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World Energy Outlook 2007

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Background and Assumptions<br />

Like China, India is on an unsustainable energy path. In the Reference<br />

Scenario, which takes account of only those policies already enacted or in place,<br />

oil, gas and coal imports increase substantially and local pollution and CO 2<br />

emissions worsen alarmingly. Rapid growth in appliance ownership and in the<br />

building stock puts more pressure on India's already weak electricity<br />

infrastructure. Despite some improvement, the inefficient use of biomass for<br />

cooking and heating in rural households continues to cause too many<br />

premature deaths from indoor air pollution and drudgery for women and girls.<br />

While there have been improvements in energy efficiency in recent years, many<br />

industries – particularly small enterprises – continue to rely mainly on<br />

technologies and equipment that are far below the best.<br />

However, there are many energy-policy actions that the Indian government is<br />

considering that could alter significantly these worrying trends. These policies<br />

are assumed to be adopted and fully implemented in the Alternative Policy<br />

Scenario. In addition, some of the policies that have already been adopted and<br />

which are, therefore, incorporated into the Reference Scenario are assumed<br />

to be implemented and enforced more rigorously. We have analysed some<br />

80 policies and measures for India covering all energy sectors, ranging from<br />

efficiency improvements in the residential and services sectors to new<br />

technologies in the power-generation sector. 1 They reflect the proposals under<br />

discussion in India in the current energy-policy debate. These policies result in<br />

a reduction of dependence on coal and oil and in the faster development and<br />

deployment of more efficient and cleaner energy technologies.<br />

The Report of the Expert Committee which formulated the Integrated <strong>Energy</strong><br />

Policy in 2006 points out that reliable and stable energy supplies will be crucial<br />

to sustaining high economic growth. There is a broad consensus among policy<br />

makers that India's current energy system is far from sustainable. The current<br />

administration has stepped up efforts to move towards a more efficient and<br />

environment-friendly energy mix. Nonetheless, India will need strong<br />

political commitment and effective public communication to put these policies<br />

and measures in place.<br />

The rate of economic growth and structure of GDP in India are assumed to<br />

follow the same trajectory as in the Reference Scenario. International oil and<br />

gas prices are also the same as in the Reference Scenario. The international price<br />

of coal is lower. Domestic prices are assumed to follow international energy<br />

prices, and subsidies are assumed to be reduced progressively over the <strong>Outlook</strong><br />

period.<br />

1. A full list of the policies and measures considered for India in the Alternative Policy Scenario can<br />

be found at www.worldenergyoutlook.org.<br />

532 <strong>World</strong> <strong>Energy</strong> <strong>Outlook</strong> <strong>2007</strong> - INDIA’S ENERGY PROSPECTS

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