World Energy Outlook 2007

to 2006. More efficient vehicles could help to curb the rapid growth in oil
demand. There is also enormous scope to improve the efficiency of energy use
in highly energy-intensive industries such as cement, steel and fertilizer. Many
large steel, cement and aluminium plants in India are state-of-the-art, with
efficiencies equivalent to those in OECD countries; but there are also very
many small plants that are extremely inefficient. Financing efficiency
improvements in these inefficient plants is often much more difficult than for
larger ones.
Improving efficiency in the power generation sector is immensely challenging.
India's coal-fired power plants are among the least efficient in the world and
the construction of new thermal power stations would be a cost-effective way
of improving efficiency.
There have been some positive achievements in energy efficiency in the past
few years, such as the enactment of the Energy Conservation Law in 2001
and the creation of the Bureau of Energy Efficiency (BEE) in 2002. The BEE
launched both the National Energy Labelling Programme and the Energy
Conservation Building Code in 2006. 13 There are, however, several barriers
to the adoption of the necessary measures, including inadequate institutional
capacity, high transaction costs, lack of access to capital, a high private
discount rate and a lack of enforcement of standards and codes. There is an
urgent need to increase the staffing and resources of administrative agencies
at the federal and state levels in order to implement energy-efficiency
measures.
Infrastructure Investment
Rising energy demand is putting enormous strain on India's infrastructure.
Ports, railways, roads and power plants are all in serious need of new
investment. Public funds will not be sufficient to cover all investments required
to support rapidly growing energy demand and to increase energy access. The
authorities are turning to public-private partnerships as a way of bridging the
funding gap (Box 15.3). To meet rising investment needs, India needs to create
a transparent, predictable and consistent investment framework, to improve its
regulatory framework and to speed up its legal process. Private investors have
been more hesitant to enter the energy market in India compared to other
sectors. Private companies have been deterred by the preferential treatment
given to state-owned energy companies and the slow progress on tariff reform
and other issues.
13. Strict implementation of these policies is assumed in the Alternative Policy Scenario
(Chapter 18).
460 World Energy Outlook 2007 - INDIA’S ENERGY PROSPECTS