Relevance: GS-2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Key Phrases: Region’s Economic Growth, Energy Trade, Renewable Energy, Rural Electrification, Energy Production, Clean Development Mechanism, SAARC, India-Bhutan hydroelectric joint venture, Myanmar-Bangladesh-India gas pipeline, Regional Power Exchange, Cross-Border Trade, Investment Environment, Private Sector.

Why in News?

• While universal coverage can catalyse the region’s economic growth, energy trade must be linked to peace building.

Context:

• South Asia has almost a fourth of the global population living on 5% of the world’s landmass. Electricity generation in South Asia has risen exponentially, from 340 terawatt hours (TWh) in 1990 to 1,500 TWh in 2015. Bangladesh has achieved 100% electrification recently while Bhutan, the Maldives, and Sri Lanka accomplished this in 2019.
• For India and Afghanistan, the figures are 94.4% and 97.7%, respectively, while for Pakistan it is 73.91%. Bhutan has the cheapest electricity price in South Asia (U.S.$0.036 per kilowatt hour, or kWh) while India has the highest (U.S.$0.08 per kWh.). India is trying to make a transition to renewable energy to provide for 40% of total consumption, while Pakistan is still struggling to reduce power shortage negatively impacting its economy.
• The electricity policies of South Asian countries aim at providing electricity to every household. The objective is to supply reliable and quality electricity in an efficient manner, at reasonable rates and to protect consumer interests. The issues these address include generation, transmission, distribution, rural electrification, research and development, environmental issues, energy conservation and human resource training.
• Geographical differences between these countries call for a different approach depending on resources. While India relies heavily on coal, accounting for nearly 55% of its electricity production, 99.9% of Nepal’s energy comes from hydropower, 75% of Bangladesh’s power production relies on natural gas, and Sri Lanka leans on oil, spending as much as 6% of its GDP on importing oil.

Green growth, Green Energy

• South Asian leaders are increasingly focused on efficient, innovative and advanced methods of energy production for 100% electrification. Prime Minister in his ‘net zero by 2070’ pledge at COP26 in Glasgow asserted India’s target to increase the capacity of renewable energy from 450GW to 500GW by 2030. South Asia has vast renewable energy resources — hydropower, solar, wind, geothermal and biomass — which can be harnessed for domestic use as well as regional power trade. The first-ever Clean Development Mechanism (CDM) benefits such as poverty reduction, energy efficiency and improved quality of life were realised when there was India-Bhutan hydro trade in 2010.
• The region is moving towards green growth and energy as India hosts the International Solar Alliance. In Bangladesh, rural places that are unreachable with traditional grid-based electricity have 45% of their power needs met through a rooftop solar panel programme which is emulated in other parts of the world. This is an important step in achieving Bangladesh’s nationally determined contributions target of 10% renewable energy of total power production.

SAARC for Regional Energy Trade:

• The South Asian Association for Regional Cooperation (SAARC) prepared the regional energy cooperation framework in 2014, but its implementation is questionable.
• However, there are a number of bilateral and multilateral energy trade agreements such as the India-Nepal petroleum pipeline deal, the India-Bhutan hydroelectric joint venture, the Myanmar-Bangladesh-India gas pipeline, the Bangladesh-Bhutan-India-Nepal (BBIN) sub-regional framework for energy cooperation, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, rumoured to be extended to Bangladesh.
• ‘South Asia’s regional geopolitics is determined by the conflation of identity, politics, and international borders. Transnational energy projects would thus engage with multiple social and ideational issues’ which is a major limitation for peaceful energy trade. If energy trade is linked and perceived through the lens of conflict resolution and peace building, then a regional security approach with a broader group of stakeholders could help smoothen the energy trade process. The current participation in cross-border projects has been restricted to respective tasks, among Bhutan and India or Nepal and India. It is only now that power-sharing projects among the three nations, Nepal, India, and Bangladesh, have been deemed conceivable.
• India exports 1,200MW of electricity to Bangladesh, sufficient for almost 25% of the daily energy demand, with a significant amount from the Kokrajhar power plant in Assam worth U.S.$470 million. Bhutan exports 70% of its own hydropowered electricity to India worth almost U.S.$100 million. Nepal on the other hand, not only sells its surplus hydroelectricity to India but also exported fossil fuel to India worth U.S.$1.2 billion.

Benefits of Regional Cooperation in Energy Sector for South Asia:

• Dependable support, reserve sharing, cleaner fuels, improved investment opportunities and decreased risks for investors, and the associated sharing of knowledge and experience will benefit everybody.
• Scopes to increase access to up to date and cleaner energy, especially electricity, to unreached localities and to intensify performance of the energy utilities would be created by economic progress.
• Differing resource endowments, development needs, and demand patterns among the countries in the region and its neighbourhood create significant opportunities for cooperation and trade in the energy sector and eventually for creating one of the world’s largest integrated energy markets.
• Energy resource-surplus countries (Nepal, Bhutan in the region, Central Asian countries, Iran, Myanmar in the neighbourhood) would be benefitted from economic progress through energy export and accomplishments of comprehensive regional schemes which would not be practically feasible otherwise.
• Improved energy security would be possible in those countries with considerable energy import needs like India, Pakistan, Sri Lanka and Afghanistan, as would the others like Bangladesh from developing the energy mix.

Steps to Be Taken:

• To increase energy cooperation, some of the important steps which need to be taken are:
  • Develop a structure for a regional power exchange after reviewing the power system structures in individual countries, along with their operational procedures and regulatory and commercial requirements for cross-border trade.
  • Improve investment environment for the private sector for both electricity generation and transmission, particularly in Nepal and Bhutan by streamlining the approval processes and establishing independent regulatory environments.
  • Identify the technically and economically feasible cross-border interconnections based on a scenario analysis and possible financing options.
  • Harmonize legal and regulatory frameworks dealing with cross-border trade along with an Energy Charter Treaty for greater security for cross-border energy transfer related investments and transactions.

Way Forward:

• South Asia is reinforcing its transmission and distribution frameworks to cater to growing energy demand not only through the expansion of power grids but also by boosting green energy such as solar power or hydroelectricity.
• Going forward, resilient energy frameworks are what are needed such as better building-design practices, climate-proof infrastructure, a flexible monitory framework, and an integrated resource plan that supports renewable energy innovation. Government alone cannot be the provider of reliable and secure energy frameworks, and private sector investment is crucial.

Source: The Hindu

Mains Question:

Q. South Asian leaders are increasingly focused on efficient, innovative and advanced methods of energy production for 100% electrification. In this context discuss the scope of regional energy cooperation between the south Asian nations. Critically Examine.