Pressure on Natural Resources: Energy Consumption


Energy Consumption

Energy has been universally recognized as one of the most important inputs for economic growth and human development. There is a strong two-way relationship between economic development and energy consumption. On one hand, growth of an economy, with its global competitiveness, hinges on the availability of cost-effective and environmentally benign energy sources, and on the other hand, the level of economic development has been observed to be dependent on the energy demand (EIA, 2006). It seems clear that there is a positive relationship between total primary energy consumption to GDP, population growth, and per capita energy consumption. However, a negative relationship does exist between the energy use and the production of the energy resources in the case of India. One can summarize that total primary energy use is one of the key components of the GDP. Population growth is an important factor for the total primary energy consumption and one of the major contributors for the demand of more energy resources. Per capita energy consumption in the economy has a positive relationship with the total energy use and hence it is one of the important factors of the total energy consumption. As evidence from the developing countries, such as India, the more the country develops economically, the demand for energy resources also increases. An analysis of data also suggests in the same manner that an increase in GDP, Population and Per capita consumption leads to more demand of energy resources.


Figure 10. Population Growth of Bangalore City, 1871–2007*

*The population for 2007 is an estimate.

Credit: Census of India (2001b).



Figure 11. Comparison of Population, Economic Indicators, and Resource Consumption



Exponential growth in population represented by the graph above has impacted energy consumption not only in Bangalore but also in the rest of India as well. Likewise, as seen above, India's energy usage per GNP is clearly the highest in the world when compared to the U.S., China and the countries of the EU. India boasts a growing economy, and is increasingly a significant consumer of oil and natural gas.


According to the International Energy Agency (IEA), hydrocarbons account for the majority of India's energy use. Together, coal and oil represent about two-thirds of total energy use. Natural gas now accounts for a seven percent share, which is expected to grow with the discovery of new gas deposits. Combustible renewables and waste constitute about one fourth of Indian energy use. This share includes traditional biomass sources such as firewood and dengue, which are used by more than 800 million Indian households for cooking. Other renewables such as wind, geothermal, solar, and hydroelectricity represent a 2 percent share of the Indian fuel mix. Nuclear holds a one percent share.


Figure 12. Total Energy Consumption in India by Type (2009)

Credit: The International Energy Agency


In 2009, India was the fourth largest energy consumer in the world, after the United States, China, and Russia. Despite a slowing global economy, India's energy demand continues to rise. As vehicle ownership expands, petroleum demand in the transport sector is expected to grow in the coming years. While India's domestic energy resource base is substantial, the country relies on imports for a considerable amount of its energy use.


IEA data for 2009 indicate that electrification rates for India were 66 percent for the country as a whole. Ninety-four percent of the 404 million that do not have access to electricity live in rural areas, where electrification rates are approximately 50 percent.

Activity 4:

1. Critically analyze and evaluate the above section about energy consumption.

2. Support a recommendation for an effective energy policy for the city of Bangalore. In which sector of energy production should Bangalore/India's rapidly growing cities concentrate their efforts? Feel free to do outside research as well to help you complete this activity.


The Indian government continues to hold licensing rounds in an effort to promote exploration activities and boost domestic oil production.


Figure 13. India's Oil Production and Consumption (Thousand Barrels per Day), 2000-2011

Credit: U.S. Energy Information Administration


According to Oil & Gas Journal (OGJ), India had approximately 5.7 billion barrels of proven oil reserves as of January 2011, the second-largest amount in the Asia-Pacific region after China. India's crude oil reserves tend to be light and sweet. India produced roughly 950 thousand barrels per day (bbl/d) of total liquids in 2010, of which 750 bbl/d was crude oil. The country consumed 3.2 million barrels per day (bbl/d) in 2010. The combination of rising oil consumption and relatively flat production has left India increasingly dependent on imports to meet its petroleum demand. In 2010, India was the world's fifth largest net importer of oil, importing more than 2.2 million bbl/d, or about 70 percent of consumption. A majority of India's crude oil imports come from the Middle East, with Saudi Arabia and Iran supplying the largest shares. Iranian oil's share of Indian imports has decreased in recent years, largely due to issues with processing payments.


Figure 14. India's Oil Imports by Source, 2010

Credit: Global Trade Atlas

Natural Gas

Despite major new natural gas discoveries in recent years, India continues to plan on gas imports to meet its future needs. According to the Oil and Gas Journal, India had approximately 38 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2011. EIA estimates that India produced approximately 1.8 Tcf of natural gas in 2010, a 63 percent increase over 2008 production levels. The bulk of India's natural gas production comes from the western offshore regions, especially the Mumbai High complex, though fields in the Krishna-Godavari (KG) are increasingly important. In 2010, India consumed roughly 2.3 Tcf of natural gas, more than 750 billion cubic feet (Bcf) more than in 2008, according to EIA estimates. Natural gas demand is expected to grow considerably, largely driven by demand in the power sector. The power and fertilizer sectors account for nearly three-quarters of natural gas consumption in India. Natural gas is expected to be an increasingly important component of energy consumption as the country pursues energy resource diversification and overall energy security. Despite the steady increase in India's natural gas production, demand has outstripped supply and the country has been a net importer of natural gas since 2004. India's net imports reached an estimated 429 billion cubic feet (Bcf) in 2010.


Figure 15. India's Natural Gas Production and Consumption (billion cubic feet), 2000-2011

Credit: U.S. Energy Information Administration

Electricity and Electricity Shortages

India currently suffers from a major shortage of generation capacity. In 2008, India had approximately 177 gigawatts (GW) of installed electric capacity and generated 761 billion kilowatt hours. Conventional thermal sources produce more than 80 percent of India's electricity. Hydroelectricity, nuclear power, and other renewable sources account for the remainder. India also imports marginal amounts of electricity from Bhutan and Nepal and has signed an agreement to begin importing power from Bangladesh.


Figure 16. Indian Electricity Generation by Type (billion kilowatt hours), 2000-2010

Credit: U.S. Energy Information Administration


India suffers from a severe shortage of electricity generation capacity. According to the World Bank, roughly 40 percent of residences in India are without electricity. In addition, blackouts are a common occurrence throughout the country's main cities. Further compounding the situation is that total demand for electricity in the country continues to rise and is outpacing increases in capacity. Additional capacity has failed to materialize in India in light of market regulations, insufficient investment in the sector, and difficulty in obtaining environmental approval and funding for hydropower projects. In addition, coal shortages are further straining power generation capabilities. In order to address this shortfall, the Indian government continues to work towards adding capacity. In the IEO2011, EIA projects that electricity consumption in India will grow at an average rate of 3.3 percent per year through 2035. To meet this growth, India will have to expand their current generation capacity by 234 GW (Energy Information Administration, 2011).


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