Recently, the PM met the CEOs of 18 private power generation companies. The meeting had been sought by the businessmen. They wanted to apprise the PM and his Cabinet colleagues responsible for energy of the difficult conditions facing their companies. The supply of domestic coal was inadequate, imported coal was expensive, the state electricity boards did not have the financial muscle to absorb the higher import costs nor the political mandate to pass on these costs to the consumer, and the power generators were consequently squeezed in the middle and in dire financial straits. The businessmen made clear that unless the situation was rectified, the flow of capital into power generation would dry up and the already severe energy deficit facing the country would worsen. The PM?s ears were clearly bent. For he reportedly directed his colleagues to set out a time-bound schedule of measures to alleviate the crisis and resuscitated an inter-ministerial energy committee under the chairmanship of his principal secretary. The decision of the PM is important not so much because of the actions it might trigger in the short term, but because of the momentum it could generate for an integrated energy policy.

The energy sector is currently in a state of transition. It is headed in a direction that will bring about changes comparable in impact to those engendered by the invention of the steam engine in the 19th century or liquid fuelled transportation in the 20th century. It is not possible at this point to put a time-line to this transition or to define precisely the architecture of the future energy system. But it is credible to posit that the combined impact of technology, increased investment in ?alternatives? and growing public sensitivity to the environment, will eventually radically reconfigure the existing order. It can also be stated that the governments that wish to influence the direction and pace of this transition will have to formulate and implement their energy policy within an integrative and collaborative decision-making structure?one that aligns technology, infrastructure, markets, people and policy for all energy sources and facilitates partnerships between public and private stakeholders. This is particularly apposite for India as today it looks at energy through a fragmented prism. There are, for instance, seven central government entities involved in energy?the ministries of petroleum & natural gas, coal, atomic, new & non-conventional, power, Planning Commission and the PMO. Each is headed by a Cabinet minister; most have a phalanx of PSUs under their jurisdiction and all are bent on to protecting their narrow turf. The integrated energy policy document prepared by the Planning Commission some years ago is gathering dust.

Change is seldom linear and unconstrained. It twists and turns and often takes one step forward as a prelude to taking two steps backwards. This is particularly true for the energy sector as it is hugely complex. It has massive embedded capital, the consumption patterns are difficult to alter and there are vested interests protecting the status quo. Radical change is possible, therefore, only when two forces?technology and infrastructure?get locked into a synergistic embrace. The development of one without compatible and timely investments in the other cannot lead to a system-wide overhaul.

Technology per se has seldom been a blocker for the energy sector. Industry has almost always managed to find a technological answer to existing and emergent problems. The Cassandra?s complex of ?Peak Oil? for instance who have maintained that the world is running out of petroleum have had to time and time again push back the date of their peak because of the resources unlocked by new technology. The commercialisation of unconventional oil/gas (viz shale, coal-based, etc) is just the latest example of this fact. One can be fairly confident therefore that technology will find solutions to the challenge of moving the world onto a low carbon trajectory. The problem is that technology alone cannot bring about such a move. It can provide the necessary conditions but it cannot meet the sufficient requirements. That will hinge on the creation of compatible infrastructure for bringing the technology to the market. The nature of this problem is best exemplified through example. Edison flipped the switch that electrified JP Morgan?s offices in New York in 1882. It was not, however, until the 1930s that the factories in America switched from steam power to electric power. This was because they had to be redesigned and, in many cases, rebuilt. Similarly wind turbines were first installed in the US and Denmark in the early 1980s. Notwithstanding, three decades later wind energy accounts for a very small share of the energy basket. The constraint here again has not been technology but infrastructure and specifically land. Huge amounts of land are required to scale up wind energy. Were America to replace all of its coal based power plants with wind energy, it would require land the size of Gujarat.

India defied conventional economic wisdom by leapfrogging from a predominantly agriculture-based economy to a service-dominated economy. Economics 101 has the sequence of development running from agriculture to domestic industry to exports to eventually services. An opportunity now exists for India to leapfrog onto a new energy architecture. This will take many more years than it look to reshape our economy but that does not take away from the fact of this opportunity. The question is whether India can put in place the institutional structures to realise it? Can it create the enabling environment to steer the energy sector through the storms of its current travails (as underlined by the CEOs) and at the same time encourage technology and innovation, attract investment into ?smart? infrastructure and reshape consumption habits to in time reach its longer-term destination of a sustainable energy future built on modern ?clean? technology? The PM?s decision to formalise a regular dialogue between the various energy ministries would be significant if it helped create such an environment.

The author is chairman of the Shell Group in India. Views are personal