Energy security in South Asia: integrating the primary energy and electricity markets

Abstract

Energy security has influenced world events during the past century. In the last decade, the Asian region has emerged as the new growing consumer of energy. South Asia, a fast growing region is faced with the issue of growing energy demand. During the past decade, this growth has been energy intensive. An important policy need in the region is to improve the supply of primary energy resources and electricity. The energy markets in the region however are weak and not integrated. There is minimal trade in primary energy and electricity among the South Asian nations creating an imbalance in the optimal use of the regions resources. The objective of this research is to examine the role of cooperation among the South Asian countries in the primary energy and electricity sectors in enhancing both energy and environmental security in the region. India presently accounts for about 83% of the region's commercial energy consumption. Consequently, developing long term energy, technology and emission trends for India is vital to understanding the regional trend. The Indian analysis spans a hundred year period given the inertia of the energy system, the long-term energy-emission relationship and the long lives of energy related infrastructure. The analysis compares scenarios that incorporate varying degrees of market reforms, global development of emerging technologies and global environment dynamics. An integrated bottom-up modeling framework (ANSWER MAR- kal) is used for the long-term Indian analysis. The regional analysis includes projections of energy and emission trends for South Asian countries using an econometric trend model. The results from the trend mode! Are then utilized for a bottom up analysis for South Asia. The significant findings from the Indian and South Asian analysis are given below. Indian energy and emission future (till 2100) a) Under the dynamics as usual trend, the Indian power generation capacity shall grow nine folds over the century. Coal will continue to be the dominant fuel and consequently carbon emissions would increase eight times. • The level of success of market reforms affects energy consumption, but has little impact on the dominance of coal. • The penetration of renewable energy technologies does not impact emission significantly. The enhanced penetration of renewable technologies happens bi re-placement of less polluting technologies which are more expensive in comparison to cheaper fossil fuel technologies. • Under carbon limitation scenarios, advanced technologies like nuclear fusion and solar PV penetrate during the latter half of the century replacing fossil fuels. Under strong carbon limitation regime, short-term mitigation is required and the Indian energy system would face a stranded asset problem for replacement of coal technologies. • Cooperation in energy among the South Asian countries results in reduction in primary energy consumption in the region. There are changes in the primary energy consumption mix as cooperation becomes stronger. • Under cooperation, Indian coal is partly replaced by natural gas from Bangladesh, and hydro from the Himalayan countries. This results in reduction of carbon emissions in the region. • Electricity costs in the region reduce as a result of cooperation. This will benefit the overall growth of the regions, economy. The contributions from this research include: • Setting up a hundred year model and database for Indian energy and emission trends. • Policy insights related to long-term relationship among Indian economy, energy, technology and emissions. • The implication of South Asian regional cooperation on future energy resources profile, emission trends, and energy costs in South Asia. Inputs for the regional analysis have benefited from discussions and participation in several South Asian regional forums. For data related to advanced technologies, the research has benefited from cooperation with researchers in OECD countries. Outputs from this research have contributed to ongoing literature and academic debates. The research has been presented at international conferences and two papers from this research are under review for publication in international journals.