Politics of Clean Fuel - Part III

In my previous posts [1][2], I highlighted how intertwined energy business and politics (namely on oil) have become and how they are blocking the ushering of clean fuel technologies in the developed world. Shubham commented in response to Part II -

... the developing countries have the wherewithal to come up with alternate methods of energy. If something good and sustainable has to be found, it has to come from the developed world.... Since most of the cutting edge research in the world happens in the US, no progress has been made on finding alternate sources of energy in the recent past.

The point he is making is exactly what I am refuting, that it is not merely about research any more; the technology that is needed is already there (at least basic if not advanced) , the problems are more political in nature.

Therefore, if say the Indian govt creates a legal and political ecosystem favourable for use of renewable energy, all the research which has been done (in India or abroad) would be able to commercialise it in India. Even foreign companies could come here to implement their research if they see economic sense in it.

So, what kind of policies need to put in to create the ecosystem. There are two focus areas - encouraging R&D and encouraging adoption which need to be tacked. For research, let me start by quoting Atanu Dey on this topic:

[Govt should] Create programs in all the Indian research institutes and reward people with sacks of gold or whatever floats their boats to get them to devote all their talents to that one aim of making solar energy technology in India so good that we don’t have to import a single drop of oil and can tell our Arab friends to take a hike.

Apart from encouraging by reward, we also need to strengthen IP protection so that academia and companies can be sure that their technology will not be stolen/pirated by private players but bought at a respectable price.

To promote private players to commercialize research, they should be given tax breaks, such as:

• Any company which is engaged in developing and marketing products relating to alternate energy sources should be exempted from corporate tax for the next 10 years (similar to the tax holiday the IT sector enjoys).
• Any real estate acquired by these companies to implement their products (ex land purchased/ leased to install solar panels or windmills) will be exempted from taxation.
• Capital invested by institutions / individuals in such companies will be liable for tax breaks (like the 80C provisions)

I would be tempted to say that employees directly engaged in activities of producing power from alternate sources should be exempted from income taxes! But alas that would be taking the argument too far.

Lets move to adoption. Adopting alternative energy sources usually involves considerable capital investment (ex - installing a solar heater atop your terrace). Making that investment would be a little less painful if I get a tax break on it - more so if I could redeem a part of it by 'selling' the produced electricity. Take this example [quote from an article in HT]:

This month, Kolkata’s Rabirashmi Abasan became the first housing project where residents have the option of giving back power — generated in their rooftop solar photovoltaic panels — to the grid of the power utilities. From now on, their electricity bills will reflect the difference between the energy consumed from utilities and how much they push back to the grid.

Novel indeed, the article in fact goes on to calculate that if "the 100,000 kothis in Delhi set up a 5 kW solar power plant [each] (requiring 60-80 sq ft and Rs 18-20 lakh), they can harness 5 lakh kW or 500 MW" - almost 15% of Delhi's peak power requirement.

So much more can be done - create a national fund for implementation of large scale projects involving alternative energy sources. Small and large scale solar, wind and hydro power plants could be created using this fund.

The FDI limit on projects for power production using alternative fuels should be increased to 100% and FII's should be given special tax breaks for investing in companies engaged in this area.

If any person owning a petrol/diesel driven vehicle wants to exchange the same with a gas or (even better) electric car, s/he should be given coupons for every KM driven. These coupons could be redeemed against his/her electricity bill. [Rationale - by shifting to alternative fuel s/he is saving the nation money used in importing oil].

Well - we could go on brainstorming on this - what is key is that we throw interests of oil lobby out of the window, rebuff any international pressure and become pioneers in setting up a haven for adoption of cleaner energy sources in India.

And there is some hope - in the National Action Plan on Climate Change unvieled by the Govt on June 30, outline eight missions focussing on:

1. increasing share of solar energy in the total energy mix
2. implementation of energy efficiency measures
3. launching sustainable habitats
4. effective water resource management
5. safeguarding Himalyan glacier and mountain eco-system
6. enhance eco-system services
7. making agriculture more resilient to climate change
8. set up a Strategic Knowledge Mission for focussed research in the area.

[series concluded].