At a time when the world is stressing upon the need to explore renewable energy sources to meet growing energy needs, Vice-President Hamid Ansari on Friday warned that renewable energy systems have proved to be land intensive, particularly in the case of bio-diesel blending and solar thermal electric generation and it is also facing the problem of grid capacity for transporting renewable energy.

Inaugurating the India Energy Conference, Ansari said though the government has ambitious programmes underway to utilise renewable energy and has announced the New and Renewable Energy Policy 2005 and the National Policy on Bio-fuels that aims to raise blending of bio fuels with petrol and diesel to 20% by the year 2017, the country might not be able to provide the vast tracts of land that would be required for the purpose.

Stressing that many renewable projects already face the problem in transporting the energy from areas of production to areas of consumption, the Vice-President said the government would have to find ?innovative ways of either redesigning the current electricity grid networks or commission renewable energy systems in stand-alone mode and independent of the national grid.?

At present, renewable energy accounts for 6.8% of primary energy consumption with hydroelectric power being the principle component. According to the International Energy Outlook 2008, most of the growth in renewable energy consumption in developing countries over the next 25 years is expected to come from hydropower. In the case of India, this would require new approaches to regional cooperation, Ansari said.

Referring to the need to ensure availability of energy to all segments of society and conservation and environmental sustainability of energy sources, Ansari mentioned the Parikh Committee Report of the Planning Commission that has estimated that the country would have to increase the primary energy supply by 3 to 4 times and electricity generation capacity and supply by 5 to 6 times of the 2003-04 levels to sustain a growth rate of 8% through 2030.

Citing the International Energy Outlook 2008 report on energy consumption, Ansari said that coal accounts for 53% of primary energy consumption in the country, oil for 31%, natural gas for 8%, renewables including hydropower for 6.8% and nuclear energy for 1.2%. By the year 2030, it estimates that this mix would change substantially only in regard to natural gas and nuclear energy whose share is expected to go up to 12% and 5.4% respectively.

While the government is looking at pursuing all energy options both conventional and non-conventional, expanding energy resource base and diversifying the sourcing of energy, both internally and globally to maintain the supply, the Vice President said that demand management is more difficult. ?It should include improved energy efficiency and lower energy intensity of GDP growth, and recognise that relative fuel prices ought to lead to the correct choice of fuel, energy form and technology?, he said, adding that

demand management should lead to competitive energy markets where government subsidies to the needy are ?clearly targeted, and resource allocation and pricing decisions are market determined and subject to effective regulation? as stated by the Parikh Committee.

?It has recently been estimated by Morgan Stanley that half of the world?s population enjoys fuel subsidies. In effect, this means that a quarter of the world?s petrol is sold at less than the market price,? Ansari noted.

On the susceptible issue of fuel subsidies, Ansari said it is ?politically sensitive and have adverse consequences for government finances and the efficiency of energy use. All stakeholders therefore need to enquire if fuel subsidies are the most efficient way to protect the poor and vulnerable households.?

An IMF working paper on fuel subsidies in five emerging economies has noted that the richest 20% of households received on average 42% of total fuel subsidies, whereas the bottom 20% of households received less than 10% of subsidies. ?Thus universal and undifferentiated subsidies for petrol, diesel and LPG imply a substantial leakage of benefits to higher income groups? Ansari said.

?The ideal however is not always possible. Fashioning targeted fuel subsidies, or effecting direct transfers to poor households in a non-fuel subsidy regime, calls for an effective social protections system that could safeguard the real incomes of the poor. This as yet is lacking,? Ansari said. Speaking about importance of energy conservation Ansari said India should use the technologies that are available and these can be implemented in all end-use sectors, which is yet to be achieved.

?The energy intensity of our growth has been falling and is estimated to be about half of what it was in the early 70s. We currently consume 0.16 kg of oil equivalent per dollar of GDP in purchasing power parity terms. This is significantly lower than China, which is 0.23 kg of oil equivalent, US at 0.22 and a world average of 0.21,? he said.

Current energy assessments only take into account marketed energy use whereas over 80% of rural households in India still rely heavily on non-marketed energy sources such as wood and cow-dung for heating and cooking, he pointed

Ansari said that with faster development, improving energy infrastructure and rising incomes, many households in rural India would seek to access marketed energy sources and energy-using equipment, making it imperative to focus on further reducing the energy intensity of our growth. Government is also committed to putting in place a market-based mechanism for trading of certified energy savings and developing fiscal instruments to promote energy efficiency.

?It remains to be seen if these steps would have a meaningful impact on the losses in the transmission and distribution of electric power that currently stands at 36% of the primary energy consumption. It is to be noted that the global average on this count is around 28%,? Ansari said.