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INDIA: ADDRESSING ENVIRONMENTAL ISSUES IN THE POWER SECTOR

India
India
INDIA: ADDRESSING ENVIRONMENTAL ISSUES IN THE POWER SECTOR India Energy Sector The Issues In India, coal

Energy

Sector

The Issues

In India, coal is abundant and still considered to be the cheapest fuel to generate power. However, the wide use of coal raises concerns over the environmental impact. In particular, the burning of coal pollutes the air and contributes to greenhouse gas emissions; while the accumulation of ash at power stations makes land inap- propriate for other uses and endangers both ground and surface water. Also, when more coal is burned, more must be produced, which in turn degrades more land, displaces population, destroys forest cover, depletes more water resources, and causes more water pollution.

The Government of India recognized the need for an independent assess- ment of the environmental conse- quences of coal burning in power plants and asked the World Bank and ESMAP to look into the issue, in consultation with all affected groups and people.

Management

Assistance

Programme

INDIA: ADDRESSING ENVIRONMENTAL ISSUES IN THE POWER SECTOR India Energy Sector The Issues In India, coal

ESMAP's Work

In 1996, with funding from the Department for International Development (DFID) of the United

Kingdom, ESMAP, launched a far reaching examination of environmen-

tal issues in the power sector. The objective was to develop a decision- making tool, which would enable government officials and institutions in India to evaluate alternative options for power development. The activity ended in June 1998, and the results are now being disseminated to several states.

The work started with an initial ques- tionnaire and a series of seminars and workshops in Delhi, to encourage the participation and interest of a wide audience. One workshop, for Indian and international technicians, dis- cussed the modeling tools available to help in the analysis. Another involved non-governmental organizations (NGOs) who were invited to voice their views and to nominate their rep- resentatives to attend subsequent workshops for the duration of the study. These preliminary workshops were followed by a major Inception Seminar in July, 1996, attended by key decisionmakers from the Indian ministries and from the industry.

The decision-making tool was devel- oped through two state-level case stud- ies, supplemented by a set of special studies. The case studies were done in the states of Andhra Pradesh (AP) and Bihar. The special studies provided generic data and covered: demand-side management; interfuel substitution;

market-based instruments for pollu- tion control; welfare effects of abate- ment policies; renewable energy options; ash pond management, ash disposal, and ash utilization; and miti- gation options for power develop- ment. A synthesis report pulled together the findings of the work as a whole and attempted to draw some preliminary conclusions at the all- India level. The case studies and spe- cial studies were carried out almost entirely by Indian teams, supported by a firm of international consultants (Environmental Resource Management, of the United Kingdom) which also prepared the synthesis report

Although no two states can adequately represent the complexity of the Indian power sector, AP and Bihar, with pop- ulations of 100 million and 75 mil- lion, respectively, offered a good cross- section of the environmental issues

and options facing India.

Bihar is rel-

atively poor, and the Bihar State Electricity Board is in a particularly precarious financial and technical con- dition. About 40 percent of electricity demand comes from heavy industry. The high degree of dependence of its power sector on coal permits an in- depth analysis of the environmental impacts of coal mining and coal use in power generation. Also, Bihar is com- paratively remote from alternative sources of energy, although other options are available in the long term. AP, on the other hand, has a wider range of power options, including hydropower, wind, and solar. Its good ports offer better possibilities for importing fuels. Agriculture accounts for about 40 percent of the electricity demand, and the financial perfor-

mance of the AP State Electricity Board has been better than that of the electricity board in Bihar.

Outcome and Follow-up

The study resulted in a set of analyti- cal tools and a decision-making process that will assist power system planners in making decisions that are environmentally more sustainable; the seven special studies; two case studies; and the synthesis report. The work is now being disseminated to a wider audience, notably through a Manual for Environmental Decision-making, in which the objectives, methodology, outputs, and interpretation of the out- puts of the tools prepared for AP and Bihar will be described. The dissemi- nation of the study also includes a series of workshops and training activ- ities in other states. It is anticipated that the analytical tools and decision- making process will be taken up as part of the implementation of ongoing Bank projects for power sector reform in Haryana and Orissa and in the preparation of a planned project in AP.

Energy

Sector

Management

Assistance

Programme

market-based instruments for pollu- tion control; welfare effects of abate- ment policies; renewable energy options; ash

The World Bank

1818 H Street, NW

Washington, DC 20433 USA

Tel.: 1.202.458.2321

Fax.: 1.202.522.3018

Internet: www.worldbank.org/esmap

Email: esmap@worldbank.org

Moreover, the experience gained dur- ing the study and the methodology developed for it are to be used in a series of country energy-environment reviews undertaken by ESMAP.

The management of this ESMAP activ- ity was shared by Robin Bates, Principal Economist with the Energy, Mining and Telecommunications Department, and Mudassar Imran, Energy Economist, South Asia Energy Operations Unit of the World Bank.

E-mail: rbates@worldbank.org and mimran@worldbank.org

market-based instruments for pollu- tion control; welfare effects of abate- ment policies; renewable energy options; ash