This article is written by Daisy Jain, from the Institute of Law, Nirma University. This is an exhaustive article which deals with the South Asia Group for Energy (SAGE) and India’s cross-border strategies.
Table of Contents
Background
The world’s energy consumption has increased by 95 percent in the last 40 years as a result of the world’s population explosion. For the country’s economic chain to grow, energy is presumed to be a necessity, according to the government. Because of the enormous population of India and China, it is predicted that future demand will exceed 90 percent. Energy security in India is defined as the continuous availability of energy sources at a reasonable price at all times.
When it comes to the significance of energy, it is important to remember that if India wants to become a global economic power, it will need to improve its infrastructure, manpower, demand, as well as supply mechanisms, which is why energy is regarded as being of paramount significance. Even though India has 17 percent of the world’s population, the country only has 0.8 percent of the world’s known oil and natural gas reserves. More than half of India’s energy requirements are met by domestic coal reserves, which are primarily used for electricity generation. As a result, India imports crude oil to meet 80 percent of its requirements.
Main objectives and focus of the SAGE
In partnership with South Asian governments, it is a coalition of energy sector specialists working to promote sustainable energy initiatives. A partnership consisting of the United States Department of Energy (DOE), the United States Agency for International Development (USAID), and three national laboratories: the Lawrence Berkeley National Laboratory (LBNL), the National Renewable Energy Laboratory (NREL), and the Pacific Northwest Laboratory (PNNL), the South Asia Group for Energy (SAGE). To promote the Asia Enhancing Development and Growth through Energy (Asia EDGE) objectives in the South Asian region, the coalition brings together world-class investigations and international advancements in the energy sector.
Objectives
- In order to participate in the achievement of the objectives of Asia Enhancing Growth and Development through Energy (Asia EDGE), a United States Government strategy to boost the development of sustainable and safeguard energy markets throughout the Indo-Pacific region.
- To provide important information to USAID partner governments in order to facilitate strategic investments.
- Research and analysis pertaining to energy sector initiatives in South Asia will be put into action.
Focus of SAGE
It is intended that the SAGE Consortium’s preliminary initiatives will be focused on consistency, adaptability, and long-term sustainability in the South Asian energy sector. SAGE will investigate themes such as resilience to climate-related impacts, how energy decisions affect power system credibility and air quality, adaptability to demand growth ambiguities in the context of e-mobility and similar technologies, and how an enhanced political economy and the assistance of facilitating environments in the region can affect the ultimate sustainability of e-mobility and related technologies. Technical papers and fact sheets on evolving concepts in the energy sector will also be developed by SAGE in relation to these efforts.
Neighbourhood first policy of India
Among the countries sharing India’s border are Pakistan, Afghanistan, Bangladesh, Maldives, Nepal, Bhutan, and Sri Lanka. These countries are diverse in terms of resilience, resources, and size. Historically, India has not been able to sustain a powerful and steady relationship with its neighbors. In 2014, Narendra Modi took the oath of office as Prime Minister of India, with the clear purpose of strengthening India’s ties with its neighboring countries.
The policy of placing the neighborhood first emphasizes the importance of diplomacy. The relations between India and its neighboring countries should be given the highest priority possible. To build strong ties with its neighbors, India must resolve all of the disparities that currently exist between the two countries’ cultures. After being appointed Prime Minister of India, Narendra Modi has visited a large number of neighboring countries in less than two years, believing that it is essential to strengthening ties with these countries. This policy also calls for a decline in China’s impact in the countries of South Asia, among other things. The neighborhood-first policy is concerned with India’s relations with the countries of South Asia, and as a result, this policy is also referred to as the South Asian Foreign Policy (SAF).
India’s other South Asia focussed efforts
Multiple intergovernmental initiatives in South Asia are promoting energy cooperation.
- Eight countries are covered by the agreement: Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka.
- The SAARC Framework Agreement for Energy Cooperation (Electricity) was ratified by all of the member countries of SAARC in the year 2003.
- It was established in 2014 to assist the coordinated operation of the regional grid throughout SAARC countries.
- One of the priorities identified in the South Asia Subregional Economic Cooperation (SASEC) Operational Plan for 2016-2025 is energy.
- SASEC members (India, Nepal, Myanmar, Bangladesh, Maldives, Srilanka, and Bhutan) have identified four priority sectors for collaboration between them.
Involvement of the USA
The United States Agency for International Development (USAID), in collaboration with the Government of India, as well as the private sector in the United States and India, is committed to aiding India and other South Asian countries in their transformation to a “high-performing, low-emission, energy secure” economy by increasing access to adequate and clean energy, expanding investment opportunities in India’s approximately $1 trillion energy sector, and promoting energy efficiency.
Asia EDGE (Enhancing Development and Growth through Energy) is a cooperative effort of the United States Agency for International Development and India that concentrates on energy resource development in the South Asia region and promotes the United States government’s Indo-Pacific Energy Strategy (Enhancing Development and Growth through Energy). A whole-of-government initiative, Asia EDGE aims to develop efficient and sustainable energy markets across the Indo-Pacific region. It was launched in 2009.
Growing energy markets in South Asia
Under Asia EDGE, USAID/India serves as the regional hub for USAID Missions in the South Asia region. South Asia, the largest rising region in the world, has far lower per capita energy usage than the global average. South Asia’s increasing environmental problems include a public health crisis caused by air pollution, which is exacerbated by energy processes, which is a major contributor to global warming. This program of the United States Agency for International Development (USAID) and India motivates countries in the region to establish an effective mix of power solutions to deliver direct exposure to enough accessible and sustainable power to lessen poverty while also driving economic growth and create jobs and increasing energy security. Aside from that, it uses four elements to capitalize on India’s leadership and its private sector to accomplish regional outcomes.
Regional energy markets and unification
South Asia is the least integrated region in the world, with bilateral cross-border trade accounting for approximately 2,500 megawatts of power, or about 1.5 percent of total installed capacity. Greater integration of electricity and natural gas markets is made possible by regional roadmaps, coordinated legislation and practices, appropriate regional entities and networks, and cross-border infrastructure, all of which are supported by USAID/India.
Innovative energy solutions and systems
Innovative energy solutions and systems, such as renewable energy, allocated energy resources, energy-saving technologies, and air pollution control, will highlight economic and environmental obstacles in South Asia’s energy sector. Renewable energy, allocated energy resources, energy-saving technologies, and air pollution control are examples of such technologies. The innovations of the United States Agency for International Development (USAID) contribute to the development of standards, regulations, incentive structure, and policies; the development of an institutional capacity to prepare the sector for long term energy systems the piloting of new technologies and business models; the identification and filling of technological and human resource loopholes; the facilitation of national and regional electricity market portals; and the increase in consumer adoption of innovative energy technologies.
Utility modernization
The electricity sector in South Asia is monopolized by state-owned utilities that are burdened by high system losses, poor financial ratings, and a lack of resources to implement next-generation technologies and business models. America’s International Development Agency’s energy sector reform initiatives aim to improve the financial performance, operational efficiency, and flexibility of public utilities through the help of smart grid technologies, adaptable coal plant generation, the design of power markets, new operations and management practices, and more equitable gender diversity in management and technical positions, among other things.
Involvement and interaction of the private sector
Infrastructure investment and finance in South Asia is mainly powered by the state, with a 3:1 or larger ratio of public to private finance. The region’s infrastructure advancement has been hampered by a heavy reliance on government budgets that are already stretched thin. Better procurement practices will be enabled through USAID’s energy work, which will include the elimination of barriers to the participation of international actors through the acceptance of fairer and transparent policies, guidelines, and tools; raising consciousness about, as well as the implementation of, quality and safety standards; implementing creative public-private partnership (PPP) models and risk-mitigation instruments; and facilitating the implementation of public-private partnerships (PPPs).
Importance of partnerships in energy-related problems
The rationale behind the vital necessity for efficient partnerships in the energy nexus can be inferred from the numerous interconnections and the requirement for incorporated solutions in this sector. In the long term, it is feasible to meet the difficulties addressed by energy within the constraints of the accessible resources as well as the current information and best available technologies. However, this would not occur as a consequence of sudden action or individual actions taken by any energy company or user in segregation, without taking into consideration the actions taken by all of the other participants.
Identifying and bringing into effect beneficial actions
Building partnerships is the process of entering into agreements to gain the advantages of collaborative efforts in the energy sector. It is not only outside the ambit of any single public authority, business, or stakeholder to address the issues engaged in the energy nexus but activities can be synchronized in such a way that the whole is higher than the total of its parts.
Involvement of various characters
A variety of characters from the energy communities, including businesses, various government levels, civil society, and anyone else who has a vested interest in determining the best path forward for an environmentally and socially sustainable social response to the energy challenges, may participate in partnership efforts. While acknowledging the differences in conceptions, priorities, and duties, all partnerships are committed to working together to achieve a mutually beneficial outcome.
Collective advantages
Partnerships for sustainable development must be based on collective advantages to be successful. Examples include a plausible long-term policy to enhance safety in the energy sector, which can lessen the risk associated with investments in that sector while simultaneously increasing energy security, which can result in significant competitive benefits for the whole nation’s economy. A long-term energy strategy with specific goals for the energy portfolio, as well as a potential role for renewable energy, may help to accelerate the dissemination of the best available technologies and to develop innovations in the energy sector. These are just a few examples of the efficiencies that partnerships can generate to maintain a long-term development strategy.
Multiple purposes
In some cases, partnerships serve multiple purposes. In addition to assisting in the integration of policies and the broadening of the scope and increasing the viability of energy planning, they can also assist in the coordination of various sectoral policies such as land planning, rural advancement, nature conservation, manufacturing, and others, all within the context of the sustainable use of energy.
Mutual contribution and trust
Effective partnerships are social constructions that progress through mutual contribution and trust, and when effective, they have the potential to make significant contributions to energy policy. Among other benefits, they promote transparency, inclusiveness, and legitimacy in decision-making, and they contribute to the development of stronger laws and facilitating institutional frameworks.
Partnerships are considered to be a knowledge alliance
Partnerships can also be thought of as knowledge alliances. They allow for the identification of opportunities to improve energy access, efficiency, and sustainability, as well as the identification of the most effective means of implementing win-win solutions that are more environmentally friendly. They provide opportunities for learning from the energy communities; they improve the ability to anticipate risks and understand from defeat while simultaneously increasing the likelihood of success. Partnerships on a broader scale allow for the development of a shared understanding of the challenges involved in the joint management of energy, and they lay the foundation for the acceptance of the difficult actions that must be made in the short term to return to a sustainable trend in the mid to long term.
Need for energy cooperation in South Asia
In order for regional energy cooperation to progress, governments from all countries must assume primary duty. Development is impossible to achieve without the authorization of the highest levels of government, and the government must have faith in the achievement of these types of collaborations. Generally speaking, the suggestions for South Asian governments for energy cooperation can be divided into four categories:
- National utilities, distribution systems operators, and transmission system operators should be broken up.
- The signing of additional agreements to integrate and synchronize the grids will also make conventional imports and exports easier to accomplish.
- Modernize domestic electricity grids to accommodate feed-in.
- In order to establish a culture of safety for private and foreign investors, as well as to improve regional infrastructure, the government should become the primary project sponsor.
Gaps in South Asia’s energy cooperation
There have been a number of reports published that have observed different challenges and gaps in the energy sectors of South Asian countries. These are highlighted in detail below:
Constraints on resources
The South Asian region is confronted with important resource constraints. Despite the fact that coal is ubiquitous in India, Bangladesh, and Pakistan, it is not regarded as a future energy source due to the pollution it causes. The use of coal pertains to the emission of greenhouse gases and the deterioration of the health of citizens in developing nations. The extraction of coal has adverse implications for society as a result of the dislocation of disadvantaged societies as a result of mining operations. While natural gas is a more environmentally friendly hydrocarbon than oil, resources are running low in Pakistan and Bangladesh. There has been accelerated advancement toward regional cooperation on natural gas and renewable energy, but there has also been an increase in reliance on imports.
The paucity of diversification in the fuel basket
There is a single fuel that dominates the energy mix among all South Asian countries, despite the fact that the region is diverse. India, the nation’s biggest consumer of main energy, is largely reliant on coal for its energy needs. Bangladesh, on the other hand, relies on natural gas to fulfill more than 70 percent of its main energy requirements. Pakistan is also highly reliant on natural gas, though the country’s consumption has slowed as a result of domestic supply constraints and a growing dependence on imported liquefied natural gas (LNG). Bhutan and Nepal rely primarily on hydroelectric power as a source of energy. South Asian countries’ energy security is compromised as a result of their over-reliance on a single fuel source, which leaves them defenseless to the destruction wrought by market and technological failings, as well as disruption. In light of the fact that diversification is one of the prerequisites for achieving energy security, countries in South Asia may wish to rethink investing in renewable energy sources.
Limited attention paid to renewable energy sources
Despite the abundance of renewable energy sources available throughout the region, they have not been efficiently utilized. Renewable energy sources make up an insignificant portion of the finished main energy mix in India, Bangladesh, and Pakistan, respectively. Afghanistan has a plethora of renewable resources that, if fully exploited, could significantly reduce the country’s supply gaps. There needs to be more investment in the use of renewable energy technologies throughout the entire region. These concerns may be taken into consideration by policymakers in the context of technology advancing and utilizing international green finance funds.
Strong focus on imports
Despite the fact that they are utilizing domestic energy resources, all of the SAARC countries are heavily reliant on imported energy. Afghanistan has enough crude oil to meet its domestic demand; however, it relies on imports to meet its energy security and energy cooperation requirements, which account for 100 percent of its oil demand. The absence of refinery infrastructure in all countries except India has resulted in a significant increase in imports. In all SAARC member countries except Bhutan, Nepal, and the Maldives, which are isolated due to their landmass pattern and geographical region, it is financially sustainable to expand their refining abilities. Bhutan, Nepal, and the Maldives are the only countries that are not financially sustainable to expand their refining capacities. This would assist in alleviating the balance of payment problems due to the high cost of hydrocarbon imports.
Low intra-regional energy trade
South Asia’s energy trade is insignificant when opposed to the region’s enormous unrealized capability. At the moment, energy cooperation is constrained to the trade-in oil and electricity between Bhutan and India, India and Bangladesh, and India and Nepal, as well as between Bhutan and Pakistan. Based on the amount of actual demand, the amount of this trade is completely negligible. In South Asia, there are currently no interregional gas pipelines in operation. The Middle East is a major source of crude and refined oil for the region, and the region is highly dependent on it. Expansion of intra-regional energy trade through power connectedness between neighboring nations, as well as oil and gas transmission via pipelines and regional hydroelectric projects, offers enormous potential for growth.
Opportunities for India with SAGE
In order to enhance the efficiency of the partnership and to create cohesiveness around related U.S. government activities in the South Asia region, interactions and partnerships are being formed. The South Asia Group for Energy will progress the objectives under Asia EDGE and the Indo-Pacific Strategy, including the United States-India Strategic Energy Partnership (SEP) through a partnership framework, according to the organization. While India has been purchasing hydropower from Bhutan, it has also been providing electricity to neighboring countries Bangladesh and Nepal. The option of constructing an overhead electricity link with Sri Lanka is now being considered, according to the current plan. India is attempting to build a common pool for neighboring countries, and has an installed power generation capacity of 373.43 gigatonnes. These measures can be achieved through the framework of SAGE.
Conclusion
As a consequence of the SAGE institutional arrangement, Indian and US entities will be able to share crucial technical information, including details on innovative technologies, for the collective advantage of both parties. It will also play a part in the development of a more comprehensive partnership between the two countries as a whole. Our goal with the SAGE initiative is to bring the best of US expertise and knowledge from three US Department of Energy labs to Indian national institutions for them to benefit from.
References
- https://www.usaid.gov/india/energy-environment-and-global-climate-change
- https://www.usaid.gov/energy
- https://www.usaid.gov/india/south-asia-group-energy-sage
- https://www.adb.org/publications/overview-energy-cooperation-south-asia
- https://www.livemint.com/news/india/india-sets-up-high-level-group-for-south-asia-energy-security-11609777234076.html
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