An Analysis of Energy Efficiency in Indian Industries

Monica Dutta

This section reviews the energy consumption patterns of the various large and small scale industries in India. The idea is to search for the existence of some plausible energy efficiency enhancing techniques in these industries. Exploring these options will definitely ensure costeffectiveness and competitiveness of these sectors in the global market.

Energy Consumption in Indian Industries Energy consumption in India is comparatively lower than the world standards. In the year 2004-05 the per capita consumption of energy in India was only 530 kilograms of oil equivalent (kgoe) whereas the world average was 1,770 kgoe (GOI 2008-09). Much of the total commercial energy available is consumed by the industrial sector (share of industry in total energy consumption in 2006/07 was 45% (TERI Energy Data Directory 2009)). Figure 1 shows a comparison of sectoral shares of industrial energy consumption in India and the world.

Fig 1. Sub-sectoral share of industrial energy consumption (India vs. World)

Source: IEA 2009a; IEA 2009b

T3253

India has the fifth lowest energy efficiency in the world (Kala 2008). However, by using simple measures such as better housekeeping, use of energy efficient devices, process modifications, energy saving potential can be further exploited. Electricity, oil, coal, biomass and gas are the main energy products consumed in India. The industry and the residential sectors are the largest energy users but they differ in the type of fuel used. The residential sector is characterized by a large share of biomass energy use, while the industry primarily thrives on electricity for meeting its energy requirements. The industrial sector in India comprises of several energy-intensive industries (e.g. iron and steel, chemicals, petroleum refining, cement, aluminium, pulp and paper) and light industries (e.g. food processing, textiles, wood products, printing and publishing, and metal processing). The energy intensive industries represented 63% of the total energy consumed in the sector in 2005 (de la Rue du Can et al. 2009). While the absolute energy use in the steel, cement, fertilizer, aluminium and pulp and paper industries in India grew between 1990 and 2005, the specific energy consumption was reduced significantly.

Sectoral Analysis of Selected Energy-intensive Indian Industries92

Steel industry:

Specific final energy consumption in India considerably decreased

from 45 GJ/tcs in the 1980s to around 35 GJ/tcs in the 1990s (Schumacher and Sathaye 1998) and has since further decreased to an estimated 28.3 GJ/tcs in 2005. The differences in energy use across various steel plants in India arises from different technology and production processes used, types of products manufactured, quality of raw material used, scale of operation, size of the plant used, and difference in the installation of energy saving systems. However, over the years Indian steel industry has shifted to energy efficient methods of production. The shift from the Blast Furnace (BF) - Oxygen Blown Converters (OBC) route to Direct Reduction (DR) - Electric Furnace (EAF) route would significantly reduce the energy consumption in the Indian steel industry. Casting and shaping of the steel products follow the steelmaking process. Ingot casting is the classical process and is rapidly being replaced by more energy efficient, continuous casting processes (Kim and Worrell 2002). Fuel switching from coal-based to gas-based direct reduced iron production provides another avenue for reducing energy consumption in this extremely energy intensive sector. Recovery and use of waste energy presents a huge potential for future energy savings in this sector.

T3254

Adopting energy efficient measures at various stages of production such as improvement in ladle design to reduce heat loss, reduction of air leakage and enhanced insulation of furnace are some other means of saving energy consumption in this sector.
Pulp and paper industry:

Currently it is the sixth largest energy user in the Indian

industrial sector (de la Rue du Can et al. 2009). The five key processes in the production of pulp and paper comprises of wood preparation, pulping, bleaching, chemical recovery, and paper making. Each of these processes consumes different amounts of energy. Papermaking process consists of preparation, forming, pressing and drying. Of these, preparation and drying are the most energy intensive processes. Total energy consumption in Indian paper industries is of the range of 51.55-79.97 GJ/tonne of paper produced as opposed to the range of 32.00-40.93 GJ/tonne of paper produced in the mills abroad (Schumacher and Sathaye 1999a). There is existence of substantial energy saving potential in Indian paper industry arising from out-of-date technologies employed in the mills and lack of energy saving devices in the industry. Some plausible options that would help limit the growth in energy use in the pulp and paper industry consists of increasing waste heat recovery, implementing better paper-drying technologies, switching to more energy efficient fuels and increasing the use of recovered paper.
Fertilizer industry:

Production of ammonia accounts for 80% of the energy

consumption for nitrogenous fertilizer (Schumacher and Sathaye 1999b). Ammonia can be produced either through steam reforming or partial oxidation (which uses more energy than the steam reforming). Over the decades there has been a shift in the feedstock mix used for ammonia-urea production from fuel oil and coal to less energy- intensive natural gas and naphtha. The energy intensity in Indian fertilizer industry has decreased gradually from 49.06 GJ/t of total fertilizer produced to 34.20 GJ/t of total fertilizer produced (Sathaye et al. 2005). This decrease in energy consumption in Indian fertilizer industry resulted from advances in production technology; usage of better stream sized urea plants and increased capacity utilization via revamping, modernization of existing plants and closure of inefficient fertilizer units.
Aluminium industry:

Aluminium is produced through primary and secondary

processing routes. The primary processing comprises of alumina production, aluminium production and fabrication of aluminium products through casting, rolling and extrusion. In the secondary process aluminium is produced through remelting aluminium scrap. Mined bauxite is converted to alumina using Bayer process. In this process the best existing plant in
T3255

India competes reasonably well with the worlds best practice (Schumacher and Sathaye 1999c). The next step is to reduce alumina to primary aluminium using the Hall-Heroult process. This step uses electrolysis and thus is the most energy intensive step. The two technologies used for this conversion are the Soderberg and Point Feed Pre-Baked (more energy efficient). The worlds best practice of energy consumption of aluminium smelter is estimated to be 13,600 kWh per tonne of aluminium (Worrell et al. 2008) and in India the consumption is 15,000 kWh in NALCO and 16,000 kWh in Hindalco. Thus, India is almost at par with the worlds best efficiency level in the most energy intensive step of aluminium production. However, if we compare the figures for the fabrication stage, India has a long way to go. Here the electricity consumption in Indias best plant is 1,650-1,800 kWh/tonne as opposed to the world best practice of 775 kWh/tonne. Technology transfers worldwide have pushed up the Indian aluminium industrys efficiency. However, energy saving opportunities lie in several other areas of production: switching over to gas-suspension calciners from rotary kilns, waste heat utilization, adapting to pre-baked smelting system, and captive power generation.
Small Scale Industries (SSI):

SSIs consists of many energy intensive sectors such as

foundry, forging, steel re-rolling mills, glass & ceramics, bakeries, brick manufacture, food processing etc. The primary source of energy for these sectors is coke/coal, petroleum products and electricity. Energy consumption in each of these sectors is of high magnitude. Hence, there is a need to invest in energy efficient measures overtime. Owing to their small size and lack of awareness, the government has a major role to play in promoting such energy conserving methods in SSIs. Energy efficient methods are required for the increased productivity and competitiveness of these industry clusters. A cluster-based approach is supposed to be amongst the set of effective strategies to promote energy efficiency of SSIs in India. A cluster comprises of similar kinds of factor units which resemble in their technologies and production processes. Hence the potential to develop and implement energy efficiency improving practices amongst these similar kinds of units is very high. If a few units in the cluster demonstrate the benefits of lower energy usage in terms of higher productivity and increased profitability, it will be easier for others to follow suit. The SSIs in India are geographically clustered and hence this approach is very effective in demonstrating the benefits of improving energy efficiency in small-scale units. The SSIs however are constrained by limited resources and have to rely on external agents for their assistance.

T3256

Energy Efficient Policies in India The rising demand of energy for promoting sustained growth in India has mandated the need to adopt energy conservation measures. A number of energy efficient policies have been initiated in India staring from the Energy Survey Committee (1965), the Fuel Policy Committee (1974), Working Group on Energy Policy (1979), Advisory Board on Energy (1983) to the passage of energy Conservation Act (2001). Under the provisions of this Act, the Bureau of Energy Efficiency (BEE) came into force from March 2002 onwards. The BEE was responsible for initiating energy efficient measures through various regulatory instruments such as the Appliance Standards and Labelling (S&L), Energy Conservation Building Codes (ECBC), energy consumption norms for designated consumers, establishing energy efficient delivery systems through Public-Private Partnerships etc. The aim was to provide informed choices to the consumers about the extent of energy saving by using energy efficient devices. An appropriate legal and regulatory environment for energy efficient products was supposed to provide a stimulus to the market in favour of energy efficient equipment and appliances. In addition to these efforts, the Ministry of Power (GoI) has also launched the National Energy Conservation Awards in 1991 to give national recognition to the industrial units for the efforts undertaken to reduce energy consumption. The other principal Indian government initiatives to address national problems of inefficient energy use are the National Mission on Enhanced Energy Efficiency (NMEEE) in 2008 and the introduction of an Energy Conservation Building Code in 200793.

Concluding Remarks and Policy Implications There are three categories of policy instruments (legislative laws, standards; economic tradable rights, tax, subsidies; and voluntary voluntary agreements etc.) which are commonly used for improving energy efficiency of any sector. The use of some of these instruments such as laws for energy conservation (Energy Conservation Act 2001) is evident in India. Economic instruments such as tax, tradable rights have shown a greater success in developed nations in constraining the energy demand. However, their usage in India is still to gain momentum. The policy alternatives should be implemented in a manner that increases energy efficiency in respective sectors. India should put efforts to ensure strong enforcement of legislative initiatives taken in this regard. The government should form propositions after consulting as many stakeholders, including NGOs, as possible so as to ensure a broad societal

T3257

support for legislation. In fact, coordination should also take place among the various ministries of the government (for e.g. Ministries of Environment, Industry, energy and Finance). There should be more avenues for the use of economic instruments to improve energy efficiency. The first step with regard to introducing a nation-wide cap and trade has already been put forth by our former union minister for environment Shri Jairam Ramesh. Under this, the three states of Maharashtra, Gujarat and Tamil Nadu are soon expected to have this mechanism for air pollutants94. This scheme allows allocation of different certificates to different industries based on its output which can then be sold by the respective firms when their emission levels go down due to better technology. Attempts should also be made to improve the efficacy of voluntary instruments by regular monitoring and reporting the progress of such instruments. The government should target developing sustainable policies with greater emphasis on renewable sources of energy. Promoting R&D in this field would definitely help India meet its goal of carbonfree growth.

T3258