Residential water heating and the rise of the gas-fired economy

When electricity distribution networks fall into place, people start using electricity for everything. Heating, air conditioning, cooking, etc.: electricity is the supple path to all applications. Electricity is conveniently accessed at home, but at a system level, there are problems. Electricity is typically made in big facilities, primarily by burning coal or gas. It is then inefficiently transported to the home. Coal has the worst carbon footprint. Given the domination of coal in Indian electricity production, electricity consumption in India is highly carbon intensive.

Gas delivered to the home is a superior alternative, but this requires gas distribution to the home. A brand-new distribution infrastructure needs to be built, for delivering gas to the home. Once gas is at the home, it can be used for cooking and for heating. To the extent that this is done, it reduces the carbon footprint of residential energy consumption. And, given the way the world is going, gas delivered to the home is likely to be significantly cheaper (per joule) when compared with electricity, even without a carbon tax. (Question: Does someone know the price per joule for residential electricity versus piped gas in India?)

When we think about global warming in India, the dominant impulse is to say to the rich countries "this is not our problem; you guys loaded up the atmosphere with CO2, you guys fix it". While this approach has strengths, it is also important for India to find low-carbon paths to development. We have a problem in having a highly coal-fired economy. We also have the malleability in having the bulk of our energy system of 2050 having not yet been built out: this gives us choices about what should be done. In contrast, most rich countries have less room to maneuver. Policy decisions in India will determine whether cities develop energy-efficient mass transportation systems (such as the Delhi Metro) or not; in contrast, there is no possibility of Los Angeles or the Bay Area developing a good transportation system.

I suspect that gas is likely to be India's low-carbon bridge to renewables and nuclear, exactly as it will be for the rest of the world. From this perspective, we need to start looking for market-based channels to do more on building the gas ecosystem. One interesting litmus test that we can use is the number of households where one sees gas-fired water heating. 

This requires distribution networks for gas, and then households have to switch from electric ovens, water heaters, stoves to gas-fired equivalents. In India, a few cities are now starting to have gas distribution to the home. In time, households should increasingly build up the capital stock of gas-fired appliances, motivated by the superior pricing of gas.

And this gives us an illustration of India's malleability. The CMIE household survey shows that at present, 5.5% of households in India today have one or more geysers (this is for the quarter ended June 2011). For these 5.5% of households, there is the question of junking the existing capital stock and shifting over to a gas-fired appliance. Presumably the differential pricing of electricity versus gas will justify such a shift for the household, but for India, it is a waste when there is such destruction of capital stock. Far more interesting are the remaining 94.5% of households. We should be doing things today, so that over the next 25 years, when 94.5% of India's households will buy a geyser, they will go towards a gas-fired heater rather than an electric one.

From this perspective, I was surprised to see a sales flyer of a small company -- P. K. L. Ltd. -- talking about a gas-fired water header:

This was news, atleast to me. I have never seen a gas-fired water heater being sold to a household before in India. I walked over to the Croma website and they don't have one. Similarly, all the water heaters at ezone are electric. Amusingly enough, the P. K. L. Ltd. website also does not talk about a gas-fired water heater. So either this is vapourware or their website is not updated. Do you know any firm selling gas-fired water heating for homes in India, and do you know any home that has one?

Carbon tax questions

Greg Mankiw criticises David Friedman who is worried about what politicians will do with the gigantic tax revenues that come out of a carbon tax.

I think there is a way out which can satisfy all parties: this is Martin Feldstein's idea of having tradeable carbon vouchers. In brief, the idea is that the government should only setup an enforcement machinery, and every citizen should get a voucher entitling X amount of carbon emissions a year. After that, the rich will buy vouchers from the poor, thus achieving a new distribution of the emission rights, in a way that avoids having this money flow into the exchequer [link, link]. This is the ideal solution for the carbon problem: a target level of emission is achieved, using the most efficient solution in terms of modified technology and consumption, while avoiding the political economy problems of a large tax/GDP ratio.

Global warming aspects of the Indo-US nuclear deal

The major focus about the Indian nuclear deal has been on proliferation issues. However, CO2 emissions is also an important dimension of the deal [link]. Ila Patnaik has two articles on nuclear energy [one, two] and one on global warming [link].

In the weeks leading up to the vote at the US Senate, David G. Victor of Stanford has done a document The India Nuclear Deal: Implications for Global Climate Change:Testimony before the U.S. Senate Committee on Energy and Natural Resources. The abstract reads:

The nuclear deal probably will lead India to emit substantially less CO2 than it would if the country were not able to build such a large commercial nuclear fleet. The annual reductions by the year 2020 alone will be on the scale of all of the European Union's efforts to meet its Kyoto Protocol commitments. In addition, if this arrangement is successful it will offer a model framework for a more effective way to engage developing countries in the global effort to manage the problem of climate change. No arrangement to manage climate change can be adequately successful without these countries' participation; to date the existing schemes for encouraging these countries to make an effort have failed; a better approach is urgently needed.

You can access the PDF file via `esocialsciences.com' (free registration required): link.

Global warming and the Indian nuclear deal

Kirit Parikh headed a group which has produced a report presenting an integrated view on Indian energy policy, looking out into the next 25 years.

There has been considerable debate on the "Nuclear Deal" where India separates out civilian from military nuclear facilities, and gets access to imports of reactors and Uranium. Generally, discussions about this subject are rooted in questions of India's choice of retaining the right to build nuclear weapons. Business Standard has an editorial today which looks at the energy dimensions of this problem. They worry about the gigantic scale of CO2 emissions that will come about as India moves forward with a primarily coal-fired energy system. As they say:

Nuclear energy is the only scalable source of energy which avoids CO2 emissions. The Parikh plan is based on the views of the Department of Atomic Energy (DAE). Over the 1947-2030 period, the DAE is supposed to have figured out how to use our plentiful Thorium to generate essentially infinite nuclear energy. But along the way, the DAE plans insignificant nuclear generation. Nuclear energy is too important to be left to the nuclear establishment. Prime Minister Manmohan Singh's nuclear deal with the US has thrown up the opportunity to get to a sound integrated energy policy. Indias best path today is to import world-class reactors of perhaps 100,000 Mw over the next decade. These should become the mainstay of the emerging private electricity generation industry. In global negotiations on CO2 emissions, India should insist on a per capita cap, which will generate huge revenues for Indian citizens from selling excess permits. Energy security can be obtained by holding a 5-10 year inventory of fuel.

Any OECD lawmaker who tries to interfere with Indian import of nuclear reactors and fuel should be given a copy of the Parikh plan, so that the consequences of India staying on the DAE trajectory can be seen. The whole world has a stake in Indian nuclear energy policy being freed from the DAE.

Elizabeth Kolbert had a marvellous three-part article in New Yorker a while ago, on global warming. It's a bit hard to find through google, so here's a text file with the content.

Update: Shekhar Gupta has an excellent big-picture piece in the Indian Express, about India's evolution on the nuclear question.