Investing in renewable energy could cost India jobs in the short run, warns a government report that could influence the direction of energy investment by India’s new jobs-focused administration.
The April report, from India’s Planning Commission, says that installing more wind and solar energy in the country, at a relatively higher cost than conventional energy, could in the short term slow the economy and cost jobs in traditional industries.
“Green energy will give jobs but will also displace those employed in the coal and transportation sectors,” Kirit Parikh, an economist who headed the expert group that produced the report on low-carbon strategies and “inclusive growth”, said at a media seminar in Delhi.
In 2009, India made a voluntary commitment to the international community to reduce greenhouse gasemissions by 20-25 per cent from 2005 levels by 2020.
But the report estimates that all the country’s low-carbon strategies together will cost an estimated $834 billion overall over 20 years, reducing the country’s GDP by 3.3 per cent by 2030. In the short term, it says, implementing wind and solar energy plans could cost jobs by diverting funds from coal production.
Under the government’s low-carbon growth plan, wind and solar power are each envisaged to make up 8 percent of India’s power generation by 2030. Together with nuclear, hydropower and biomass, non-fossil fuels would supply 33 per cent, while coal would account for 63 per cent.
That projected proportion of power generated from coal in 2030 is just 2 percent less than at present, but under the plan half of thermal power plants would be operating using more efficient “super-critical” technology that emits fewer greenhouse gases.
Focus on jobs
Faced with a rate of economic growth that has fallen from a high of more than 9 percent in 2008 to below 5 percent in the last two years, the recently elected Prime Minister Narendra Modi’s National Democratic Alliance government, voted to power on the promise of providing jobs for all and taming price hikes in essential commodities, is under pressure to prioritise economic activity that provides the greatest employment.
The country is confronting a demographic youth “bulge” of 550 million people under 25 years old that is both an opportunity to grow its economy and a challenge in that it requires 15 million jobs to be created annually.
India’s Ministry of New and Renewable Energy and others involved in solar power have insisted that renewable energy offers potentially higher rates of employment per unit of electricity produced than coal, particularly during the construction and commissioning phase.
But the International Renewable Energy Agency found in its 2014 annual review that employment in India’s wind power and grid-connected solar photovoltaic sectors in 2013 totalled 114,000, the same level as in 2009.
The report estimated that that India’s entire renewables effort provided 391,000 direct and indirect jobs overall in 2013. By comparison, China had 2.6 million such jobs.
Even after the launch of the flagship Jawaharlal Nehru National Solar Mission in 2010, solar power projects created just 24,000 jobs in 2011-2014, according to a new study by the Council on Energy, Environment and Water, a non-profit policy research organisation, and the environmental non-profit Natural Resources Defense Council.
India’s solar market is slowing, according to the study, which says one main stumbling block is the government’s inconsistent policy on subsidies. State utilities also have been accused of not sticking to their obligations to purchase power from renewable resources, putting off investors.
However, critics say that international trade disputes and anti-dumping duties on U.S. and Chinese solar imports are also contributing to the slump.
“A little bit of policy tweak and minimal subsidy support would go a long way in putting the solar sector back on track,” said S.P. Gonchaudhuri, director of the West Bengal Green Energy Corporation.
Coal on top
Today, coal remains India’s top fuel, providing two-thirds of its energy. Coal is one-sixth cheaper than solar per kilowatt of power produced and overall also provides a higher number of jobs, experts said.
Although a total figure for the industry is not available, Coal India Limited, which contributes 81 percent of India’s coal production from 471 mines, has a workforce of over 340,000.
The sector generates additional employment through rail, port and road transport, and loading and unloading, as well as at power plants, suggesting total employment likely exceeds the 391,000 jobs provided by the renewables sector in 2013, experts said.
India is currently the world’s fifth largest producer of electricity, but its production fell 8.7 percent short of demand in 2013, according to the Central Electricity Authority. That is in part because coal production has not kept pace with demand over the past decade.
The government estimates that the country’s energy supply will need to quadruple or quintuple if it is to achieve 8-9 percent annualgrowth until 2032.
In July, within two months of coming to power, the new government eased rules for the expansion of small coal mines that produce up to 8 million tonnes per annum,exempting them from holding hearings with affected local communities on the environmental impacts of expansion.
Around 400 such coal mines will benefit from the relaxation in regulations.
Environmentalists concerned about India’s need to reduce its reliance on fossil fuels acknowledge that no shift from coal is likely in the short term.
“Coal is here to stay till 2030,” said Ritu Mathur of Delhi-based The Energy and Resource Institute (TERI). But “renewable energy is necessary and likely to play a major role after 2021,” she added.