Speaking on the outcomes of the recently completed World Summit on Sustainable Development (WSSD), P. Venkata Ramana, Managing Director, Clean Energy Group, Winrock International, USA, said that WSSD had shown that the environment cannot be viewed in isolation: it has to benefit the developmental process. He said that since that linkage has been established, the main focus of WSSD has really been on developmental issues. Earlier, providing clean energy services was seen as an end in itself. Now it is recognised as a means for actualising something else.

Clean energy must be provided and it must also contribute to rural development, human welfare and so on. These higher goals must be served by whatever is available — sustainable energy, sanitation, health services. These are all means to attain a more integrated, developmental process. In that sense, there is a critical qualitative difference between Rio de Janeiro and Johannesburg.

He reportedly said that WSSD generated a lot of hype but no specific targets were set. Targets cut both ways: without targets, it’s not clear what commitments donor countries will make and what’s to be done. One of the outcome of the summit was to cut poverty by half by 2050 which is laudable but vague.

Speaking on the outcomes of the summit Venkata Ramana said that the lack of clarity crept into WSSD. He was not sure of the commitments being made and who was putting in the money. And there was a lot of opposition from developed countries on setting very specific goals. On the issue of setting up goals he said that there was no meaning if the goals that have been set are not backed up with the resources. Goals are good only if followed up with money. In the absence of commitments, there is no particular sense in setting goals.

Speaking on promoting renewable energy technologies (RETs) he said that a large investment is not required. He said that the capital in carbon technologies runs into trillions of dollars but RE could start with modest goals. Right now, solar energy generates about 240 MW worldwide. If costing is done at $ 2 million per MW, that’s half a billion dollars, which is nothing in the overall energy sector context. I don’t think capital is a constraint in promoting RETs.

On the successful implementation of RETs by the Indian industry, he said that industries with captive power requirements could use RETs such as cement companies and textile mills. Sugar factories produce a lot of bagasse, which could be used with co-generation systems to cater to their own requirements and then export the rest to the grid. He said that a sugar factory crushing about 2,500 tonnes per day could set up a co-generation plant for 10 MW and use only 2 MW and export the rest. This could easily become a huge income-generating stream.

He said that it’s not true to say that RETs are focussed on rural areas. In the 1970s, with the oil shocks, the government and international donors took up the challenge of rural energy problems in a big way, so RE focussed on rural issues, and the biogas and improved cooking stoves programmes came into existence.

In the last 10 to 15 years, as technology has improved, they have been developed for generating power through biomass cogeneration and gasification by using wood, coconuts, rice husks, and so on. The progression of RETs is closely linked to technlogy improvements, lower costs and governmental policies. And in 1992, India became the first country in the world to set up a full-fledged ministry for renewable energy: the ministry for non-conventional energy sources.

Second, in terms of markets and government policies, the government has been the prime mover, it designed programmes, allocated and distributed resources, dealt with manufacturers and even dealt with consumers. The entire thing is still seen as a government programme. He said that market conditions were not really ripe for promoting these programmes on a commercial basis in rural areas.

Venkata Ramana said that RETs are expensive in terms of initially high capital costs despite no or low maintenance costs. Initially, the government set up subsidy schemes, but it also pushed RETs on a commercial basis through IREDA (Indian renewable energy development agency), which gives soft loans.

He said that the issue is not whether the government or private sector should do these programmes. He said that on one hand, there’s a government programme but there’s also an attempt to promote it commercially... There is no cohesive policy to really understand all the specific issues related to this.

Venkata Ramana recommended that there should be a national policy and even legislation, like the National Energy Conservation Bill. He said that there was a need for a national renewable energy policy to make it mandatory for utilities to produce a small part of their energy from renewables.

Secondly, to create an environment for entrepreneurs. He said that the government has done a lot, but it is still not adequate.

Thirdly, the government still seems to be the prime mover and there is no reason for this to be so. It should improve regulations, incentives, work on a tax regime and focus on research and development so these technologies become cheaper. Having both subsidies and commercial programmes side by side distorts the picture and confuses consumers.

On the Clean Development Mechanism (CDM) under the Kyoto Protocol, he said that the RETS have a lot of potential to benefit from the CDM. But under the CDM, project viability is ultimately determined by the price of a tonne of carbon replaced. Since the CDM is a market mechanism, projects with the cheapest carbon credits will attract those who want to buy those credits. So RETs have a disadvantage since their capital costs and unit costs are high.

But the CDM also works on the additionality principle. Projects under CDM must be additional to what would have been done otherwise. For example, suppose you have a biogas programme that’s already part of your baseline: that is, had CDM funding not been there, it would still have been done. But CDM (funding) is for projects that would not have been done otherwise.

Thus, defining additionality is a crucial aspect of the CDM. For RETs, some argue that if it is environmentally additional, we should not consider any other additionality. Similarly, there can be other such additionalities like financial and technological additionalities. RETs have a lot of potential but it will depend on the regulatory regime.