of when global warming starts affecting, when the
species. Ecosystems comprise landscapes, local air quality becomes hazardous, or when
plants, animals, resources, and climate that excessive rains cause havoc.
interact with each other and sustain the character
of the environment in a particular place. Who is Responsible for Preserving the
Environment?
When should Environmental Quality be Protected?
Local, State, and Federal Officials: In the majority
Although you should always be aware of of nations, state and federal authorities are in
environmental quality, there are some times when charge of protecting environmental quality. Their

90 Environmental Justice
effectiveness is based on their financial resources
as well as the level of political backing they receive
from the ruling party. These organizations and
representatives could be valuable allies because
most developed and many developing countries
have significant environmental concerns.
Local, National, and International Environmental
Organizations: Local groups typically have a good
understanding of the situation in their area, as well
as the real problems and possible strategies. Larger
organizations with legal divisions, funding access,
and the means to engage in protracted struggles
for environmental quality include the Sierra Club,
Greenpeace, Friends of the Earth, or the World
Wildlife Fund.
Community Activists: Even though
environmental quality may be just
one of many issues they are
interested in, when a problem
arises, they can be effective
defenders of environmental
quality.
Those directly affected by
environmental quality: This group
can include individuals with extremely different
perspectives on the environment.
● People whose livelihood is based on it: Even though
commercial fishermen and loggers, for instance,
are occasionally viewed by environmentalists
as enemies of the environment, they have just
as much to gain from environmental quality as
everyone else. They can develop the same level
of care for environmental quality as the most
ardent environmentalist if they fully understand
how maintaining healthy fish stocks safeguards
their way of life.
91
● People whose line of work is environmental
quality or environmental research: Foresters,
hydrologists (water experts), public health
professionals, wildlife biologists, botanists, and
other life scientists typically care deeply about
environmental quality and are frequently in a
position to provide important information about
it.
● Individuals who take advantage of nature
for recreation and spiritual uplift: Outdoor
enthusiasts including hunters, fishermen,
birders, hikers, skiers, and others typically have
a strong desire to safeguard the wilderness and
the integrity of the natural environment.
● Architects and developers who
care about the environment.These
individuals are leaders in promoting
green development and the wise
use of open space because they
care about both the natural
and built environments.
Businesses and corporations:
Some companies and businesses
make efforts to support and
safeguard environmental quality and
take measures for the same in their own operations.
These companies and businesses are said to be
environmentally conscious. Others are compelled
to pay attention to it by regulations or are motivated
to do so by incentives.
Whatever the reason, if you can find areas of
agreement with the corporate community, they can
be powerful and effective partners.
Everyone in a community is impacted by the
environment’s quality in terms of their health
and well-being. In addition to directly affecting
Environmental Justice
human health, environmental quality also has a
significant impact on resource availability and
quality, the security of the food and water supply,
and the psychological and social well-being of the
community as a whole.
In many cases, protecting environmental quality
entails preserving open space and preventing
pollution, but it also entails addressing:
● Loss of habitat for plants and animals
● Conserving resources (including food stocks,
such as fish populations)
● Exploring alternate energy sources
● Engaging in sustainable development and
agriculture
● Building in accordance with environmentally
responsible principles
Reducing Diesel Emissions
The planet is steadily warming. This is due to the
growth in greenhouse gases brought on by human
activity, which has caused problems in the areas
of health, the environment, and humanitarian aid.
Despite this, the fight against climate change
offers a genuine chance to transition towards a
low-carbon civilization while fostering innovation,
creating local and global jobs, and promoting social
justice.
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Reducing exposure to diesel pollutants is particularly
crucial for the benefit of the environment and
human health.
Impacts of Diesel Emissions
Diesel emissions have a negative impact on human
health, the environment, the global climate, and
environmental justice.
Human Health: Exposure to diesel pollution can
cause significant health disorders, particularly
in young children and the elderly. It can lead to
conditions such as asthma, respiratory infections,
and worsen existing heart and lung conditions.
These ailments can result in increased visits to the
emergency room, hospital admissions, work and
school absences, and even premature death.
Environment: Diesel engine emissions contribute
to the formation of ground-level ozone, which
harms plants, including trees and crops. Acid rain,
another byproduct, damages lakes, streams, and
soil, and enters the human food chain through
water, produce, meat, and fish. Additionally, these
pollutants contribute to property damage and
decreased visibility.
Global Climate: Climate change impacts various
aspects such as air and water quality, weather
patterns, sea levels, ecosystems, and agriculture.
Reducing greenhouse gas (GHG) emissions from
diesel engines through fuel economy improvements
and idle reduction techniques can help mitigate
climate change, enhance energy security, and boost
the economy.
Environmental Justice: The Environmental
Protection Agency (EPA) aims to protect all
individuals from environmental and health threats,
Environmental Justice
ensuring a safe environment to live, learn, and work. ● To promote the utilization of byproducts,
recyclable waste, and locally sourced resources
The planet relies on heat and electricity. Our as primary inputs for conversion processes.
transportation systems, heating and powering of
● To generate employment opportunities in the
homes, infrastructure development, and support
sector.
for all sectors require energy.
● To enhance the overall quality of life.

Currently, our primary reliance is on fossil fuels

What Makes Clean Technology Crucial?
such as oil, coal, and gas, which release CO2
stored in the ground for millions of years. Swiftly
Climate Change refers to a change in an area’s
transitioning to renewable and sustainable energy
average temperature or weather patterns and
sources is imperative if we hope to mitigate climate
is possibly the most well-known environmental
change.
problem. Average global temperatures are rising
alarmingly, and if we don’t take action to reduce
Technology that is “clean,” also referred
our carbon footprint, they will continue
to as “cleaner technology,” prevents
to rise.
environmental harm at its source.
On the other hand, clean-
Pollution occurs when
up technology is defined
hazardous elements enter
as the act of minimizing
the environment. There are
environmental harm through
three types of pollution—air
the retrofitting, modification,
pollution, water pollution,
or addition of end-of-pipe
and land contamination—
pollution abatement systems
all of which can be extremely
to an already-operational facility
dangerous for living things.
or process.

Biodiversity loss refers to the loss of

Clean technology involves the practical
diversity of life on Earth. The well-being of the
application of knowledge, methods, and means to
Earth is greatly impacted by biodiversity loss, as
meet human requirements for the most efficient
discussed in our blog post on extinction prevention.
use of energy, natural resources, and environmental
Living things depend on the existence of other
protection.
species to survive, and the loss of biodiversity can
have disastrous cascade effects.
It aims to achieve the following goals:

Among many other options, using sustainable

● To reduce waste production and levels of
technology is one way to bring about change. With
polluting emissions, thereby protecting or
the widespread use of electricity, advancements
improving environmental quality.
like wind turbines, solar panels, and geothermal
● To enhance the efficient use of energy and raw
energy can significantly reduce emissions.
materials.

93 Environmental Justice
Case for Clean Technology: manufacturing of cleaner goods. The private sector
should be encouraged to be economically efficient,
Imported or locally developed clean production competitive, and responsive to customer demands
technology can enhance output and prolong while also protecting the environment and long-
the lifespan of natural resources. Traditionally, term resource base.
environmental policy and practice have prioritized
pollution control over pollution avoidance. Products have proven to be the most cost-effective
means of reducing consumption of raw materials,
Waste is typically treated using outdated energy, and pollution when pricing signals reflect
environmental technologies, transforming it into a appropriate social and environmental costs for
form of pollution that is relatively less damaging. cleaner production.
However, a new shift is underway, favoring cleaner
production methods that minimize environmental UNEP Report
damage at its source.
It is argued that all economic sectors require
Clean technology assists in analyzing adequate technological advancements
options for pollution avoidance before to achieve more efficient use of
pollutants are even produced. natural resources, reduced waste,
These options include product and fewer polluting byproducts.
and manufacturing process Additionally, sharing and
improvements, on-site distributing knowledge,
recycling, and resource skills, and technology,
recovery. Industrialists are now as well as implementing
realizing that modifying process appropriate financing structures,
technologies to reduce pollution is are necessary for genuine global
less expensive and more profitable industrialization and the adoption
than seeking cheaper waste disposal of the best available and relevant
methods. technologies and production processes.

To minimize risks to people and the environment, The history of industrialization demonstrates that
clean production technology continuously applies initially, wastes and toxins were simply released
an integrated preventive environmental strategy to into the air or waterways, surpassing nature’s
processes and products. This strategy includes: capacity for assimilation.

● Eliminating harmful raw materials while However, numerous clean production technologies
conserving energy and raw materials. have been developed and are currently in use,
particularly in industrialized nations. These
● Reducing emissions, waste volume, and toxicity
technologies support waste reduction and the
before they are released from a process.
control of harmful emissions, resulting in more

Industrial policies should support the efficient energy utilization.

94 Environmental Justice
What Prospects does Clean Technology have
going forward?
Clean technology is clearly more relevant than ever,
given the surge in sustainable living and awareness
of climate change.
It is essential to intensify sustainability efforts
globally, as environmental challenges and
population growth coexist. We must take action
now before the situation worsens, as our natural
environment is undergoing dramatic changes.
The Earth’s average temperature is rising, water
resources are becoming increasingly limited, and
numerous animal species are facing extinction.
Unfortunately, human activity is a major contributor
to these destructive changes. Therefore, we must
utilize sustainable technology to put an end to
these detrimental behaviors.
Reports indicate that the market for green
technology was valued at 11.2 billion USD in 2020
and is projected to reach 36.6 billion USD by 2025.
The number of individuals eager to take action is
growing, along with knowledge of sustainability.
In the future, we can expect clean technology to
become even more widespread than it is now.
Impact Investing: Impact investing is the practice
of making financial investments in businesses that
also have a positive impact on the environment.
These impact investments target businesses
whose fundamental business strategy includes
making advancements.
Companies that are considering adopting a clean
tech strategy have even more incentive as impact
investing gains popularity. Cleaner technology aids
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the transition toward a more sustainable way of life
that the world is experiencing.
Given the rapid expansion of the clean technology
sector, it is only logical that investors are moving in
this direction. Impact investment grows alongside
cleaner technology. In 2020, it was projected that
the market for impact investments would be worth
715 billion USD.
Smart Agriculture: When it comes to reducing
carbon emissions, smart agriculture is a game-
changer. The agricultural sector greatly affects
our world, with the cattle industry alone being
responsible for 44% of human-caused methane
emissions.
Only a small portion of the field of smart agriculture
involves hydroponics. With topics like precision
farming and artificial intelligence being used in the
agricultural sector, there is much to learn in terms
of technology.
Artificial Intelligence: Machine learning is utilized
in this sophisticated computer program to mimic
human intelligence. Artificial intelligence is not
limited to the agricultural sector; it can be applied to
various industries. AI has the capability to perform
tasks with a high degree of precision, significantly
reducing waste, whether it be resources or time.
Environmental Justice
Due to its ability to automate numerous steps in the
production process, AI has proven to be especially
helpful in manufacturing operations. It can also
save costs, which can then be allocated to fund
future clean technology initiatives.
COP26 Impacts: Even though it has not yet
concluded, COP26 is already influencing
international agreements and strategies related
to climate change. At the event, world leaders are
addressing a variety of topics, including gender,
finance, fashion, and education. Here are just a
few of the outcomes of COP26 so far. Further
advancements that will be implemented after the
event are anticipated, such as:
● More than 20 nations and
financial organizations have
pledged to cease funding
any overseas fossil fuel
development projects.
● Joe Biden, the President
of the United States, has
committed to reducing
worldwide methane emissions
by 30% by 2030.
● Africa is prepared to invest USD 6 billion
in climate change adaptation.
● India aims to achieve zero emissions by 2030.
What Economic Benefits Will Clean Energy Bring?
Clean energy has financial advantages, including
the creation of jobs to upgrade infrastructure,
produce clean energy solutions, and install and
maintain them. As the world begins to shift away
from fossil fuels, renewable and clean energy
sectors are growing, which means that there will be
additional opportunities in areas such as eMobility,
96
power generation, and storage.
When it comes to developing these next-generation
power solutions, expertise can be beneficial for
those who possess it, providing jobs and contracts
to others who may be hesitant to adopt sustainable
energy.
Of course, the financial benefits of clean energy
are just part of the story, as the primary motivation
for using clean energy is to improve the future
of the planet. However, as the use of fossil fuels
decreases, it will also impact the financial benefits.
Therefore, clean energy is not only beneficial for
the environment but also a step in the right
direction for business.
Greening the Urban
Environment
70% of the world’s population
is projected to reside in cities
by 2050. Cities in developing
nations face numerous
challenges. It is crucial to
consider how the expansion of our
cities impacts the environment. How
does the environment of an area get affected
when what was once grassland or forest is now
covered in concrete?
We now understand that our actions can harm
the planet, altering its climate and impacting the
creatures, plants, and inhabitants that call it home.
As the world learns more about climate change
every day, the importance of green spaces in urban
development is being recognized and prioritized.
The objectives of urban greening are multifaceted
yet effective. They improve the quality of life for
Environmental Justice
local residents and wildlife, while also making our
cities more visually appealing and environmentally
friendly.
The effects of excessive pollution in metropolitan
areas are observable, with Beijing’s haze serving
as an extreme example. Climate change is not
solely about rising sea levels. Cities worldwide are
utilizing urban greening to protect and enhance
their skylines and overall health.
Benefits of Urban Greening
● Fight noise and air pollution.
● Capture rainwater that may otherwise
cause flooding.
● Provide a habitat for wildlife in the
area.
● Reduce carbon emissions in
the neighborhood.
Architects and city planners
alike have been searching for
ways to promote sustainable urban
living as climate change becomes an
increasingly significant issue.
When constructing something, its future usage is
taken into account alongside its immediate use.
By incorporating urban greening, these structures
benefit both the environment and the people who
utilize them, resulting in a more sustainable and
enjoyable living environment. The presence of a
living wall or a tree-lined corridor greatly enhances
the positive environmental impact of a location.
According to a study that revealed cities have been
warming by 0.5C per decade on average, urban
greening projects such as planting street trees,
97
rainwater gardens, and depaving can help mitigate
the effects of urban heating caused by the climate
crisis and urban development.
The report states that cities warm by an average
of 0.56C during the day and 0.43C at night. Urban
areas warm, on average, 29% faster than rural areas,
which warm by 0.4C during the day and 0.37C at
night.
The size of a city was found to be linked to its rate
of urban warming, with megacities warming by an
average of 0.69C per decade during the daytime
compared to 0.41C per decade in smaller cities,
according to the researchers.
There were also variations in the
rates of urban heating between
continents, with Asia’s megacities
warming the fastest both during
the day and at night. Cities
in Oceania experienced the
least warming at night, while
those in Europe experienced the
least warming during the day.
Scientists discovered that the climate
crisis is the primary cause of urban warming
in around 90% of the cities they studied, with
approximately 0.3C of heating per decade on
average attributable to human-induced climate
change. Rapid urbanization in certain areas of
China and India accounts for around 0.23C of urban
warming every ten years, according to scientists,
who also emphasized that urban expansion can
contribute to urban heating.
However, the paper highlights that urban greening
programs, such as tree planting that covers
exposed land surfaces with natural vegetation, can
Environmental Justice
mitigate the rate of urban warming by generating a cooling effect, especially at night, and by retaining some
of the ambient surface heat.

Urban greening has been shown to reduce urban warming by an average of 0.13C per decade in Europe.
Similarly, in Chicago, a plan to increase tree canopy after a heatwave in 1995 has helped reduce the rate of
urban warming by approximately 0.084C per decade.

Decision-makers are urged to consider urban greening programs as a viable option for reducing urban
warming. They argue that these programs can alleviate the effects of the “urban heat island” phenomenon
and reduce the risk of exposure to future heatwaves, which are more likely to impact cities.

Summary

● Environmental justice must be considered in the context of global social inequalities that impact people’s
health, well-being, and the environment both within and between nations.

● The underlying power inequalities are the primary factor in the unequal distribution of benefits and
drawbacks of production systems and the environmental damage they cause, with the poorest and most
marginalized groups bearing a disproportionate burden.

● Environmental justice upholds the integrity of Mother Earth, recognizes the interdependence and ecological
interconnectedness of all species, and ensures the right to be free from ecological harm.

● Public policy must be founded on respect for all individuals and the pursuit of justice, free from any form of
bias or discrimination, to achieve environmental justice. This necessitates the right to ethical, egalitarian,
and responsible use of land and renewable resources for the betterment of a sustainable planet for humans
and other living beings.

● Environmental justice calls for universal protection from environmental injustices, such as nuclear testing,
the extraction, manufacturing, and disposal of toxic/hazardous wastes and pollutants that compromise the
right to clean air, land, water, and food. It also upholds the fundamental right of all individuals to political,
economic, cultural, and environmental self-determination.

● Environmental justice demands the cessation of all production of toxins, hazardous waste, and radioactive
materials, and holds all past and present producers accountable to the public for site detoxification and
containment.

● Environmental justice supports the need for urban and rural ecological policies that clean up and restore
our cities and rural areas in harmony with nature, while respecting the cultural integrity of all communities
and ensuring equitable access to resources for all.

● Environmental justice requires individuals to make deliberate choices and prioritize changes in their
lifestyles to ensure a healthy natural world for present and future generations. This includes committing to
using fewer resources from Mother Earth and generating less waste.

98 Environmental Justice
 Unit 12

Energy Justice

Learning Objectives Introduction

By the end of this unit, you will be Energy justice aims to include the values of justice,
able to understand: fairness, and social equity in the development of new
● Energy justice energy systems. Energy justice promotes more inclusive

● Three-Tenet Framework of decision-making processes and the equal distribution of

Energy Justice the costs and benefits of energy system services. It can
also be used as a framework to pinpoint when and how
● Distributional Justice
injustices arise in energy systems and offer solutions for
● Recognition Justice their eradication.
● Procedural Justice
Energy justice can be local, regional, national, or worldwide
● Energy injustice in India
in its strategy and implementation due to the different
sizes at which energy systems and changes occur.

It also draws on “top-down” and “bottom-up” viewpoints

and is supported by two frameworks: one for decision-
making and the other for three core principles of energy
justice.

First off, the framework for making decisions is based on

eight fundamental principles: responsibility, sustainability,
due process, transparency and accountability, equity
across generations, affordability, and availability. The
framework suggests that in order to create energy policies
that are more just and equitable, decision-makers should
apply these principles.

99 Energy Justice
Second, the three fundamental principles of energy
justice are relevant across a range of energy
systems and at different scales.
By putting these principles into practice, we can
determine where and how injustice manifests itself
in energy systems:
● Procedural Justice is the capacity of individuals
to be a part of the decision-making processes
about the technologies and infrastructures of the
energy system. It emphasizes the significance of
“justice as public involvement” and investigates
how to produce “just” outcomes through
the mobilization of local knowledge,
more information transparency,
and improved institutional
representation.
● Distributional Justice
questions regarding the
placement of energy
infrastructure as well as
advantages and burdens
(‘who gets what’) throughout
the economy. Focusing on the
distribution of energy as a “social
good,” distributional justice looks at
the areas where energy provision damages
people as a “social evil” and, as a result, where
inequities in the functioning of the energy system
arise.
● Recognition Justice comprehends the causes
of social injustices and how marginalized and
poor groups are treated in connection to energy
systems. In order to lessen social inequality,
recognition justice takes into account groups in
society that are neglected or misrepresented and
demands increased acknowledgment of these
groups.
100
A fourth tenet of the energy justice paradigm,
cosmopolitan justice, has been proposed in
addition to the three fundamental tenets. This
concept asserts that injustice is a worldwide issue
that affects all people in all countries and that it
is not just a national problem. All agents who are
capable of comprehending, facilitating, and acting
on them are subject to the ethical obligations
represented by this.
These principles are meant to be used at every
decision-making stage throughout the development
of the entire energy system, from resource extraction
to infrastructure siting through production,
operation, pricing, use/consumption, and
waste management.
Energy justice has an inherent
multi-scalar (energy,
economic, environmental, and
cultural) character because
of the three core principles
and cosmopolitan justice.
Defining Energy
Justice
Energy justice is the pursuit of equity in the
social and economic aspects of energy system
participation, as well as the alleviation of social,
economic, and health burdens on those who have
historically been harmed by the energy system.
Energy justice attempts to improve access to,
affordability of, cleanliness of, and democratic
management of energy for all communities, while
explicitly focusing on the problems faced by
underprivileged people.
Energy justice addresses fairness and equity
issues within the current extractive energy system
Energy Justice
and incorporates elements of “deep democracy,”
cooperation, and regeneration that feature in the
just transition framework. Energy justice, also
referred to as “energy equity,” is essential to the just
transition.
The dimensions of energy justice include:
● The term “energy burden” describes the cost of
energy expenses in relation to total household
income.
● Energy insecurity, which refers to the challenges
that families encounter in order to meet their
basic needs.
● Energy poverty, which is the lack of actual access
to energy.
● Energy democracy, the idea that local
communities should have a say in determining
their future use of energy.
Environmental justice and climate justice are
concepts that both practitioners and academics
in the field are familiar with, and energy justice
is no different. The principles of procedural and
substantive (or distributive) justice are intertwined
in environmental and climate justice.
101
Fair burden sharing throughout development
and participation in all facets of “the formulation,
implementation, and enforcement of environmental
laws, regulations, and policies” are two guiding
principles of the environmental justice movement.
From this extensive history, energy justice is born.
The consensus among academics is that an energy
just society involves an equitable distribution of the
advantages and disadvantages associated with the
production and consumption of energy services.
Additionally, it is one that treats people and
communities fairly when making energy-related
decisions.
Furthermore, key concerns of the field include:
● Issues of access
● Distribution of harms
● Fairness in energy decision-making to prevent
decisions from violating civil liberties and human
rights
● Informed participation
The demands for distributive and procedural justice
made by the movements for environmental justice
and climate justice are mirrored in energy justice.
Among its objectives are the following:
● Allowing the community to control and gain
authority over the methods of energy generation.
● Ensuring that the benefits and drawbacks of
energy production operations are distributed
fairly and equally.
● Emphasizing the issues faced by underprivileged
communities.
Energy Justice
Usage of Energy Justice in Social Science and Law
Practitioners and advocates for energy justice
explicitly mention the importance of elevating the
voices of low-income individuals, as well as the
critical role that equity plays in undoing past harms
that communities have suffered as a result of the
current energy system.
Researchers who study energy justice typically
adopt a more measured approach. Until recently,
most debates on energy justice did not include an
examination of the historical damages experienced
by specific groups. Instead, academics in the field of
energy justice have generally focused more closely
on procedural and distributive justice concerns.
A variety of terminologies have emerged under
the broader concept of energy justice in both
social scientific and legal literature, similar to the
approaches taken by practitioners. These include:
Energy Justice 1
Clean Energy Justice 2 inception, academic research on energy justice
Energy Equity 3 about the role of energy institutions in addressing
Energy Democracy 4
Energy Insecurity 5
Energy Burden 6 research, the conceptual and analytical frameworks
Energy Poverty 7
Figure 12.1: Energy Justice
102
Social scientists tend to prefer the terms energy
justice, energy democracy, and energy insecurity.
Legal scholars approach energy justice in a
less clearly-defined manner and use a variety of
concepts, including all those mentioned above, as
well as clean energy equity, energy poverty, and
energy burden.
According to research, the three analytical frames
of advocacy, social science, and law share
many similarities. While there is some overlap
in vocabulary, the more challenging question is
how each group uses these terms differently and
whether these different uses are in conflict with
one another.
The Three-Tenet Framework of Energy
Justice
As environmental justice work has become more
conceptually sophisticated over the past 40
years, efforts have been made to apply lessons
to a broader range of issues. This evolution can
be seen in the rise of “energy justice.” Since its
has significantly increased, raising crucial issues
expanding poverty inequalities and the challenges
related to rising unaffordability.
Despite the growing interest in energy justice
have tended to emphasize social conditions and
processes, rather than the underlying institutions,
structures, and systems of the economy and
politics. For instance, numerous studies have used
the three-tenet justice framework to describe and
examine ethical problems related to energy.
Energy Justice
The concept is based on three principles underexamining the structural and ideological
distributional, procedural, and recognition justice foundations of the issue.
that encourage assessments of discriminatory
energy policies and projects. It was originally As a result, discussions of energy justice typically
adopted from environmental justice research. draw their analytical line at energy poverty.

Here’s a quick rundown of the three principles that
apply to energy:
● Unfairness in how society is expected to split
the costs and rewards of energy production is a
matter of distributional justice. When there are
disparities in income, energy costs, and living
conditions, one form of distributional unfairness
that arises is fuel poverty.
Although there is a valid connection between the
problems of energy justice and energy poverty,
the language can restrict how problems are
identified, how far investigations can go, and
what kind of analysis can be conducted. More
extensive discussions regarding the overall justice
implications of contemporary energy systems are
needed.

● Procedural justice calls for equal

Distributional Justice
and just participation of all
Distributional justice acknowledges
stakeholders in energy decision-
the physically unequal
making. Achieving procedural
distribution of environmental
fairness requires full
benefits and harms, as well
availability of information
as the unequal distribution
and appropriate policy
of the responsibilities that
instruments to promote public
accompany them. It evaluates the
engagement.
points at which “questions about
● The importance of understanding the desirability of technologies in
various forms of vulnerability principle become entangled with issues
and specific requirements related to energy that relate to specific localities” and calls for an
services among social groups is emphasized by equitable distribution of society’s advantages and
recognition justice, especially for marginalized disadvantages among all its members, regardless
communities. of wealth, race, or other factors.

The three-tenet paradigm, without
addressing the complicated political and economic
reasons that frequently result in energy injustice,
provides a conceptual foundation for recognizing
and assessing issues related to shared energy,
including fuel poverty. The framework often
focuses more on ‘tailpipe’ issues and solutions,
such as increased accessibility and cost, while
directly Such demands for justice require the combination
of evidence of inequality and an argument for fair
treatment because they acknowledge the uneven
distribution of certain resources. The location of
wind resources serves as an example.
In terms of distributional justice, access to energy
services is just as important as the placement

103 Energy Justice

of infrastructure. The fuel poverty agenda has
highlighted the unequal distribution of costs
associated with accessible, affordable energy
services from a consumer standpoint.
Energy justice raises issues related to physical
access to power and heating, as well as the degree
of freedom and control individuals have over their
lives.
Recognition Justice
“The practice of disrespecting, insulting, and
degrading the identities of certain individuals and
places in relation to others” is the definition of
recognition. Recognizing that justice
demands fair representation of
people, freedom from physical
threats, and full and equal
access to democratic rights
goes beyond mere tolerance.
Lack of acknowledgment
can manifest itself in various
ways, including through political
and cultural hegemony, insults,
denigration, and devaluation. It can
also take the form of misrecognition, which
is a distorted expression of people’s beliefs that
may be humiliating or contemptuous. Therefore,
it entails the request for people to acknowledge
the diverse perspectives that are rooted in social,
cultural, ethnic, racial, and gender differences.
Procedural Justice
Access to the decision-making procedures that
govern the aforementioned distributions is a matter
of procedural justice. It involves demanding fair
procedures that involve all parties in an inclusive
104
manner and has been associated with politically
marginalized civil rights groups across North
America. Subsequently, it has been applied in
relation to class, gender, and religion.
Access to and the influence of multi-level legal
systems support procedural justice. Additionally, it
is influenced by softer, non-regulatory factors such
as customs, standards, norms, and behaviors.
The application of three methods promotes
the attainment of just outcomes rather than
categorizing procedural injustices or exposing
mechanisms of exclusion. These methods can be
achieved through the mobilization of local
expertise, increased transparency
of information, and improved
institutional representation.
Energy Injustice in
India
Some adverse effects of
global warming include the
risks of famines and droughts,
a worldwide decline in crop
production, floods, and a shortage
of fresh water supplies, as well as a rise
in sea levels, among others. These effects have
been specified by the Intergovernmental Panel on
Climate Change (IPCC). Millions of people residing
in tropical nations like India are expected to be
greatly impacted by these repercussions.
Energy use is strongly linked to a substantial
portion of the greenhouse gas (GHG) emissions
that cause global warming. The environment
ministry estimates that among all energy sources,
electricity alone has contributed around 38% of
GHG emissions and roughly 52% of CO2 emissions.
Energy Justice
Although burning fossil fuels to produce energy is
the main cause of GHG emissions, approximately
65% of the nation’s installed capacity for power
generation still relies on burning fossil fuels.
According to an estimate by Greenpeace, India’s
contribution to global CO2 emissions will rise from
approximately 1,126 million tonnes in 2003 to
roughly 4,039 million tonnes in 2050, increasing its
proportion of emissions from 4.8% to 8.7%.
While it may seem reasonable for India to advocate
for shared but distinct duties for each country to
reduce its own GHG emissions, its own track record
of energy use by the two main types of population
should be a cause for serious concern. The wasteful
use of energy by those who can afford it and the
lack of access to energy by the poor are matters of
great concern. India has a major responsibility to
its own citizens to mitigate the effects of climate
change as much as possible.
According to a Greenpeace analysis titled “Hiding
Behind the Poor,” a significant portion of India’s
population, particularly those in the lowest income
category, emits roughly 335 kg of CO2 per person,
while those in the highest income group emit about
1,500 kg.
Sorry State of Affairs
In order to highlight India’s unfair treatment
regarding power, Greenpeace India conducted
a study in 2009. Relevant data from five distinct
states and four regions were gathered to compare
the electrical supply scenario between the rural and
urban populations. Three villages, one tier A city,
one tier B city, and one from each of these states
were selected for the survey.
105
It was discovered that none of the 15 communities
included in the survey had complete electrification.
While official records indicate that more than 50%
of homes are electrified, the supply is so inadequate
that the per-person usage of energy is pitifully low.
With less than 100 watts of electricity consumed
per person in the majority of the surveyed villages,
the fundamental purpose of electrification is all
but moot. The majority of states define a family’s
daily energy needs as one unit. The fact that there
is neither a regular supply nor is it offered when
people most need it makes the poor supply to the
villages even worse.
Rural areas fail to meet even their most basic
needs for lighting and agriculture, despite the fact
that the demand for and supply of power to towns
and cities have been growing at a remarkable rate.
The country’s total installed producing capacity
increased dramatically by 162% from 58,012 MW in
1989 to 152,148 MW in 2009!
A careful investigation of the electrical sector
reveals the true causes of this egregious
disregard for rural areas. The greater issue is
caused by significant inefficiencies in generation,
transmission, distribution, and utilization.
Energy Justice
The inherent inefficiencies of a poorly managed grid-based centralized power generation system alone result
in a loss of between 25% and 40% of the installed capacity.

A select few efficient techniques, such as generating plant performance enhancement, T&D loss reduction,
consumption waste minimization, demand-side management, and energy conservation, have the ability to
close the gaps.

Successive governments have looked to the grid-based centralized generation system as a means of
accelerating economic growth and rural electrification, but in reality, it mostly contributes to meeting the
rising demand for power from only the metropolitan population. The best ways to give rural residents quality
access to electricity are through decentralized energy solutions.

Summary

Energy justice is the pursuit of equity in the social and economic aspects of energy system participation, as
well as the reduction of social, economic, and health burdens on those who have historically been affected
by the energy system (referred to as “frontline communities”).

Energy justice aims to improve access to, affordability of, cleanliness of, and democratic management of
energy for all communities while explicitly focusing on the problems faced by underprivileged people.

The environmental justice and climate change movements have longstanding scholarly and grassroots
traditions that energy justice draws on.

Energy justice, energy equity, and energy democracy are frequently framed by those involved in the movement
for the switch from fossil fuels to renewable energy as components of a larger “just transition” to a low-
carbon regenerative economy that will address the injustices of the fossil-fuel energy system and extractive
economy across various sectors.

The demands for distributive and procedural justice made by the environmental justice and climate justice
movements are reflected in energy justice, which includes a number of objectives, including:

● Giving the community more authority and control over the methods of energy generation.

● Ensuring that the benefits and drawbacks of energy-producing operations are distributed fairly and equally.

● Highlighting the issues faced by underprivileged communities.

106 Energy Justice

 Unit 13

Creating an Energy Policy

Learning Objectives Introduction

By the end of this unit, you will be Because energy is such a crucial component of economic
able to understand: growth and a strong society, we frequently worry about
● Energy economics and policy its future supply. No government depends completely on

● Energy demand the market for its energy supply, and stakeholders have
strong views on both the goals and tactics of energy
policy.

In the past, many companies considered energy to

be an unavoidable operating expense. However, more
businesses than ever now see energy management as a
commercial opportunity. The corporate world is beginning
to understand that using energy responsibly has a variety
of positive effects on the bottom line. Cost reduction is
one of these advantages, but it’s not the only one.

The world’s energy system is faced with significant

economic, geopolitical, environmental, and social issues.
The energy choices being made now to address these
various issues will have an impact on every region of the
world for decades, if not millennia.

It is crucial for energy policymakers and planners to

imagine and articulate potential energy futures, despite
significant uncertainties in energy demand growth (such
as the pause brought on by the recent financial crisis),
107 Creating an Energy Policy
energy supplies, climate impacts, technological
advancements, and shifting economic relationships.
Businesses can strengthen their relationships
with external stakeholders, such as investors,
customers, and the neighborhood, by implementing
a strong energy policy that demonstrates their
dedication to energy management.
Energy Economics and Policy serve a large number of clients in the majority
Energy is a crucial component of a healthy economy
and is necessary for upholding our contemporary
way of life. Numerous aspects of our social and
economic lives are influenced by energy. Providing
equal and ethical access to affordable energy in the
future is a significant problem.
In order to address the issue of sustainability,
energy policies and regulations are developed and
implemented, and both of these processes are
heavily influenced by economics.
Concerns about the development and management
of energy resources are becoming more widespread
around the world, such as:
● Controlling the environmental impact of energy
use
● Regulating and expediting the commercialization
of renewable energy
● Re-evaluating the safety issues related to nuclear
power
Therefore, there is a need to conduct research on
energy economics and relevant policies to assess
the effectiveness of past initiatives and guide future
progress.
108
For those who make decisions about various areas
of energy management, it is particularly important
to research the characteristics of the energy market
and the roles played by governments in it.
Economics of Electricity Generation and
Distribution
Electricity is produced at generating facilities that
of developed nations. These power plants,
often referred to as central station generators,
are frequently located far from the point of
consumption.
Cost plays a significant role in the economics of
central station generation. There are fixed and
variable costs associated with central station
generation, similar to any other industrial method.
The basic costs of power production are relatively
simple, but the variable costs are remarkably
complex.
Fixed costs: Land and capital costs constitute the
fixed costs of power production. Labor expenses
and “regulatory costs,” including obtaining site
permissions, environmental approvals, and other
factors, impact the capital cost of installing central
station generators differently in various regions.
It is crucial to understand the duration required to
establish central station generation.
Creating an Energy Policy
Fixed costs consist of: staff and management.

● Annual charges of the central organization
management
● Salaries of the employees (usually higher
officials)
● Interest on the land costs
Since each of these expenditures is fixed, the fixed
cost remains constant.
Operating Costs - It covers fuel, labor, and
maintenance costs for power plants. The overall
operational cost of a plant is based on the amount
of power the plant produces, as opposed to capital
expenses, which are “fixed” (don’t change with
the level of output). The “marginal cost” is the
operational expense needed to create each MWh
of electric energy.

Semi-Fixed Cost: These fees are determined by Operating expenses comprise:

the maximum demand rather than the amount of
energy (in kWh) produced. The semi-fixed costs ● Cost of Fuel: Of course, this price varies depending
increase as the maximum demand increases. on the type of plant. It is lower in thermal (coal-
based) plants compared to nuclear reactors.
Semi-fixed costs consist of: However, this cost is zero for hydroelectric plants
(HPS).
● Interest and depreciation on capital expenses
● Cost of Maintenance and Repairs: As a plant
(investment and insurance) incurred in connection
ages, it experiences wear and tear, necessitating
with the purchase of land, the construction
maintenance. Lubricating oil must be used due
of structures, and the purchase of machinery
to the plant’s deterioration, which incurs a cost.
required for the production, transmission, and
distribution of electricity. ● Salaries of the Operating Staff: The larger the
size (capacity) of the plant, the more personnel
● The plant’s capital expenditure is substantial and
are needed for operation.
is typically financed by loans.
● Other Costs: These include fees for feed water
● The cost of production includes the interest on
(TPS), the cost of treating water (HPS and TPS),
this borrowed sum.
and the cost of enriching fuel (not applicable to
● Depending on the state of the market, this interest all plants, such as NPS).
rate can reach 8%.

● The aforementioned depreciation refers to the

decline in value of regularly utilized equipment.

● Depreciation occurs as a result of wear and tear,

and these expenses are also accounted for in
fixed and semi-fixed charges.

● The size (and cost) of the installation depends on

the maximum demand. The semi-fixed costs will
Figure 13.1: Relative comparison of operating cost and operational
include wages and salaries for both the clerical flexibility for different power plant technologies

109 Creating an Energy Policy

For fossil-fired power plants, fuel costs account for
the majority of operating expenses. Fuel is typically
free for renewable energy sources (in rare cases,
biomass power plants may be an exception), while
the fuel costs for nuclear power plants are relatively
low. Labor and maintenance expenses constitute
the majority of total operating costs for these types
of power plants.
In general, capital and operating expenses for
central station generators must be balanced. Plants
with higher capital expenses typically have lower
operational costs. Additionally, the operational
costs of generators that use fossil fuels are often
highly sensitive to fluctuations in the
underlying fuel price.
Comparing the total costs of
different power plant systems
can be challenging due to the
apparent tradeoff between
capital and operational costs.
The “Levelized Cost of Energy”
(LCOE), which represents the
average cost per unit of production
required for the plant to break even
during its operational lifespan, is a common
metric used to compare power plants.
Characteristics Influencing Plant’s Operations
Regardless of technology, all generators share
the following traits, which impact how the facility
operates:
● Ramp Rate: Expressed in [MW/h] or [% of
capacity per unit time], this variable determines
how quickly the plant can increase or decrease
110
power output.
● Ramp Time: The time it takes for a generator
to start supplying energy to the grid at its lower
operational limit when turned on, expressed in
[h].
● Capacity: The maximum output of a plant,
measured in [MW].
● Lower Operating Limit (LOL): The minimum
amount of power a plant can produce after being
turned on, expressed in [MW].
● Minimum Run Time: The shortest duration a
plant can operate once turned on, measured in
[h].
● No-Load Cost: The cost in [$/MWh]
of turning on the plant and keeping
it in a “spinning” state to be
ready for producing power. It
can also be seen as the fixed
cost of operation, incurred by
the generator regardless of
energy production.
● Start-up and Shut-down
Costs: The costs involved
in turning the plant on and off,
expressed in [$/MWh].
The minimum run duration and ramp times, which
vary significantly between plant types and depend
on laws, fuel type, and technology, influence the
flexibility of the generation source.
Generally, base load energy is supplied by plants
with longer minimum run durations and slower
ramp times. On the other hand, plants with shorter
minimum run times and faster ramp times are
better suited for meeting peak demand. The cost
structure for transmission and distribution differs
from power generation, as operating transmission
Creating an Energy Policy
and distribution wires essentially incur no fuel
expenses. Adding more electricity to a transmission
line typically has minimal cost implications unless
the line is operating at its capacity limit.
Therefore, capital cost primarily influences
transmission and distribution economics.
Design of Power Markets
It is essential for the power sector to adapt and
evolve as the global energy transition shifts towards
greater use of renewable energy sources such as
wind and solar PV, and increased electrification of
end uses. The current power systems, which were
designed for large, centralized, and easily controlled
power plants, must be redesigned to support the
integration of variable renewable energy sources.
The linked power grid serves as a sizable wholesale
electricity market in various parts of the world
(separate and distinct from the retail, or distribution,
network). The flexibility that is required in systems
that use significant amounts of variable renewable
energy sources, like wind and solar electricity, is not
necessarily valued by these markets. Additionally,
the near-zero marginal cost of variable renewable
energy might provide difficulties for market
structures and result in a lack of generational
revenue necessary to maintain resource adequacy.
Electricity was initially produced nearby the source
of demand, which was often an industrial load,
when power systems were originally constructed.
Distribution grids, then transmission grids,
connected metropolitan centers with relatively far-
off power providers as cities became electrified.
The first national grids emerged gradually when
meshed networks with numerous generators
supplying power to diverse loads emerged.
111
The way that electricity was acquired and distributed
changed as physical power systems changed.
Prior to the introduction of grids connecting
numerous generators with many consumers,
bilateral agreements between the producer and the
user were the norm. However, as grids connected
more generators with more customers, more
sophisticated organizational structures became
necessary to sustain the power system.
Figure 13.2: Changing power systems
Organizational structures within the power system
are built around social and political objectives, and
they rely on financial, physical, and procurement
procedures to achieve those objectives while
staying within the technical bounds of the system.
Both in the short and long terms, the way that
energy and flexibility services are compensated
reveals important information. Organizational
structures transmit the signals that govern how the
power system will develop in the future.
A New Model for New Challenges
Organizational structures for power systems were
created using a pattern from the era of fossil fuels
and had to be appropriate for both the prevailing
technologies of a centralized energy system and
the objectives of the time. In light of the extensive
electrification of the economy, governments now
face a new problem for the power sector: how to
quickly integrate renewable energy power plants
Creating an Energy Policy
while maintaining acceptable system costs and
promoting the maximization of both system and
social value.
The majority of implemented energy transition
initiatives have not given careful thought to how
they would interact with existing power system
organizational structures. They were typically
created to work outside the constraints of the
current power system in order to allow the
deployment of renewable energy. Misalignments
between the organizational structures of the power
system, the support mechanisms, and the techno-
economic characteristics of renewable energy
sources become more obvious as the transition
moves forward.
Renewable Energy Integration
It focuses on integrating
demand response, thermally
activated technology,
distributed generation, energy
storage, and renewable energy
into the electric distribution and
transmission system.
The production of electricity from renewable
energy sources helps in reducing greenhouse gas
emissions from the power sector and addressing
climate change. Renewables are preferable to
fossil fuel generators in terms of emissions, but
grid operators face difficulties managing these
plants because the amount of power they produce
is dependent on varying natural resources.
By taking a holistic approach, efforts are being
made to overcome institutional, technical, and
economic barriers to the implementation of
distributed and renewable energy systems. This
112
includes developing and testing new methods for
capacity planning, grid operations, and demand-
side management, as well as addressing any
operational challenges. Additionally, the aim is to
establish viable economic models for the use of
these technologies.
Goal
The goal of renewable energy integration is to
promote system design, planning, and operation of
the electric grid to:
● Lower emissions of carbon dioxide and other air
pollutants by using more renewable energy and
other clean distributed generation.
● Improve asset utilization
by integrating distributed systems
with customer loads to decrease
peak demand and, hence, cut
electricity bills.
● Encourage the adoption of
renewable portfolio requirements
for energy efficiency and renewable
sources.
● Improve critical infrastructure
protection and enhance the resilience of limited
parts of the electric grid through the use of
microgrid solutions.
● Encourage the use of fewer oil-based products
by allowing plug-in electric vehicle (PHEV)
operations on the grid.
Process of Integrating Renewable Energy into the
Grid
The two main categories of renewable energy
generation resources are distributed generation
and utility-scale generation. The former refers to
Creating an Energy Policy
small-scale renewables on the distribution grid
where electricity loads are served and centralized,
while the latter refers to larger projects that connect
to the grid through transmission lines.
Utility-Scale Generation: Utility-scale, centralized
renewable energy plants may produce hundreds of
megawatts (MW) of power, which is equivalent to
fossil fuel power plants. Large renewable energy
sources generate electricity that is sent over
transmission lines, reduced in voltage, and supplied
through distribution lines to homes and business
buildings, just like natural gas, coal, and nuclear
power plants.
On the other hand, renewable energy facilities
usually cannot be dispatched (or able to create
power when called upon) as they rely on erratic
resources like the sun and wind that change
throughout the course of a day. But when renewable
energy is available, the dispatch order is prioritized
by sources like wind and solar. Because wind and
solar are the cheapest energy sources at the time
and have no fuel costs, their production is utilized
before that of other generator types.
Distributed Generation: Small home and
commercial renewables, on the other hand, typically
produce between 5 and 500 kilowatts (kW). Solar
panels, which are easily scalable, make up the
majority of these small-scale renewable energy
sources. These dispersed resources, like rooftop
113
solar panels, are often found on-site at residences
or commercial buildings.
Distributed resources like these are connected to
the grid through electrical lines on the lower voltage
distribution network, which are the same lines that
deliver electricity to customers, in contrast to large,
centralized renewable energy sources that connect
to the grid through high-voltage transmission lines.
These initiatives frequently take place “behind the
meter,” meaning that the electricity is produced
for on-site use (such as a rooftop solar system
that supplies a household with power). Instead
of boosting the amount of power available on the
grid, these modest, distributed initiatives often
reduce the demand for electricity at the point of
consumption.
Distributed generation also includes community-
scale renewables, which are bigger than rooftop
projects but smaller than utility-scale installations
and are connected to the grid via distribution lines.
However, community-scale renewables reside “in
front of the meter,” which means that the power
they produce does not travel to the distribution
grid for consumption by nearby households and
businesses, rather than being used on-site like
small rooftop renewables do.
How Does Renewable Energy Affect the Grid?
No matter where the renewable energy generation
is located within the system, it has an impact
on how the grid operator distributes resources.
Because there is enough demand for electricity,
the grid will typically be able to consume all the
electricity generated by renewable sources. As the
percentage of renewable energy sources on the
grid increases, this might happen more frequently.
Creating an Energy Policy
Thus, the amount of electricity required and the
amount of electricity generated by renewables on
the grid are equal, and the remaining amount can be
filled in by other sources. The difference between
the forecasted load, which is the anticipated level of
power demand from customers, and the system’s
total renewable energy generation is known as net
load.
The net load must be met by utilities, who normally
do so by using conventional fossil-fuel sources like
natural gas plants. As a result, the more renewable
energy sources are available on the system, the
less power needs to be produced using traditional
fossil-fuel plants.
However, the intermittent nature
of renewable energy sources
can pose challenges for
grid operators in terms of
anticipating and meeting load
as more of them are included
in the grid.
Weather becomes more crucial
for predicting net load as the
percentage of renewable energy on
the grid rises. Due to the unpredictable and
quick changes in weather, grid operators must be
adaptable and quick to respond to new conditions
and production patterns. Failure to do so can result
in power outages and shortages.
For example, when the sun sets but the need for
electricity persists, grid operators must promptly
adjust to the diminishing solar energy production,
even in predictable weather.
114
Implications for the Grid of the Future
In the upcoming years, it is anticipated that
renewable energy will experience tremendous
growth, driven by declining costs and supportive
renewable energy legislation. The modern grid will
need a lot of flexibility on both the power supply
and demand sides to handle a large penetration of
variable renewable energy.
There are numerous strategies to improve the
integration of renewable resources and grid
flexibility:
● To accommodate variations in
renewable power over the course
of a day or several days, energy
storage can be used with
variable renewables. When
electricity production is high
(for solar, on bright days; for
wind, when wind speeds are
high), it can be stored for use
later when demand is high.
● Increasing the value of
renewable resources and lowering
uncertainty in their power generation
can be achieved by building more transmission
lines to link regions endowed with abundant
renewable resources (such as extremely sunny or
windy regions) with regions with high electricity
demand.
● The fluctuation in production of one resource
type can be balanced out by combining different
renewable sources. For instance, a system that
uses multiple renewable energy sources—such
as solar, wind, hydro, and geothermal—will
probably experience less production volatility
than one that uses only wind energy.
Creating an Energy Policy
● Demand-side management can be strategically As the grid’s share of renewable energy capacity
applied to improve the times of day when rises, the challenges become more critical. To
power is consumed to reflect the capacity of achieve a smooth transition to an electrical
the generation. Demand-side management may grid dominated by renewable energy, improved
involve relocating flexible demand to periods technology, careful planning, and enhanced
of high renewable energy production, such as flexibility are required.
preheating electric hot water heaters or charging
electric vehicles during periods of high solar Environmental Implications of Energy
energy production, and decreasing demand
during peak hours to lessen the slope of the Since it is practically impossible to create, transport,
ramp. or use energy without having a substantial
environmental impact, energy and environmental
● Grid flexibility can be promoted by giving
concerns are intimately intertwined.
generating flexibility value in the wholesale power
markets. For instance, California has made an
Air pollution, climate change, water pollution,
effort to control its “duck curve” by creating a
thermal pollution, and solid waste disposal are
flexible ramping product that rewards generators
some of the environmental issues directly linked to
for their capacity to ramp quickly. Instead of
the production and consumption of energy.
prescribing a predetermined answer, options like
these allow the market to decide how to best
Among the problems, there are:
promote flexibility.

Renewable energy sources facilitate a low-carbon

future, but it is important to consider how their
erratic nature will affect the current grid system.
Grid operators need to be aware of this in order to
correctly balance electricity supply and demand on
the power grid. They need to know:

● How much renewable energy is being generated

at any given moment.
● The primary contributor to urban air pollution is
● How much renewable energy generation is the emission of air pollutants from the burning
expected. of fossil fuels.

● How to respond to changing generation.
The nature of renewable energy is irregular and
varies in sizes and locations. Therefore, it is
challenging for grid operators to know about the
size and location of these sources throughout the
power system.
● The main cause of greenhouse gas emissions is
also the burning of fossil fuels.
● Energy use is linked to a variety of water pollution
issues, with oil spills being one significant
concern.
● There is a limited possibility of oil spilling during

115 Creating an Energy Policy

 all petroleum handling operations, either on the Most environmental research and legal controls
ground or in a body of water. throughout the 1970s focused on traditional effluent
gas pollutants such as SO2, NOx, CO2, particulates,
● Water pollution is another effect of coal mining.
and CO. Recently, environmental concerns have
Changes in groundwater flow brought on by
expanded to include the regulation of both globally
mining operations frequently expose previously
significant pollutants like CO2 as well as micro-
unpolluted streams to specific mineral
or hazardous air pollutants, which are typically
substances that leach from the soil and result in
toxic chemical substances and damaging in small
acid mine drainage.
amounts.
● Another by-product of several forms of energy
use is solid waste. Large amounts of earth must
Along with improvements in environmental
be removed in addition to coal when mining coal.
research, modifications to industrial structures
and processes have created new environmental
Different types of power generation have different
issues. For instance, significant changes in the
environmental effects on our air, water, and land.
transportation of industrial items by road and in the
More effective generation and use of
use of personal vehicles for individual
energy lower the amount of fuel used
travel have increased road traffic and,
to generate electricity, as well as
as a result, the focus on the causes
the amount of greenhouse gases
and effects of NOx and volatile
and other air pollution that is
organic compound (VOC)
released as a result.
emissions.

Energy and Environmental

Environmental issues cover a
Problems
variety of contaminants, dangers,
and ecological deterioration over
The world has witnessed several
larger geographic areas. Major
significant changes as a result of
environmental accidents, water pollution,
technological advancements. However,
maritime pollution, land use and siting impacts,
it has also sparked the growth of environmental
radiation and radioactivity, solid waste disposal,
issues that endanger both nature and humans.
hazardous air pollutants, ambient air quality, acid
rain, stratospheric ozone depletion, global warming
The threat and reality of environmental degradation
greenhouse effect, and global climatic change are
have grown over the last 20 years. Growing
the main sources of environmental problems.
evidence of environmental issues is the result of
several factors, as human activity’s impact on the
The four main categories of harm caused by human
environment has greatly increased due to the sheer
activity are gases that cause global warming, gases
growth in the global population, consumerism,
that destroy the ozone layer, gaseous pollutants,
industrial activity, etc.
and microbiological risks.

116 Creating an Energy Policy

Energy supply and use issues are linked to
environmental issues such as air pollution, acid
rain, ozone depletion, forest loss, and radioactive
material emissions, in addition to the global
warming that is occurring as a result of effluent
gas emissions, primarily CO2. If humanity is to
have a successful transition to an energy future
with minimal negative environmental effects, these
factors must be taken into account simultaneously.
There is ample data that indicates the future
will suffer if humans continue to damage the
environment.
The average temperature of the Atlantic,
Pacific, and Indian oceans, which
cover 72% of the Earth’s surface,
has risen by 0.06 °C since
1995, while global surface
temperatures have risen over
the past century at a rate of
about 0.6 °C per century. The
annual average combined
land and ocean temperature
for the period 1880–2000 is
13.9 °C, which means that in 2001,
global temperatures were 0.52 °C
higher than the long-term average.
This could result in a sea level rise of 60 mm every
ten years, increasing the likelihood of flooding in
low-lying locations. Around 153 nations made the
commitment to promote sustainable development
at the Rio Earth Summit in June 1992. Among the
key objectives was to lower carbon dioxide and
other greenhouse gas (GHG) emissions.
Additionally, the US Department of Energy predicts
that global carbon emissions would rise by 54%
above 1990 levels by 2015, increasing the likelihood
117
that the world will warm by 1.7 to 4.9 °C between
1990 and 2100. Such findings, along with others,
show that interest in energy-related environmental
issues is likely to rise, and that energy is one of the
key variables that must be taken into account when
discussing sustainable development.
Energy Demand
The term “energy demand” refers to the amount of
energy required by human activities. It influences
the location and types of fuel used in the energy
supply system, as well as the characteristics of
the end-use technologies that consume energy. It
drives the entire energy system.
When we talk about energy
demand, we are referring to all
forms of energy consumption,
including:
● Electricity
●Transportation fuels
● Fuels for heating
Energy Demand Drivers
Policy, technology, and consumer inclinations
all have an impact on how the world consumes
energy. Each driver influences the others, and their
interplay varies based on local conditions such as
accessible resources and public support, which
may also change over time.
Technology: New technology allows people
to achieve more with less. The most effective
technologies often require enabling governmental
and business frameworks to scale up. Measures
like tax incentives can incentivize the development
Creating an Energy Policy
of new technology, which then needs to compete
in the market without assistance to become
widespread and have an impact on global markets.
Additionally, consumer preferences can have a “pull
effect” that drives demand for new technologies.
Policy: Transparent and consistent government
regulations can encourage innovative technology
and influence consumer choices. For example,
regulations can promote the use of new technology,
such as providing free parking for electric vehicles,
or restrict the use of existing technology, such as
implementing limitations on coal-based power.
It follows that policies that are not supported
by cutting-edge technology or do not align with
consumer preferences may be challenging to
implement. It is difficult to enforce something that
consumers perceive as inferior to other options.
Consumer Preferences: Consumer decisions play
a significant role in shaping energy demand. As
better options emerge, such as those offering lower
prices and lower emissions due to new technology,
consumer preferences may change accordingly.
Policies that incentivize certain choices, such as
a carbon tax that promotes lower-emission energy
sources, can also influence and shift consumer
preferences over time.
Demand Side Management
Demand-side management can be broadly divided
into the following four categories: national, utility,
community, and individual household scales.
National Scale: One of the most significant demand-
side control tactics is the enhancement of energy
efficiency. National legislation and standards
can be used to increase efficiency in things like
housing, buildings, appliances, transportation, and
118
machinery.
Utility Scale: Utilities are able to regulate storage
water heaters, pool pumps, and air conditioners
in large areas during peak demand to lessen peak
demand. Ripple control is a popular technology that
uses high-frequency signals (like 1000 Hz) on top
of regular power (50 or 60 Hz) to turn devices on
and off.
Peak demand for the energy network typically
happens in the late afternoon to early evening in
more service-based economies (4 pm to 8 pm). The
largest portion of this type of peak demand is made
up of residential and commercial consumption.
As a result, it makes perfect sense for utilities
(electricity network distributors) to handle air
conditioners, pool pumps, and storage water
heaters for residential use.
Community Scale: Other terms include district,
precinct, and neighborhood. In areas with harsh
winters, communal central heating systems have
been around for many years. Similar management
is required for summer peak regions’ peak demand.
It is possible to adopt demand-side control at the
community level to lower peak cooling or heating
demand. Getting a building or community to net
zero energy is another factor.
Creating an Energy Policy
Household Scale: Rooftop photovoltaic systems
are becoming increasingly necessary for homes.
They can lessen their reliance on the grid by using
the free energy provided by the sun. Demand-
side management can also be beneficial when
a methodical approach is taken into account:
the functioning of solar energy systems, air
conditioning, battery energy storage systems,
storage water heaters, building performance, and
energy efficiency measures.
Current Energy System
The moment of significant transformation in our
current energy system is just getting started. Fossil
fuels must be removed from the energy grid if we
are to combat the threat of climate change. As a
result, energy efficiency will increase, which is a
trend that has to be supported and encouraged.
Current trends in electricity generation are
encouraging. We are using more renewable energy
sources to generate power as a result of rapidly
lowering costs for wind and solar energy, enabling
us to abandon dirty fossil fuels like coal. However,
incorporating a significant quantity of renewable
energy into the power supply is not simple. The
constant balancing of electricity supply and demand
is necessary, but because solar and wind energy
119
are variable sources, it becomes more challenging.
Solutions for energy storage are being developed
by many people and are improving. Demand-side
response, or more flexible electricity demand, can
also be beneficial. This necessitates a deeper
comprehension of the timing of energy demand
and how it can be changed, either by altering our
energy consumption habits (such as doing laundry
at different times) or locally storing energy (e.g., in
hot water tanks or electric vehicle batteries).
Some technologies claim to be able to control
demand using internet-connected smart gadgets,
smart meters, and a smart grid. These technical
changes will need to be accompanied by significant
social transformations.
Additionally, we will need to decarbonize the
fuels we use for transportation and heating.
Electrification can have a significant impact on this.
Electric vehicles and various forms of heating are
already in high demand. Complete electrification
of heating is improbable, and there are comparable
difficulties in transitioning from fossil fuels in
shipping, aviation, and many industrial activities.
Therefore, it is possible that new energy carriers,
such as hydrogen, will be required, posing new
challenges for the study of energy demand.
Creating an Energy Policy
Summary

● Energy economics, like many other areas of applied economics, was born out of the recognition that
“energy” is a limited resource. Electric power networks and related industries are evolving as a result of
renewable sources’ expanding contribution to reducing climate change and meeting the world’s energy
needs.

● The approach taken by a specific entity regarding energy development, production, distribution, and
consumption is referred to as its energy policy. Industry professionals, policymakers, and academics must
comprehend these shifts in order to be prepared for future job opportunities in the energy landscape. They
also need to develop specialized and relevant skills to drive this energy transition within the necessary
timeframe.

● Energy use and its environmental impacts are two of the most crucial challenges of the twenty-first century.
The energy industry is poised for significant transformation, presenting considerable opportunities, given
the vital role energy plays in geopolitical connections and the fact that a majority of greenhouse gas
emissions contributing to global climate change originate from energy production.

120 Creating an Energy Policy

 Unit 14
Energy Efficiency
Policy Objectives, Planning
and Dispute Resolution
Learning Objectives Introduction

By the end of this unit, you will be Energy policy is the government’s response to the current
able to understand: conditions in a particular social sector. The government
● Objectives of energy policy can choose to either maintain the status quo in order to

● Energy efficiency policies and achieve specific societal goals or modify the existing

programs system to ensure the attainment of those goals.

● Dispute resolution in the

Energy policy also recognizes that the events unfolding in
international and national energy
the energy sector are not solely influenced by economic
sector
forces. Governments bear the responsibility of ensuring
that the outcomes in the energy sector align with various
social objectives.

However, in a contemporary society, the energy sector is

interconnected with other areas of activity. Furthermore,
even within the energy sector itself, if there are
externalities present, competition alone is insufficient to
generate efficient outcomes.

Therefore, when developing an energy strategy,

considerations must be given to social fairness, the
environmental implications of energy use, the long-
term sustainability of accessible energy supplies for
society, and concerns about efficiency. Additionally,
aligning energy policy with other policy domains, such
as transportation, the built environment, industry, and
121 taxation, is essential.
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
Governments at all levels increasingly operate their
energy policies within an international framework.
The prevailing viewpoint is that of the “global
commons,” where the energy policy decisions made
by one country have positive or negative impacts
on other nations.
Consequently, national governments are not free
to independently implement their energy policies.
To achieve both national and international policy
objectives, countries must coordinate their energy
strategies, particularly in light of the issue of
greenhouse gas emissions.
Objectives of Energy Policy
The desired outcomes achieved through the
implementation of energy policy tools are referred
to as energy policy objectives. Various policy goals
exist, including:
● Financial efficiency in energy supply
● Effective utilization of energy
● Diversification of energy sources
● Alignment between energy policy goals and other
policy objectives, particularly environmental
goals
● Energy security
● Accessibility and affordability of energy
122
resources for disadvantaged groups
● Conservation of resources for energy
● Research into energy supply technologies
● Long-term sustainability of energy sources
When one goal becomes the sole focus, others may
be sacrificed. For example:
● If national security is the top priority, using coal
to transition the transportation sector away
from oil might make sense, despite the high
environmental and financial costs.
● Prioritizing economic growth can lead to
compromised national security due to oil
dependence and environmental concerns due to
coal and oil emissions.
● Economic development may be limited if
environmental considerations take precedence,
although nuclear power could enhance security.
No single technology, whether new or existing, can
fully meet society’s energy needs; each technology
involves significant trade-offs between different
goals. For instance:
● Large-scale, affordable storage options are
currently unavailable, and solar energy is
expensive and intermittent.
● Wind power is costly and faces intermittent
challenges similar to solar energy.
● Nuclear energy cannot be rapidly expanded due
to safety, proliferation, and long-term storage
concerns.
● Hydroelectricity is not universally accessible,
requires substantial time and funding
for construction, necessitates extensive
transmission infrastructure, and has negative
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
 environmental impacts. Economic objectives encompass macroeconomic
progress and economic development. It is valuable
● Biomass has low energy density and adverse
to compare industrialized nations with emerging
environmental effects.
ones. The current status of industrialized nations

Meeting the vast global energy demand requires a can be partially attributed to the accessibility

combination of new and established technologies. of inexpensive energy, although some of this

However, determining the optimal integration of perceived “low” cost comes at the expense of the

different technologies and allocating resources environment and raised security concerns.

between current and future technology research

Furthermore, there is an increasing realization that
and development remains uncertain. Over time,
sustaining economic growth requires the protection
it becomes crucial to compare the expected
and enhancement of natural resources. Conversely,
performance of different portfolios of alternative
developing nations and their populations are
energy technologies.
striving to attain a comparable economic status

Linking Scenarios to Energy Policy and Planning with growth rates twice as high as those of wealthy

Objectives nations.

Despite the existence of numerous goals Geopolitical energy challenges encompass a range

associated with energy planning and policy, they of factors, including terrorism, nuclear proliferation,

can be categorized into four main areas: and global and national energy security. The
primary objective of energy security is to ensure an
adequate and reliable energy supply at fair rates,
while safeguarding essential national values and
Economic
objectives. The International Energy Agency defines
energy security as “access to adequate, cheap, and
reliable energy supply.”
Geopolitical

While energy security is the central focus, its meaning

can vary depending on the dynamic political,
economic, and social environment. It is not solely
Environment
limited to oil and geopolitics. The geographical
placement of large-scale hydropower plants or

Public fossil fuel reserves can impact energy security in

Acceptability
Figure 14.1: Energy Policy and Planning Acceptability
various ways. Oil, in particular, is concentrated in
a limited number of nations, enabling suppliers to
exert partial dominance over the global oil market.
While different fuels and energy carriers, including
electricity, are considered in de

There are other energy security issues besides oil.

123 Energy Efficiency Policy Objectives, Planning and Dispute Resolution

Compared to oil, natural gas resources are more
scattered, but they also pose significant security
threats. Natural gas is susceptible to risks of
interruption due to the high cost of long-distance
delivery, especially over oceans. In contrast,
coal is more evenly distributed worldwide and
has abundant supplies in proximity to densely
populated areas.
When it comes to electricity, understanding
energy security in terms of reliability rather than
just security is crucial. To encompass concerns
of proliferation and terrorism, which may not be
directly tied to energy sources but rather to the
exploitation of energy infrastructure for violent
purposes, the concepts of energy security
and energy vulnerability need to be
expanded.
Nuclear proliferation is another
significant security concern,
which can occur either through
direct acquisition of nuclear
weapons or indirectly through the
commercial generation of power
using nuclear energy.
Environmental concern is a critical objective of
energy policy and planning, involving the addressing
of various environmental issues associated with
ecological and human health impacts. These
issues encompass GHG emissions, air pollutants,
water impacts, toxic materials, safety, and long-
term sustainability.
Energy production and utilization have a wide
range of environmental effects that extend across
different geographical areas and timeframes. Some
effects are regional in nature, such as acid rain,
while others are localized, like the environmental
124
consequences of strip mining coal. Additionally,
there are global impacts, such as the production
of greenhouse gases (GHGs). This category also
encompasses the harms caused by energy-related
accidents and mishaps.
Public acceptability is a multifaceted aspect that
encompasses both procedural and substantive
elements. In the realm of energy policy and
planning, it is imperative to involve the public in the
development and implementation of major energy
policies and programs, particularly in democratic
societies.
Public engagement and input are crucial not
only for the democratic process itself but
also indirectly through mechanisms
like elections. Additionally, direct
stakeholder processes are
often employed to ensure
comprehensive involvement. In
contrast, even in nondemocratic
governments, energy subsidies
are frequently utilized as these
governments rely on popular
support for their policies and objectives,
prioritizing public acceptance over official
channels like elections.
Under each of the four main headings of economic,
geopolitical, environmental, and public acceptance,
there are several sub-objectives. In certain cases,
these sub-objectives are utilized to further other
goals rather than serving as ends in themselves.
The four main objectives can also be categorized
within these respective categories.
Reducing greenhouse gas (GHG) emissions not
only serves as a means of achieving the final goals
of economic prosperity and human health but also
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
contributes to their attainment. Various indicators
may be used for different objectives and sub-
objectives, further complicating the situation.
With the presence of numerous objectives, two
issues arise.
Firstly, it is necessary to identify and design each
aim, sub-objective, and their relationships, which
poses a significant semantics challenge due to
different individuals, organizations, and countries
using various terms to refer to the same goals.
Secondly, developing a shared taxonomy of aims
requires more than just consensus on terminology,
as the description of an objective
is influenced by how individuals
value it. This leads to the second
issue, where nations, groups,
and individuals have diverse
preferences for the multitude
of goals.
The underlying objectives and
supporting sub-objectives are
rooted in fundamental arguments
about how people should live their lives,
which are partially encapsulated by the concept of
sustainability.
Consequently, many believe that the energy future
entails more than just optimizing a set of objectives.
It also involves living in a manner that achieves
broader social, cultural, and political outcomes that
are challenging to encapsulate within a simple set
of objectives.
125
Energy Efficiency Policies and Program
Examples
Projects aimed at reducing energy use are
implemented with the assistance of energy
efficiency policies and initiatives. Examples of
these include energy regulations for buildings,
commissioning and retro-commissioning practices,
financial incentives and initiatives, government
programs that serve as examples, and others.
Some specific examples of these initiatives include:
Appliance Standards: The federal government
and some states have set minimum efficiency
requirements for certain appliances
such as refrigerators and washing
machines. These standards may
specify specific features or
devices that a product must
have or establish a maximum
allowable energy usage.
Alternatively, regulations may
require products to meet a certain
average efficiency across all models,
allowing for a mix of less and more
efficient variants.
Building Codes: Some commercial and/or
residential building regulations mandate that
new construction and renovations meet certain
energy performance standards in terms of design,
materials, and equipment used. Local governments
may adopt stricter rules than the statewide
minimum if the existing energy performance
requirements are deemed insufficient or lax.
Commissioning and Retro-Commissioning:
Implementing a commissioning program
throughout all phases of a building, including
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
design, construction, and operations, ensures
that the building’s systems are properly installed
and functioning correctly. Similarly, retro-
commissioning methods can identify and improve
the energy performance of equipment and control
systems in existing buildings.
State and municipal governments have the authority
to develop programs and laws that incentivize or
require retro-commissioning in privately owned
buildings, as well as incorporate it as part of energy
efficiency initiatives for their own facilities.
Decoupling and Utility Business Models: Energy
efficiency initiatives can lead to reduced energy use,
which may conflict with a utility’s business model
of generating more revenue by driving increased
energy demand.
Decoupling is a rate adjustment method that
disconnects the quantity of energy sold by a utility
from the revenue it receives in order to cover fixed
costs associated with serving consumers. This
ensures a fair return on investment for the utility
and a fair tariff for the consumer by maintaining
the company’s revenue from fixed costs at a level
deemed fair and reasonable by regulators.
126
Education and Behavior Modification: This is an
essential component of efforts undertaken by the
government to promote a more energy-efficient
society. It creates awareness and educates
state and local government employees and their
constituents about changing behaviors in favor
of conserving energy and adopting more energy-
efficient practices.
Energy Benchmarking and Disclosure: It is a
market-based policy instrument used to generate
demand for energy efficiency improvements
by raising awareness and transparency among
key stakeholders regarding building energy
performance. These upgrades can be implemented
through required regulations for buildings in the
private and/or public sectors or through voluntary
programs.
This policy tool aims to overcome obstacles
that hinder the recognition and appreciation of
energy efficiency in existing structures within the
commercial real estate industry and government
organizations.
Energy Efficiency Resource Standards: Energy
efficiency resource standards (EERS) require
an energy supplier or authority to establish a
measurable energy efficiency objective within a
predetermined timeframe. These requirements
may promote more efficient energy production or
usage, include demand management programs,
and can be combined with a state’s renewable
portfolio standard.
Financial Incentives and Programs: State and local
financial incentives and programs assist building
owners in implementing energy efficiency projects
through public benefits funds, grants, loans, clean
energy financing based on property assessments,
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
as well as personal, corporate, property, and sales variety of end users.
tax incentives. Additionally, these programs may
provide assistance in reducing or eliminating Zoning and Permitting: Local governments
permitting fees. frequently regulate zoning and permitting, which
may be relevant to both residential and commercial
Lead-By-Example: properties. However, the state may control the
scope of regional zoning rules.
By implementing measures such as data
management and analysis of energy usage, For instance, several states have implemented
implementing energy-efficient building standards legislation that makes it more difficult for local
for public buildings, retrofitting existing structures, governments to obstruct or impose unreasonable
procuring energy-efficient equipment and restrictions on the installation and use of
appliances, and establishing procedures for renewable energy systems. Zoning regulations
energy efficiency maintenance, state and local may be established to support energy-efficient
governments can serve as a model for construction. Buildings that achieve
other government entities. specific energy efficiency standards,
for instance, may receive floor
Industry Outreach and area ratio bonuses.
Coalitions: Engaging the
industrial sector in energy Dispute Resolution
efficiency initiatives can in the International
help governments meet their Energy Sector
energy reduction targets.
Programs for industry outreach The global petroleum industry
may encourage and promote makes investments in lengthy,
the implementation of energy- complicated, and capital-intensive
efficiency policies at businesses, projects. The governments and parties
as well as the use of energy-efficient involved in these projects constantly change,
technologies in the manufacturing process and which frequently results in disputes.
finished items.
Another significant global investor is the petroleum
Strategic Energy Management and Continuous industry. Consequently, the global portfolio of
Improvement: An effective strategic energy international commercial and state investment
management strategy sets objectives, monitors conflicts involving building projects is dominated
progress, and communicates outcomes while by the global energy sector.
fostering enduring relationships with energy
consumers and focusing on long-term energy Therefore, disputes pose a serious risk to any global
savings. Effective planning guarantees ongoing energy effort. The risk lies in how successfully a
energy efficiency improvements, boosts building party can handle a conflict to achieve a favorable
property values, and can save expenses for a outcome, rather than whether a dispute would arise

127 Energy Efficiency Policy Objectives, Planning and Dispute Resolution

in a project.
Planning for Disputes
Any transaction has numerous crucial turning
points where parties can have a significant impact
on how their conflicts are handled and resolved in
the end. These pivotal moments are:
● When parties first reach an agreement and
include a dispute resolution clause in it
● When parties choose their conflict attorneys,
arbitrators, mediators, or other dispute resolution
facilitators after engaging in a real dispute
To maximize their potential gains and
reduce their potential losses, parties
must prepare and implement their
dispute resolution strategy at
these critical junctures.
The dispute resolution clause
should not be an afterthought.
It is a crucial provision in any
international agreement as it
determines how the deal will be
interpreted, put into practice, and upheld
in the end.
International energy projects have a significant risk
of having a dispute submitted for settlement in a
hostile forum under unfavorable legislation and
procedures, unlike domestic operations.
The parties must agree on who will decide the
dispute, where it will be resolved, and how. In
many developing nations where oil and gas firms
invest, local courts are typically excluded from that.
Therefore, businesses must carefully consider how
they want any future disputes to be resolved, as
128
well as how to include those procedures in their
agreements.
Types of Disputes in the Global Oil and Gas Industry
In the worldwide oil and gas industry, disagreements
typically fall into one of four categories. These are:
State versus State Disputes: The majority of these
border conflicts involve oil and gas reserves that
span international boundaries and are situated in
marine areas. Since only governments have the
authority to assert sovereign title and negotiate
boundaries with neighboring states, they are, strictly
speaking, the only parties involved. However, oil and
gas corporations become unintentionally
entangled in these conflicts when they
are given concessions that cross
contested boundary lines.
Sometimes, developing
countries require businesses
to pay for the costs of the
boundary dispute, as well as to
contribute information and legal
know-how to help settle it. Therefore,
businesses must be aware of these
disputes and have the skills necessary to handle
them effectively when they arise.
Company Versus State Disputes: State investment
conflicts or investor-state disputes are common
names for them. They occur when governments
nationalize or expropriate an investment or when
they materially alter the terms of the original
agreement. The investor may rely on an investment
treaty, a production sharing contract (PSC), a
risk service agreement (RSA), or perhaps both to
support their claim.
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
Bilateral investment treaties (BITs), which
are negotiated and ratified by two sovereign
governments, are where the majority of treaty
claims are made. Currently, there are more than
2,500 BITs in force worldwide, involving about
180 different nations. The Energy Charter Treaty
is the only multilateral investment agreement that
matters to the oil and gas sector.

Businesses should structure their investments and

negotiate their host government contracts in a way
that allows them to benefit from the investment
Conflicts between operators and service providers
protection offered by these treaties and gain
fall under the second classification, which includes:
access to the resources of the International Centre
for the Settlement of Investment Disputes (ICSID),
● Drilling and Well Service Agreements
which should be the preferred forum for any dispute
with a sovereign state. This is typically achieved by ● Seismic Contracts

having their investing company incorporated in a ● Construction Contracts

jurisdiction with a strong BIT with the host country,
● Equipment and Facilities Contracts
operating their business out of that
● Transportation and Processing Contracts

Company versus company disputes: International

These disputes predominate among oil and gas
commercial disputes are the common name for
firms and vary widely in size, complexity, and
this. There are two types of disagreements that
financial importance.
take place between energy businesses.

Individual Versus Company Disputes: People

Participants in joint ventures under agreements
file claims against oil and gas firms in various
like these fall under the first subcategory, which
circumstances.
includes:

The first occurs when a person is personally injured

● Joint Operating Agreements
and files a lawsuit against a business. While this
● Unitization Agreements
frequently happens in US jurisdictions, it also
● Farmout Agreements occurs more frequently abroad. Foreign claims

● Area of Mutual Interest Agreements
● Study and Bid Agreements
● Sale and Purchase Agreements
are typically brought in local courts, although the
Alien Tort Statute occasionally permits filings in US
courts as well.

● Confidentiality Agreements Secondly, proponents of oil and gas deals sometimes

claim they have a stake in a host government

129 Energy Efficiency Policy Objectives, Planning and Dispute Resolution

contract and the joint operating agreement that
accompanies it, often within the context of a third
party’s claim of tortious interference.
The last set of claims involves consultants or
agents who request payment in accordance with
their agent agreements for assisting a business
in securing a government contract. In a number
of arbitrations over the past 50 years, companies
have refused to pay their agents due to corruption
charges that arose after winning the contract with
the host government.
Various Techniques for Resolving Disputes
In their international agreements,
parties may adopt a variety of
dispute resolution procedures,
and they are able to combine
one or more of them.
Depending on the situation,
certain options are better
than others.
Whatever option the parties
decide on, they must carefully
construct their dispute resolution clause
to ensure that the various options complement
one another. Otherwise, a party may face unpleasant
surprises when the conflict arises.
Negotiation, mediation, expert determination,
dispute review boards, litigation, and arbitration are
a few of the different forms of dispute resolution
techniques.
Negotiation: When there is a conflict, parties
typically engage in negotiation as a matter of
course. An agreement may or may not include a
clause allowing for discussion. It could be formally
130
recognized as a step in a multi-stage dispute
settlement procedure. If so, the agreement must
specify in detail when each phase is to be completed
and by when. Otherwise, not completing a stage
can be a barrier to completing a binding procedure.
Negotiation is the most economically feasible
technique of conflict settlement and the least
expensive overall. However, to avoid unfavorable
feelings and firmly held beliefs that prevent a
resolution, the parties must work together fully and
act with a great level of objectivity and detachment.
Mediation: For mediation to be successful, all
parties must be prepared and dedicated
to the process, have representatives
present, and have an experienced
mediator. When these
conditions are met, mediation
can be a very successful and
effective conflict resolution
method.
The main concern in mediation
is the real interests of the parties
instead of their legal agreements.
Common law nations including the
US, England, Canada, and Australia regularly use
mediation domestically. Civil law jurisdictions are
starting to experience its steady spread.
In the business community, mediation is the
preferred alternative to litigation and arbitration for
the resolution of disputes. It is largely preferred over
alternative ADR techniques in various jurisdictions.
Mediation has a higher success rate of settlement
than arbitration and is quicker and less expensive.
Despite its benefits, mediation is still not widely
utilized in international disputes. Factors
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
contributing to this include the parties’ great
distance from one another, their unfamiliarity with
the process, and the cultures, languages, and
values of each party.
Expert Determination: The most common
instances of expert determination in oil and gas
litigation include economic appraisals or technical
judgments. The conclusion of an expert is only
upheld in international court systems as a contract
between the parties and not as an arbitration result.
The parties would have to agree to it in writing.
Expert determination is quite helpful and feasible
in highly technical situations, but not in the case of
disputes. International disputes do not
frequently employ it, and when they do,
it should only be used on specific
technical grounds.
Dispute Review Board: This
concept originated from
US construction companies,
and as it gained popularity,
construction firms from other
countries began to adopt it. A
dispute review board consists of three
members appointed for the term of a
specific project. Even though numerous institutions
offer help and services in this field, this approach is
still not well-known in the energy business.
Litigation: Courtroom litigation is the method
of dispute resolution that lawyers are most
accustomed to using. It is most commonly used
when partners from the same jurisdiction are
involved in domestic energy commerce. However, it
is not the preferred forum for international disputes
due to difficulties in enforcing court rulings in
131
foreign jurisdictions, the expense and length of
trials, and foreign investors’ distrust of local courts.
As a result, international oil and gas agreements
rarely choose litigation as a dispute resolution
method.
Arbitration: In the global energy industry, arbitration
is the most frequently accepted and utilized form of
dispute settlement. It is a legally binding procedure
that gives parties the maximum freedom in how
they choose to settle their disagreement.
Arbitration offers benefits such as the ability for
parties to select their arbitrators and determine the
type.
Dispute Resolution in Energy
Sector at National Level
India is a nation that offers
excellent prospects in all
forthcoming industries for
the development of the nation.
India has developed an amazing
reputation in the energy sector
thanks to a huge number of projects
and initiatives being carried out across
the nation.
The dispute settlement methods in India are similar
to those in other nations, but the government is
attempting to select a method that can settle
disputes in a fast manner. As a result, in July
2019, the Indian government decided to create a
committee, and the Ministry of New and Renewable
Energy (MNRE) issued an order to set up a Dispute
Resolution Mechanism (DRM) to handle unforeseen
disputes between solar or wind power developers
and consumers.
Energy Efficiency Policy Objectives, Planning and Dispute Resolution
The various dispute resolution techniques utilized in India include arbitration, mediation, negotiation, litigation,
and expert determination. All of them have shown to be successful and effective in India.

Summary

● One of the most important issues for the future is energy. Businesses must strike a balance between
operational effectiveness and sustainable development.

● Finding energy efficiency across the board, from planning to production to operations, makes good financial
sense in light of rising energy prices and the growing scarcity of natural resources.

● Increasing energy efficiency is one strategy to lower energy costs by maximizing the use of already-
existing resources and strategically planning investments in new technologies. This not only better serves
customers and manages operating costs but also has a positive influence on the environment and reduces
risk.

132 Energy Efficiency Policy Objectives, Planning and Dispute Resolution

 Unit 15

National Energy Policy

Learning Objectives Introduction

By the end of this unit, you will be Energy is essential for achieving numerous goals of
able to understand: the Indian government, including reducing severe levels
● Green energy policy initiatives of outdoor and indoor air pollution, mitigating climate
for large-scale de-carbonization change, ensuring that everyone has access to clean,
in India modern energy, and recovering economically from

● Mapping India’s energy COVID-19.

policy towards net zero

For the federal and state governments, energy is a
emissions
significant source of revenue. The predicted INR 699,565
● Draft Electricity Rules, 2021
crore (USD 94 billion) total energy revenue for the center,
to push green energy use in
states, and UTs in FY 2020 is almost 17% of all government
industries
revenue. Oil and gas account for 83% of energy earnings,
with just two taxes accounting for the majority of this
income:

● The central fuel excise

● State-level VAT

Additionally, the combined contribution of coal and

electricity is 16%, and the contribution of renewables is
less than 1%.

The proportion of profits generated by fossil fuels will

decline as the energy transition proceeds, necessitating

133 National Energy Policy

initiatives to diversify revenue streams. Energy
costs should be fully reflected in energy pricing for
optimal economic efficiency, delivering signals that
affect consumers and producers.
Support has an impact on the rate of development
of the energy sector. It can take many different
forms, such as:
● Subsidies
● The investments made by state-owned energy
companies (or public sector undertakings
[PSUs])
● The lending provided by public financial
institutions (PFIs)
An equitable transition can be
achieved by compensating
disadvantaged people,
encouraging producers
to invest in dependable,
clean energy, and assisting
consumers in gaining access
to affordable energy. However,
poorly planned support can
impede progress and unduly expose
public institutions to the risk of stranded
assets, especially when it is supporting fossil fuels
that are becoming less and less competitive.
Today, as the nation considers a new investment
paradigm, it is necessary to take into account the
synergy between social security programs and the
use of clean energy.
At the 2021 Paris Climate Accord discussions,
the government of India declared to achieve net-
zero greenhouse gas emissions by the year 2070.
The goal of installing 500 GW of non-fossil power
capacity by 2030 was again reiterated. This is an
increase from the non-fossil capacity of 159 GW in
February 2022.
We need to:
● Continue the socially responsible phase-out of
support for fossil fuels in order to align support
with 2030 targets and net-zero.
● Introduce fresh assistance as required to achieve
renewable energy goals and guarantee a fair
transition.
● Create a body including appropriate ministries,
departments, and expert organizations to
coordinate actions regarding support,
taxation, and price for energy.
As the government develops
more comprehensive net-zero
policy frameworks, it should
expressly state the role that
taxation plays in establishing
accurate and dependable
carbon pricing, as well as the
social protection required to
reroute funds to the underprivileged
and disadvantaged.
Green Energy Policy Initiatives for
Large-Scale De-carbonization in
India
India has set a goal of becoming net-zero by 2070 in
recognition of the need to address climate change.
Along with the overarching objective for 2070, the
nation has also established the following goals for
2030:
● Use renewable energy sources to meet 50% of

134 National Energy Policy

 your energy needs.
● Achieve a 500 GW non-fossil fuel capacity.
● Cut down on 1 billion tonnes of carbon emissions.
● Reduce carbon intensity by 45%.
The government’s commitment is demonstrated by
major policy efforts like the green hydrogen policy,
the offshore wind policy, the promotion of electric
vehicles, the creation of a green day-ahead market,
and the lowering of conditions for open access to
purchase green energy.
Despite the push, India now relies mostly on coal
and crude oil for its energy needs. To replace these
with clean energy sources, large investments would
be necessary.
India’s economy is anticipated to grow at one of the
fastest rates worldwide. India would need 3.5 trillion
units (TUs) of energy by 2036–2037 to support a
7.3% economic growth rate, as opposed to 1.37
TUs in 2021–2024, according to estimations from
the Central Electricity Authority (CEA).
Consequently, having access to affordable,
dependable energy would be a requirement in order
to guarantee India’s high rates of economic growth.
Policy Considerations for De-Carbonization
There are many options for pursuing India’s 2070
net-zero objective without compromising on
significant economic growth. Renewable energy
sources like wind and solar must be supplemented
with other energy sources like gas and supported
by storage devices due to their variability and lack
of 24-hour energy availability. As a result, policies
to reduce carbon emissions must follow the
criteria of dependability, affordability, and energy
135
independence.
Energy Independence: India’s economy is
vulnerable to fluctuations in international energy
costs because it imports the majority of the primary
energy it needs. Through programs like production-
linked incentives (PLI) in goods other than solar
panels and advanced chemistry cell (ACC) batteries,
the government needs to think about developing
local capabilities across the clean energy value
chain.
Innovation: India’s objective of going net-
zero presents both financial and technological
difficulties. Based on technical decisions, a
number of viable routes exist to assist the nation
in achieving its net-zero aim. But further cost-
effective developments are needed for widespread
commercial utilization. Policies should establish
the proper incentives for innovation rather than
forecasting the future or focusing on a select few
technologies and power sources.
Creating Markets: India-specific carbon markets
will motivate the adoption of green technology
and energy. The majority of companies currently
use the open access model, which involves buying
green energy directly. The grid might become more
complicated if these strategies are widely used.
Policies that encourage decarbonization and handle
the complex needs of the energy system through
National Energy Policy
market-based prices are the need of the hour, along
with policy initiatives like green open access.
Mobilizing investment: India would require a sizable
amount of cash as it moves toward net-zero. By
2070, the current projections indicate a significant
investment of roughly US$10.1 trillion. Even though
the projections could change, authorities still need
to think about how to raise the necessary funds.
Strategies to Ensure Large-Scale De-carbonization
in India
Any choice should adhere to two requirements:
● One, there is a critical need for
government energy delivery policies
to be technology-neutral.
● Second, it must continue to
encourage the creation and
execution of green energy
initiatives.
The following tactics are desired
for India’s extensive decarbonization
program:
● Increase the production of renewable energy
sources, such as offshore wind farms, supported
by machinery made in-country under various
production-linked programs. Policies should aim
to reduce the amount of embodied carbon in the
equipment while creating incentives.
● Develop carbon capture technology for utilizing
coal-based energy, which is the country’s main
domestic source of energy and the largest.
● Promote innovative and effective storage
solutions to make it easier to use renewable
energy. The usage of energy storage systems to
136
be operated as part of generating, transmission,
and distribution or as standalone energy projects
has been outlined by the Ministry of Power.
● Hasten the environmental approval process so
that viable pumped-storage hydropower (PSH)
projects can be implemented. Separate guidance
for PSH projects by the Ministry of Environment
and Forest and Climate Change will be helpful.
● Use more of the current natural gas-based power
generation capacity and take advantage of
natural gas’ flexibility in energy delivery and low
carbon footprint.
● Encourage the use of green hydrogen by using
demand-side policies and incentives to reduce
costs, such as production-linked
incentives for electrolyzers, while
keeping in mind that the switch
from blue/grey to green hydrogen
might take place in the future.
● Establishing
standards for smart grids
will aid in their implementation.
Develop mechanisms that permit
cost-sharing between consumers,
power producers, discoms, and
state governments while focusing on
expanding the capacity of discoms.
● Take steps to make the electrical grid a more
decentralized system that can move electricity in
both directions rather than a centralized one-way
carrier.
● By creating carbon markets and streamlining
green open access, encourage large commercial
and industrial energy consumers to pursue
decarbonization activities.
● Encourage green financing by creating a
framework for financing the investments and a
uniform green taxonomy.
National Energy Policy
Mapping India’s Energy Policy Towards
Net Zero Emissions encourages a responsible transition in support
India intends to achieve net-zero emissions by
2070 and to meet 50% of its electricity needs from
renewable sources by 2030. This is a turning point
in the global effort to fight climate change. India is
setting the bar for a fresh approach to economic
growth that could:
● Steer clear of the carbon-intensive strategies
that several nations have already used.
● Offer a model for other emerging economies.
transparency, generates accountability, and
away from fossil fuels and toward clean energy by
taking a look at how the Government of India has
funded various sources of energy from FY 2014 to
FY 2021.
India is in the third position globally for annual
CO2 emissions due to the significant increase
in the country’s use of fossil fuels. However, the
emissions per person in India are the lowest in the
world. The same is true for energy use: the typical
Indian household uses ten times less electricity
than the typical American household.

The extent of the change in India is

India’s energy demand is forecasted
amazing. Over the past two decades,
to grow significantly in the coming
the country has witnessed
decades as a result of its large
significant economic
population and vast potential
development. The urban
for economic development.
population is rapidly growing
In order to achieve the goal
in the country. Therefore,
of net-zero emissions by
there is a significant need
2070, a significant portion of
for extensive development of
this increased energy demand
new structures, industry, and
must be met through low-carbon
transportation systems.
sources in the current decade.

Up until now, coal and oil have played an

Therefore, it is understandable that Prime
important role in India’s economic development and
Minister Narendra Modi will propose more
modernization. These resources have supported
challenging goals for 2030, such as:
many Indians with access to contemporary energy
services. For the previous ten years, this has
● Installing 500 gigawatts of renewable energy
included adding new energy connections for 50
capacity
million people annually.
● Reducing the emissions intensity of its economy
The government’s energy income and carefully by 45%
crafted energy support measures—subsidies, ● Reducing a billion tonnes of CO2
investments by public utilities, financing by public
finance institutions—play a critical role in India’s There is no doubt that these goals are difficult to
transition to clean energy and reaching net- achieve, but the shift to renewable energy in India
zero emissions by 2070. The policy facilitates
137 National Energy Policy
is now well underway. The country has already met ● As the third-largest energy importer in the world,
40% of its power capacity from non-fossil fuels, tight markets are raising concerns about energy
and the share of solar and wind in India’s energy security.
mix has increased enormously. It has exceeded its
● Many users lack sufficient access to dependable
commitment made at COP 21- Paris Summit.
electricity.

● The continued use of traditional fuels for

India has made significant progress in reducing
cooking endangers the health of many people
the costs of solar power through technological
unnecessarily.
advancements, supportive government policies,
and a robust private sector. As a result, the cost of ● Financially struggling electricity distribution
building solar power facilities is now cheaper than companies are hindering the urgent
that of coal-fired power plants. India is leading the modernization of the sector.
way in renewable energy with the largest market
● Due to heavy pollution, Indian cities now have
and the fastest growth rate, and it is projected that
some of the worst air quality in the world.
new additions to solar capacity will triple by 2026.
● Policy measures in place.

The nation aims to expand the use of contemporary

If fully implemented, existing policies in India could
bio-energy throughout the economy and is one
accelerate the shift towards cleaner and more
of the largest producers of this type of energy in
efficient technology and address some of the
the world. India is predicted to surpass China and
challenges.
Canada in the coming years to overtake the United
States and Brazil as the third-largest ethanol market
● In the early 2010s, subsidies for gasoline and
globally.
diesel were eliminated, and in 2019, incentives
for electric vehicles were established.

● India’s effective program for energy efficiency

has been successful in cutting back on energy
use and emissions from major industries,
transportation, and buildings.

● Government initiatives to supply fuel gas to

millions of homes for heating and cooking are
enabling a steady shift away from the use of
conventional biomass, such as burning wood.
Challenges
● India is also setting the stage for the expansion of

● The country aims towards net zero, and therefore, significant emerging technologies like hydrogen,

it must overcome a number of urgent short-term battery storage, low-carbon steel, cement, and

obstacles. fertilizers.

● Due to the substantial rise in commodity costs,

energy is now more expensive.

138 National Energy Policy

Transition to Clean Energy
A move towards clean energy is a significant
economic opportunity. India can ideally lead in
green hydrogen and renewable batteries around
the globe. By 2030, India may have a market for
low-carbon technologies valued at up to $80 billion.
India needs the support of the international
community to shift its development onto a low-
carbon trajectory. According to the IEA, the Indian
energy industry will require, on average, $160 billion
annually between now and 2030 to reach net-zero
emissions by 2070. That is three times the level of
investment made today.
To achieve net zero, access to low-
cost, long-term capital is essential.
In this case, achieving net
zero involves more than just
reducing greenhouse gas
emissions. India’s need for an
energy transition is:
● For the benefit of its people
● Effective policies that reduce the
likelihood of sacrificing cost, security,
or sustainability.
The role of green hydrogen: It will be crucial in
achieving net zero and decarbonizing industries
with the highest carbon emissions. India wants
to become a leading producer and exporter of
environmentally friendly hydrogen.
India could easily replace grey hydrogen in refineries
and the fertilizer industry by creating a 5 million-ton
green hydrogen demand. As a result, 28 million
tonnes of CO2 will be reduced. This percentage will
increase as the green hydrogen economy prospers,
139
and by 2050, it will have prevented 400 million
tonnes of CO2 emissions.
India is a developing economy with a population
of over 1.3 billion. Therefore, the objectives for
climate adaptation and mitigation will support not
just India, but the entire world. In order to help India
develop, industrialize, and improve the quality of life
for its population without carbonization, NITI Aayog
and the IEA have committed to working together.
Recommendations
● Coordinate assistance with 2030 goals and net-
zero.
● Continue the socially appropriate
phasing out of fossil fuel support.
● Introduce fresh assistance
as required to achieve renewable
energy goals and guarantee a
fair transition.
● Create a body including
appropriate ministries,
departments, and expert
organizations to coordinate initiatives
related to energy support, taxation, and
pricing.
Shift Subsidies
● Create a National Electricity Council to serve
as a forum for discussing matters related to
the power sector and grant it the authority
to facilitate discussions between the federal
government and the states regarding the reform
of electricity subsidies. This includes directing
subsidies towards low-income consumers
and exchanging subsidies for environmentally
friendly agricultural methods.
National Energy Policy
● Ensure that any LPG subsidies are targeted and fuels.
linked to funding for the development of non-
fossil cooking technology. Use Taxation Strategically

● Develop a plan and schedule for responsibly

● During a time of rising fossil fuel prices, it is
reforming coal subsidies, such as shifting
subsidies from the input (coal) to the output
(affordable electricity service).
● Determine the level of assistance required to
achieve sustainable energy goals, especially for
new and emerging technologies, and provide it.
advisable to allocate significant funds for two
purposes: improving social safety nets and public
services to reduce living expenses, and providing
public support for clean energy, including an
equitable transition, to reduce volatility and
enhance security in the medium term.

● As the government develops more comprehensive

Diversify PSUs
net-zero policy frameworks, it should clearly
articulate the role of taxation in establishing
● Ministries should compel energy PSUs to
accurate and consistent carbon pricing,
diversify into renewable energy
as well as the social protection
and amend CSR policies to
measures necessary to redirect
specifically encourage
funds to the underprivileged
support for sustainability
and disadvantaged.
and a just transition.

● Public utility companies

Improve Transparency –
should increase their
investments in sustainable
●To facilitate more
energy while creating net- coordinated decision-making,
zero roadmaps for the phase- ministries, departments, PSUs,
out of fossil fuels. and PFIs should improve reporting
on support for energy.
Shift Public Finance

Draft Electricity Rules, 2021 to Push

● Ministries should enhance lending targets for the
Green Energy use in Industries
renewable energy sector in accordance with the

stated policy objectives.

● To reduce the current high levels of exposure to
fossil assets, PFIs (Public Financial Institutions)
in India should promptly cease new primary
public financing for coal thermal power or
mining, except for decommissioning and a just
transition. PFIs should also develop a strategy
for managing potential stranded assets and
gradually phase out public financing for fossil
140
India has come up with a new set of regulations
called the “Draft Electricity (Supporting Renewable
Energy through Green Energy Open Access)
Rules, 2021.” This will support the purchase and
consumption of green energy, including electricity
from waste-to-energy plants. The proposed
regulations aim to encourage a quicker uptake
of renewable energy by addressing a number of
National Energy Policy
issues surrounding the green energy industry. The Energy Federation of India (NSEFI), the umbrella
Union Power Ministry has posted the regulations organization for all solar energy players in India.
online and requested feedback from all interested If properly implemented, they will offer crucial
parties. assistance for the expansion of renewable
energy to meet the 2030 target.
● According to the proposed regulations, green
energy is defined as electrical energy produced India has surpassed the 100 GW threshold and has
from renewable sources for customers, including set a goal of installing 175 GW of renewable energy
businesses with loads of 100 kW (kilowatts) or by the year 2022. India ranks fifth in the world in
more. terms of installed solar capacity, but we are still
falling behind when it comes to corporate solar
● The proposed rules state that all obligated
(or renewable energy) buying. A paradigm change
businesses, including distribution licensees,
in India’s private renewable energy purchase could
open access customers, and captive power
result from the provisions in this draft, which would
consumers, would be subject to a single
also benefit MSMEs’ customers.
Renewable Purchase Obligation (RPO). The RPO
is a system established by the Electricity Act
of 2003 that requires large users to acquire a
specific proportion of their total electricity needs
from renewable energy sources.

● According to the draft regulations, “any entity

(whether required or not) may elect to purchase
and consume renewable energy as per their
requirements,” whether it be through in-house
production of renewable energy, open access
to renewable energy from any developer, the
purchase of renewable energy certificates, or the
purchase of green hydrogen.
● The proposed regulations also state that the
appropriate Commission would set the green
energy tariff, which “may comprise the average
pooled power purchase cost of the renewable
energy, cross-subsidy charges (if any), and service
charges covering all prudent costs incurred by
the distribution licensee for the provision of the
green energy.”
● The draft guidelines from the electricity ministry
are “a good move for renewables in the country,”
according to a statement from the National Solar
141
The guidelines also state that there would be no
cap on the number of power plants that might be
installed using renewable energy sources, but the
electricity they produce must be used by them
directly rather than being sent into the power grid.
The draft rules state that “Distribution Licensee
shall not be liable to acquire such energy.”
The purpose of the most recent regulations appears
to be to encourage large-scale energy consumers,
especially industries, to source 100% of their energy
from renewable sources.
● The draft regulations state that when purchasing
power from distribution firms, any business
National Energy Policy
 could choose to “purchase green energy only up green hydrogen to satisfy their Renewable
to a particular percentage of the consumption or Purchase Obligation (RPO), but they add
its whole use.” a clarification that “the quantum of green
hydrogen would be computed by considering
● The proposed regulations specifically state
the equivalence to the green hydrogen produced
that the Commission must also establish
from one MWh of electricity from the renewable
rules to provide “Green Energy Open Access
sources or its multiple.”
to Consumers who are Willing to Consume the
Green Energy,” but they also make clear that
The production of green hydrogen, or hydrogen
only consumers who have contracted demand/
produced using power from renewable sources, is
sanctioned load of 100 kW and above shall be
currently a high priority for the Indian government.
eligible to take power through this system.
The Union Power Ministry said in June 2021 that
● According to the regulations, “the supply of
regulations for a “green tariff” policy are being
electricity for captive consumers using power
developed. This policy will enable electricity
under green energy open access shall not be
distribution companies to provide electricity from
limited.” They state that the central government
clean energy projects at a lower cost than power
must notify a “central nodal agency” that will
from conventional fuel sources.
run a single-window open access system for
renewable energy. The government is encouraging green hydrogen,
● The proposed regulations state that any according to the electricity ministry, by imposing
consumer, including industries, can purchase “obligations for fertilizer and refining companies
(green hydrogen purchasing obligations).”

142 National Energy Policy

Summary

● With growing worries about the nation’s energy security, the role of new and renewable energy has been
gaining more relevance recently.

● The research and implementation of alternative fuels, including hydrogen, biofuels, and synthetic fuels, as
well as their applications, are required to help close the gap between local oil production and demand and
reduce reliance on oil imports.

● India is utilizing more renewable energy sources like wind, hydro, solar, geothermal, bio, and tidal power to
supplement fossil fuel-based electricity generation in order to boost the share of clean energy. Additionally,
it would help achieve cost-effective, practical, secure, economical, and dependable energy supply solutions.

● India has proposed new regulations to reduce emissions and combat climate change, including requiring
its companies to utilize a certain percentage of renewable energy. The recommendations would take
effect by amending India’s 2001 Energy Conservation Act, which aims to promote renewable hydrogen as
a substitute for the fossil fuels currently used by businesses.

● According to a statement from the power ministry, the proposed revisions would make it easier for India
to build a carbon market and set minimum requirements for the use of renewable energy, either directly
or indirectly through the grid. “This will assist in reducing fossil fuel-based energy usage and atmospheric
carbon emissions.”

143 National Energy Policy

 Unit 16

Politics of Green Energy Policy

Learning Objectives Introduction

By the end of this unit, you will be It is a matter of concern that economic expansion
able to understand: may surpass the planet’s ability to sustain it due to
● Green energy policy: Role of the approaching risk of severe global warming and the
governments negative effects of poor environmental management.

● Desirable conditions for green

The transition to sustainability necessitates a significant
energy policy
overhaul of economic institutions, technologies, and
systems. To achieve this, it is essential to understand
the concept of ‘green energy policy,’ a policy initiative
intended to align a nation’s energy sector structure with
the requirements of sustainable development within set
planetary bounds.

Governments must be proactive, but they cannot, by

themselves, bring about change at the necessary scale
and pace. They need to work together with non-state
actors to foster a transformational process where political
capture is reduced, as well as to ensure that gains and
costs are optimized and distributed fairly.

In other words, handling political-economic concerns

usually implies managing opposing interests and dealing
with more or less powerful individuals who want to gain
influence.

144 Politics of Green Energy Policy

Green Energy Policy: Role of
Governments learned to bring about structural change in the
Regulation, subsidies, and tax incentives are just
a few of the policy tools that are utilized today to
guide economic activity toward environmental
sustainability. Industrial policy has been used
for years to start and facilitate structural
transformation, so this is not illogical.
In reality, a key objective of industrial policy, tying
environmental preservation to competitiveness,
may help win over supporters. According to studies,
implementing a green transformation can really
depend heavily on the alignment of interests that
go beyond environmental conservation.
The execution of industrial strategy during the
previous few decades has taught us many valuable
lessons. The prevailing tenets of industrial policy
are:
● Enabling experimentation driven by the private
sector in search of new technologies
● Paying attention to the competitive distribution
of money
● Monitoring and assessment
● Instruments for codifying and learning policies
systematically
● Sharing funds with the private sector
145
The goal at this point is to apply what has been
direction of the green transformation. However, for
government intervention to be truly revolutionary, it
must go beyond the typical restrictions imposed by
“traditional” industrial policy.
Contrarily, industrial strategy as we currently
understand it has promoted competitiveness along
well-established technical trajectories. Technology
diffusion has been left to the market, even though
innovation has been encouraged. Supply and
demand are mainly taken for granted, and market
forces have influenced the choice of particular
technologies.
Contrarily, environmental concerns are now
necessitating the purposeful disruption of old
channels in favor of new, sustainable ones.
Supporting diffusion of low-carbon technology,
such as via establishing markets, as well as
innovation in this area will be necessary.
Governments must work to sway public opinion
and alter (unsustainable) consumption habits.
In emerging economies, middle-class families
often adopt lifestyles similar to those in
industrialized nations. This further contributes to
the issue of unsustainable consumption patterns.
Governments should therefore create additional
and fundamentally new policy instruments in
addition to taking a more active role in directing
markets.
The phrase “green industrial policy” is quickly
gaining popularity in this sense, extending beyond
the energy industry. It has recently been incorporated
into internationally agreed agreements (United
Nations Conference on Sustainable Development,
2012) and is rapidly being used by international
Politics of Green Energy Policy
organizations as well as economic development
and policy scholars.
Governments cannot allow the green revolution on
their own; thus, expecting them to do so would be
unrealistic, given:
● The complexity of this undertaking
● Its effects on the economy and society at large
● The political dynamics that such a process
unleashes
Therefore, governments must coordinate their
efforts with nonstate entities. The government
has the authority to control, tax,
subsidize, or invest. In addition,
there are nonstate change
agents in business or society.
These actors may be in favor
of or against change.
Economic nonstate entities
are particularly important to the
transition to a green economy.
Investment requirements for a 2C
scenario were projected by the World
Economic Forum to be US$5.7 trillion
annually in 2013. Significant changes in the context
of economic actors’ decision-making are required
to attract such investment.
By altering incentives, which would move profit
opportunities from polluting to clean investments,
government actors can expedite this transition.
However, there will always be factions trying to
sway such shifting in their favor when there is
redistribution of profit prospects. Similarly, there
will always be losers because transformation is
rarely a win-win situation. Resistance to change is
146
the inevitable outcome.
Governments will be lobbied by different interest
groups if they are in charge. Rent-seeking and
political capture are risks associated with this.
These interests must be controlled in a way that
prevents inefficiencies and excessive windfall
gains for the green transition to thrive.
Desirable Conditions for Green Energy
Policy
Here’s the corrected version of the text with
improved grammar:
Three key conditions must be met for
a green energy policy to succeed:
● Efficiency
● Effectiveness
● Legitimacy
A balanced institutional
environment that balances the
embeddedness and autonomy
of governments in relation to the
private sector is essential for an effective
policy. By including market mechanisms in policy
design, which is defined here as achieving given
policy goals at the lowest possible cost, policy
efficiency can be increased.
However, we contend that a project as intricate,
extensive, and long-term as the transition to green
energy should also be accepted. The many facets
of legitimacy necessitate community agreement
on:
● A long-term plan for attaining the specified
objectives
Politics of Green Energy Policy
● Accepting the expenses associated with policy lobbying or outright corruption could be better used
incentives (both in terms of subsidizing sunrise elsewhere.
sectors and compensating sunset sectors)
Green energy programs become more effective and
● An equitable allocation of both the benefits and
legitimate by decreasing the likelihood of capture.
the expenses (through, e.g., compensation as an
instrument of burden sharing)
Broad Agreement on the Direction of Change

Legitimacy, efficiency, and effectiveness are

The implementation of a green energy strategy takes
intertwined and cannot be implemented separately.
place in a setting with both significant uncertainty
All of these necessitate state-nonstate actor
and extensive time horizons. Furthermore, winners
interaction, mostly but not only in the economic
and losers are an inevitable part of economic and
domain. Additionally, they have four common
social reality, as are conflicts and controversies
underlying causes, which are:
based on frequently incompatible goals of various
societal groupings. These factors call for the
● Broad societal agreement on the
initiatives of the green transformation to
direction of change
be highly legitimate.
● Change alliances

● Systematic policy learning Regarding the long-term vision

of the transformation, broad
● The use of market
stakeholder consensus is
mechanisms to manage
required, for example, when
policy rents and political
it comes to shutting down
capture
some options and promoting new
industries (as seen with Germany’s
These elements support legitimacy,
decision to abandon nuclear energy
efficacy, and efficiency in various ways.
and make significant investments in
Societal consensus on directionality
renewable energy technologies). Such an agreement
gives transformative policy legitimacy and boosts
should create long-term policy frameworks and a
its efficacy. These odds can be improved by change
sufficient level of policy “directionality.”
alliances since less powerful actors can band
together to assist the shift.
Policies in favor of renewable energy put more
pressure on future governments to follow the same
Openness to policy learning improves both
course by transforming entire markets, lowering
efficiency and effectiveness. Incorporating market
prices, and opening up lucrative investment
elements—such as rivalry among beneficiaries—
opportunities. Investment, in turn, greatly depends
improves efficiency by eliciting data on ideal prices
on the stability of institutional frameworks over the
and streamlining resource allocation. Additionally,
long term.
it can aid in preventing political capture, which is
fundamentally ineffective because money spent on

147 Politics of Green Energy Policy

It is impossible to fairly handle the issue of forging
a consensus on the most promising revolutionary
technologies, institutions, and policies without
conversations involving the entire spectrum of
stakeholders, ranging from:
● Government agencies to business
● Trade unions
● Consumer organizations
● Civil society
● The research community
Social inclusion and fairness are also essential to
guaranteeing legitimacy when it comes to bearing
the additional costs of the green transformation.
Long-term support can only be maintained when
the essential burden sharing is perceived by
different demographic segments as equitable. The
equitable distribution of rewards is also crucial for
ensuring legitimacy.
A good example is Morocco, a nation that heavily
relies on energy imports and is actively working
to green both its energy mix and its economy.
Morocco’s government has taken steps to establish
a sustainable future by developing a plan for green
growth, collaborating with various stakeholders,
maximizing the benefits of green investments
across multiple sectors, phasing out subsidies for
fossil fuels, and addressing the needs of vulnerable
populations.
148
Change Alliances
The green transition is a massive project that is
extremely ambitious, uncertain, and complex.
Alliances across the governmental, corporate, and
civil sectors are crucial for promoting the change
because “no single player has the resources to
bring about the green transformation.”
These partnerships can be considered as vehicles
for combining various interests for a certain goal,
such as:
● Influencing legislation
● Influencing policies
● Influencing technological projects
Heterogeneous change alliances frequently
function in shaky networks and are undoubtedly
challenging to organize. However, in “particularly
conflictual negotiation scenarios, the identification
of previously unidentified ‘win-win alternatives’
may make all the difference between a policy
impasse and effective action.” So, expecting
shared advantages from the green revolution would
actually make cooperation easier.
The German energy transition, for instance, has
been fueled by:
● Civil society advocacy organizations that
genuinely promote sustainability
● Progressive business groups predicting the
expansion of green markets
● Both employers and labor unions in companies
that are creating new jobs, such as the wind
and solar energy sectors, or in the electronic
and chemical industries that export specialized
components to global green industries.
Politics of Green Energy Policy
● Municipalities and regional administrations Co-benefit magnitude is influenced by a number of
striving to strengthen decentralized power variables, including:
structures
● The level of low-carbon technology deployment
Positive forces that might drive dramatic change
● Existing technological capabilities
are frequently mobilized by placing a strong
● State capacity to develop and implement
emphasis on the side effects of going green. Co-
coherent long-term strategies
benefits extend beyond the realm of commerce.

Measuring and capturing co-benefits from greening

They are categorized by the Intergovernmental
can impact:
Panel on Climate Change (IPCC) into:

● Investment decisions
● Economic benefits (e.g., energy security, local
employment) ● Individual behavior

● Social benefits (e.g., energy access, ● The priority setting of policymakers

health impacts)
Therefore, these co-benefits
● Environmental benefits (e.g.,
must be taken into account
decrease in air pollution and
from the start of any effective
water use
green energy program. They
serve as the cornerstone
Particularly, the effects on
of large coalitions, which
employment have been
are essential for political
important justifications for
advocacy campaigns.
the green transition. There is
evidence of good employment
Systematic Policy Learning
impacts in low-income developing
countries, despite the fact that the majority
Systematic policy learning is the third
of “green jobs” are created in OECD nations and
essential component for effectively implementing
emerging economies like China and Brazil (UNEP,
green energy legislation. Green energy policy is
2008) (Asian Development Bank, 2013).
arguably highly contextualized and necessitates
the skillful synthesis of tools tailored to the current
Another defense is that current energy services are
socioeconomic circumstances and institutional
accessible. However, the price and dependability
features of a certain country.
for the underprivileged must be taken into account
when evaluating the performance of energy access
The complexity of the green revolution also
programs. Even though some of these benefits are
necessitates systematic and ongoing learning.
hard to measure, their long-term repercussions and
Last but not least, to achieve the required speed of
economic spillover effects may pave the way for
transition, policies must evolve more quickly and, in
new development opportunities.
some situations, innovate.

149 Politics of Green Energy Policy

We contend that systematic policy learning has to
focus on two key areas:
● Learning from others over time
● Policy experimentation
A cyclical strategy that regularly analyzes and
revises goals and accomplishments might support
these characteristics.
The ramifications for those involved in policymaking
are not insignificant because such a method of
policy formulation necessitates a change from
linear to complex adaptive systems-based thinking.
Recent research has investigated how
to develop an efficient policy process
for addressing complicated issues.
The World Bank’s “learning
spiral” is one of the most
persuasive methods for
incorporating learning into
policy formulation. An iterative
process, characterized by feedback
loops, forms the foundation of this
approach. At its best, it allows for
the incorporation of new information in
decision-making and provides the ability to adjust
previous goals and objectives to accommodate a
constantly evolving environment.
Agents serve as “learning brokers” or facilitators in
this process, and they are in charge of:
● Framing the knowledge
● Facilitating the ongoing revision
● Moderating the interactive learning procedures
● Facilitating dissemination of new knowledge
150
To further improve learning, a number of
policymaking methods must be applied, including:
● Scenario planning
● Technology foresight exercises
● Value-chain analyses
● Systems mapping
● Growth diagnostics
It is becoming increasingly understood that
policy experimentation is essential for addressing
challenging development issues. This is mostly
attributable to the growth of emerging economies,
which also stems from the adoption
of unconventional policy strategies
that combine market forces with
governmental leadership. The
willingness to try new things is
especially evident when trying
to influence future sustainable
development patterns.
For instance, model cities are
growing in emerging economies and
exploring new forms of low-carbon
infrastructure for:
● Energy-efficient buildings
● Public transport
● Infrastructure for scaling up the use of electric
vehicles
● Waste recycling
In the absence of uniform and legally binding global
environmental policy frameworks, international
networking and knowledge-sharing among change
agents can significantly advance the creation and
acceptance of sustainable alternatives.
Politics of Green Energy Policy
Despite the triumphs of the global South in policy
innovation, industrialized nations are only just
beginning to learn from “Southern” ideas. The use
of renewable electricity feed-in tariffs is one area
in particular that supports such South-North policy
learning (FiT). Despite being developed in wealthier
economies, the technology has found widespread
use and improvement in developing nations.
Many different auctioning strategies have been
used with considerable success. By testing the
market before awarding subsidies, auctioning
enables the determination of tariff levels in a free
market.
Aside from the United Kingdom, emerging
economies like China, India, Brazil, and South
Africa have used auctioning most frequently. Many
of these cases were quite successful in increasing
the capacity for renewable energy sources and
securing a supply of electricity at a cheap cost.
The Case of India: We can find interesting examples
of systematic policy learning throughout time. In
India, there were more than 270 million individuals
without access to power grids in 2014. Here, power
interruptions are common (World Bank, 2017), and
even if prices are heavily subsidized, many users
lack the means or motivation to pay for electricity.
However, the potential for solar energy is huge in
India.
151
In order to do this, the government established the
National Solar Mission in 2012 with the aim of:
● Increasing the capacity of grid-connected solar
power generation from 0.1 GW to 20 GW, plus 2
GW off-grid, by 2022.
● Lowering costs to achieve retail grid parity.
India was successful in attracting significant
investments in solar power facilities despite the
myriad structural issues with its energy sector. The
installed solar capacity rose to nearly 13 GW in just
5 years (Ministry of New and Renewable Energy,
2017). The cost of solar energy also decreased
below the cost of newly constructed coal capacity,
which was made possible by extremely successful
and competitive reverse auctions for 25-year Fit.
The government first tested the market with
tenders for small projects. This was done since
it was impossible to predict at what price per
kilowatt-hour businesses would invest in solar
power facilities. The bids from project developers
were requested to include the tariff rates at which
they would be willing to make an investment. The
lowest-priced bids were chosen by the government.
Then it organized a subsequent bidder call for
larger projects, requesting lower bids than the initial
proposal, and so forth.
The cost per kWh had decreased during the first
year of repeated auctions, from 0.27 to 0.11 euros.
Bids have decreased to 0.04 euros by 2017. Parallel
to this, contract language and bid requirements
evolved over time to take into account lessons
learned from earlier bids.
The government also took note of failed European
auctions when investors placed modest bids and
then broke their agreements. Bidders had to make
Politics of Green Energy Policy
bank deposits in order to prevent engaging in such created by the private sector.
so-called risky bidding, which they would forfeit if
● Introducing standards gradually by enticing the
they failed to fulfill their obligations.
private sector to adopt voluntary standards, which
are then made obligatory once manufacturers
In the end, the National Solar Mission was
and consumers have had time to adjust.
successful in terms of generating investment and
lowering tariffs because of its clearly defined aims,
The targeted policy issue, as well as the national
sequential approach, and built-in protections.
circumstances, influence the choice of the
appropriate policy tool. The control of rents and
Designing an efficient auctioning system is a
the threat of political entrapment are crucial in
possible option for improving FiT systems that, in
the development and implementation of these
some European nations, have not been as effective
strategies.
as first anticipated, given the diverse experience
gathered and lessons learned in these rising
Managing Policy Rents: Given the numerous market
markets.
failures, massive upfront investments are
necessary for the transition to green
Integrating Market Mechanisms
energy and must be enforced by
in Green Energy Policies
legislation. To put it another
way, it is necessary to lower
“The utilization of market
revenues from unsustainable
mechanisms is the final
economic practices while
fundamental aspect that
creating policy rents to
contributes to a successful
artificially make these
green energy strategy. The
investments attractive.
possibility of capturing and
spreading private advantages
Thus, managing policy-induced
will be reduced the more competitive
rents entails creating (or eliminating)
market-based processes and initiatives from
incentives that lead economic players to
the private sector are incorporated into the design
momentarily produce profits above (or below) what
and execution of green energy policies.
the market itself would permit. Incentives must be
tailored to create the best possible conditions for
This could entail:
encouragement without going overboard.

● Including competitive bidding in strategies for

The risk of providing incentives that are too
green subsidies.
generous is that they will encourage wasteful
● Conducting new technology trials in public- resource allocation and lead to behavioral
private partnerships. patterns that make rent-seeking the main goal of
● Setting performance standards for comparable investment, which will stifle the entrepreneurial
items based on the most effective product spirit of innovation.

152 Politics of Green Energy Policy

Policy rents can undoubtedly be an effective ● Poorly developed government capabilities
instrument and have the potential to develop into
● Weak monitoring systems
a strategic resource for bringing about structural
● Insufficient transparency
change when planned and implemented in the best
possible way.
The European Emissions Trading Scheme, for
instance, has demonstrated that political capture
Particularly when it comes to energy systems,
can also occur in settings with highly developed
policy rents have always played a significant
governmental capabilities. According to numerous
role. During the post-war decades, many nations
authors, the European Emissions Trading Scheme
favored coal-based regimes, while others invested
has been victimized by a variety of advocacy groups
in nuclear power during the 1970s and 1980s, and
with economic interests in promoting:
more and more nations have supported renewable
energy since the 1990s. There are many different
● The free allocation of permits
types of instruments.
● Exemptions and loopholes
Rents can be created by: ● The excessive issuance of permits

● Increasing costs (such as in Furthermore, in many nations,

the case of FiT for renewable incentives that are harmful to
energy sources) the environment go beyond
● Offering long-term loans at simple exemptions to outright
a discount support harmful activity.
Countries all across the world
● Offering subsidies for
are still significantly subsidizing
investments in certain emerging
fossil fuels, despite the fact that
technologies’ R&D
the discussion about fossil fuel
● Establishing a specific institutional or
reserves and stranded assets is gaining
physical framework for cooperative technology
momentum.
exploration activities.

Even though there is widespread agreement that

Managing the Risk of Political Capture: There is a
fossil fuel subsidies seriously impede the green
lot to learn about how to manage political capture
transformation process, cutting subsidies is
risk in state-industry interactions. In essence, it
notoriously challenging. Although policymakers
contends that strong interest groups can thwart the
defend fossil fuel subsidies on the grounds of
stated goals of incentive programs and sway the
justice and competitiveness, there is emerging
results of regulatory action taken by government
evidence that doing so has negative social,
agencies (typically through lobbying).
financial, and environmental impacts.

In situations where there is a lot of lobbying

Middle and high-income demographic segments,
pressure, the capacity to:
as well as other influential stakeholders such as

153 Politics of Green Energy Policy

energy-intensive companies and fuel distributors,
have especially benefited from fossil fuel subsidies.
These factors make tight collaboration between the
general public, the government, businesses, energy
producers, and international donors necessary for
subsidy reform.
Strong vested interests among these parties,
including those held by the government, trigger
complex political-economic processes. In cases
where reforms have been effectively implemented,
coalitions between diverse stakeholders have
formed, compensation programs have been
implemented, and intensive awareness campaigns
have been conducted (e.g., South Africa, Turkey,
Philippines).
The establishment of independent energy policy
agencies in certain countries has helped maintain
stability and continuity of reforms. Additionally,
better economic conditions and transparency in
decision-making have decreased resistance and
facilitated the formation of alliances.
However, reforms often fail due to the following
reasons:
● Lack of state capabilities to manage strong
opposition from interest groups
● Lack of public awareness regarding the size and
impact of subsidies
154
● Inability to form consensus among diverging
interests
In nations with the greatest need for subsidy
reform, political potential for reform is typically low
due to subsidies being used as tools of political
legitimization and weak channels for compensating
vulnerable income groups.
Second-best options for subsidy reform, such
as switching from fossil fuel to food subsidies—
which are easier to control, less detrimental to the
environment, and help reduce poverty—should be
considered where political credibility is low.
Given the significant possibility of political
entanglement and the high degree of uncertainty
and risk associated with green energy policy,
there must be equal requirements for open
implementation and stringent oversight.This can
be achieved, for instance, by:
● Creating roadmaps based on exercises in
inclusive technology foresight
● Regular performance reviews of entities in
charge of implementing policies
Such measures are crucial in situations where
institutional capacity is lacking and where checks
and balances need to be enhanced in order to
separate and assess various policy roles.
Politics of Green Energy Policy
Summary

● The role of a green energy strategy in directing a green transformation is crucial. Such a transition calls for
inventiveness and a rapid pace of innovation in both institutions and technologies.

● Economic history has demonstrated the value of the private sector in creating commercially viable solutions
for a variety of issues, sometimes with little or no assistance from the government but frequently with
significant public investment at precompetitive stages.

● Finding consensus on the broad contours of desirable societal change is thus the art of any policy aiming
at structural change, particularly in green energy policy. The private sector should be given incentives to
find the most practical and cost-effective solutions through regulations and rent management procedures.

● Less than ideal decisions are likely to be made due to the high risks and uncertainties involved. For this
reason, the significance of a logical and open policy-making process, ongoing systematic policy learning,
and choices for corrective action is paramount.

● The green transition provides fresh prospects and a plethora of side advantages, including but not limited
to security, energy access, job development, and competitiveness in new green sectors.

● Additionally, since the dynamics of change frequently feed off one another, efforts should be made to
foster constructive feedback loops. For instance, new information and communication technologies may
broaden consumer environmental awareness and the world’s knowledge networks.

● Future research in this area should focus on understanding the processes of co-evolutionary change
indicated earlier. Furthermore, country- and context-specific ideas for a green transformation call for
additional research.

● This is relevant in country-specific institutional conditions, such as when governments are ineffective
and markets fail. It also relates to the energy market environment, which has a significant impact on the
political economy of implementing green energy policies.

155 Politics of Green Energy Policy