Relevance: GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Key Phrases: NITI Aayog, State Energy and Climate Index, competitive Federalism, Key Performance Indicators, State’s progress in implementing clean PPA, Unexplained Arbitrariness in Weights, Sustainable National Energy Growth Trajectory.

Why in News?

• The State Energy and Climate Index (SECI), recently launched by the NITI Aayog, aims to track and benchmark the efforts made by States and Union Territories (UTs) in the climate and energy sector, capturing dimensions such as energy access, consumption, efficiency, and environmental protection.

Key Highlights:

• It is expected that the SECI will trigger a competitive spirit among States and UTs.
• An exercise at the sub-national level shall contribute to helping India fulfill its commitments on climate change and clean energy transition in the global fora consistent with the spirit of cooperative federalism.
• India’s Panchamrit elements, presented at the COP26 Conference in Glasgow aim to-
  • meet 50 percent of India’s power requirements from renewable energy sources by 2030
  • substantially reduce the carbon emissions and intensity of the economy by 2030
  • reach net-zero emissions by 2070.
• The conceptualisation of SECI, and the commencement of benchmarking exercise through it, is a crucial step in that direction.
• SECI measures progress on 27 Key Performance Indicators (KPIs) covering six parameters:
  • Discoms performance
  • Access
  • Affordability and reliability of energy
  • Clean energy initiatives
  • Energy efficiency
  • Environmental sustainability and new initiatives.
• The exercise classifies States into large and small categories and the Union Territories as a separate set.

What are the issues with the SECI?

• SECI suffers from certain limitations that need to be urgently addressed to make it more meaningful and consistent with its overarching objective:

1. Conflict between Core Philosophy and Current Design:
   • There is a conflict between SECI’s current design and the core philosophy that it propounds.
   • Among the different parameters the Index considers, Discoms performance is assigned a disproportionate weight (40 per cent) compared to those that track efforts made by States and UTs in transitioning toward clean energy (15 per cent); in driving environmental sustainability (12 per cent); or in launching new initiatives (12 per cent) to lower their carbon footprint.
   • As a result of the unexplained arbitrariness in weights, Gujarat tops the overall score among large States in SECI Round I list, because of the extremely high weight assigned to the Discoms performance parameter.
   • The State is not even among the top six for four out of six parameters and has made relatively unsatisfactory efforts towards driving environmental sustainability and new initiatives, where it ranks 9th and 13th, respectively, among 20 large States.
   • If equal weight is assigned across all parameters, Gujarat’s position will come down from 1st to 5th, and Kerala, pursuing a more balanced path in climate and energy initiatives, will come out on top.
2. Revision of weights assigned to other KPIs:
   • There is an urgent need to rethink and revise the weights assigned to other KPIs critical to reforming the current energy value chain.
   • For example, the KPIs on renewable energy penetration and utilisation of RE potential, which can play a vital role in bringing down the high input cost of electricity and emission levels, have a combined weight of only 7 per cent.
   • Similarly, a small 4 percent weight has been assigned for the proportion of consumers with smart meters.
   • The adoption of smart meters is the panacea for reducing AT&C losses and for better targeting DBT schemes for reducing deadweight losses of Discoms.
   • There is a need to revisit the design and methodology to make the Index genuinely progressive.
3. Inertia in Transition towards Clean Power Purchase Agreements:
   • The Index appears to promote a status quo approach concerning energy management.
   • A recent McKinsey report suggests that grid emissions can be considerably reduced through Clean Power Purchase Agreements (PPAs), where sourcing power shall be through optimised renewable energy, coupled with long-duration energy storage systems.
   • Unfortunately, States have exhibited inertia in transitioning toward such futuristic clean PPAs.
   • Inclusion of indicators such as the State’s progress in implementing clean PPAs and their efforts to develop a battery ecosystem can nudge States to adopt them and help drive policy certainty in this regard.
4. Unfair to states making real contributions:
   • SECI is not progressive and fair to States making real contributions to the net-zero emissions goal.
   • For example, the building sector, which consumes approximately 38 percent of India’s total annual primary energy demand, is critical to driving a sustainable national energy growth trajectory.
   • Towards this objective, states such as Telangana and Andhra Pradesh, which have been at the forefront of notifying and implementing the Energy Conservation and Building Code 2017, do not even figure in the top 10 of the SECI list.
5. State's progress toward ‘Just Transition’ not considered:
   • There is no consideration in the Index for measuring the States’ progress toward ‘Just Transition’.
   • SECI rankings indicate that coal-rich States are the worst performers.
   • However, international experience suggests that implementing ‘Just Transition’ policies require long-term planning, implementation, and engagement.
   • To be fair to States fiscally dependent on revenues from non-renewable resources, SECI should ideally capture indicators of ‘Just Transition’ so that it encourages the laggard States to strive for resilient and climate-neutral economies and societies.

Conclusion:

• SECI is a laudable and timely initiative.
• However, it needs to include more progressive indicators, and develop more objective and fair criteria to recognise the good and innovative work done by various States.
• It is imperative that the construction of the Index is based on an objective rationale rather than motivated by subjective and extraneous considerations.

Source: The Hindu BL

Mains Question:

Q. The State Energy and Climate Index of Niti Aayog suffers from various limitations that need to be urgently addressed to make it more meaningful and consistent with its overarching objective. Discuss.