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Syllabus Connect:- GS III (Energy)
Context:-
At the beginning of the new millennium, amid growing awareness of the link between energy-related greenhouse gas emissions and climate change, the notion of a ‘nuclear renaissance’ became popular. Scientists and policy makers identified low carbon nuclear power as a potential protagonist in the transition to clean energy.
However, the accident at the Fukushima Daiichi Nuclear Power Plant, operated by the Tokyo Electric Power Company (TEPCO), on 11 March 2011 dealt a blow to plans for swiftly scaling up nuclear power to address not only climate change, but also energy poverty and economic development.
As the global community turned its attention to strengthening nuclear safety, several countries opted to phase out nuclear power.
Following efforts to strengthen nuclear safety and with global warming becoming ever more apparent, nuclear power is regaining a place in global debates as a climate-friendly energy option. That is due to its vital attributes: zero emissions during operation, 24/7 availability, a small land footprint and the versatility to decarbonize ‘hard-to-abate’ sectors in industry and transportation.
But even as technology-neutral organizations such as the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) recognize nuclear power’s ability to address major global challenges, the extent to which this clean, reliable and sustainable source of energy will achieve its full potential remains uncertain.
The Fukushima Daiichi accident and public acceptance in some countries continue to cast a shadow over nuclear power’s prospects. Furthermore, in some major markets, nuclear power lacks a favourable policy and financing framework that recognize its contributions to climate change mitigation and sustainable development.
Without such a framework, nuclear power will struggle to deliver on its full potential, even as the world remains as dependent on fossil fuels as it was three decades ago.
Impact on electricity generation
The biggest immediate blow to nuclear electricity generation came in Japan. With public confidence in nuclear power at record low levels following the accident, authorities suspended operations at 46 of the country’s 50 operational power reactors.
Nuclear energy, a strategic priority since the 1960s, supplying almost a third of Japan’s electricity, was suddenly shelved. In 2019, nuclear power provided only 7.5% of Japan’s electricity. Just nine nuclear power reactors have resumed operation.
Meanwhile, public and government opinion turned against nuclear power in some other countries as well.
Germany, less than three months after the accident, decided to phase out nuclear power entirely by 2022. All but six of the country’s 17 power reactors have since been permanently shut down.
Nuclear power produced about 12% of the country’s electricity in 2019 compared with around 25% before the accident at Fukushima Daiichi, while coal-fired plants remained the largest source of electricity, according to the IEA.
Elsewhere, Belgium confirmed plans to exit nuclear power by 2025.
In Italy, a government-backed plan to bring back nuclear power, shuttered since 1990, fizzled.
And countries such as Spain and Switzerland decided not to build new nuclear plants.
Between 2011 and 2020, some 48 GWe of nuclear capacity was lost globally as a total of 65 reactors were either shut down or did not have their operational lifetimes extended.
The immediate effect was a decline in global nuclear electricity generation through 2012. At the same time, efforts to deploy other low carbon sources, such as variable wind and solar, intensified as countries looked for new ways to address the climate crisis.
Still, nuclear energy remained the world’s second largest source of low carbon electricity after hydro, providing at the time about 40% of all low carbon power.
Rebuilding confidence
The road back for nuclear power was built on actions taken at the national and international levels to share factual information on the real impact of the Fukushima Daiichi accident and further strengthen nuclear safety, combined with ongoing innovations in reactor design and performance and the long-term operation (LTO) of existing plants.
While newbuild projects in some liberalized markets faced cost and schedule overruns, several countries have made significant progress on the deployment of large scale advanced reactors, including in Belarus, China, the Republic of Korea, Russia and the United Arab Emirates. Russia’s deployment in 2016 of the BN-800 fast reactor, a technology that minimizes waste, underscored the potential for nuclear power’s long-term sustainability.
Meanwhile, efforts accelerated in the development of small modular reactors (SMRs), including the deployment of the first SMRs. Today, SMRs are among the most promising emerging nuclear energy technologies. In comparison to existing reactors, proposed SMR designs generally are simpler and rely more extensively on inherent as well as passive safety features.
They are likely to require lower up-front costs and offer greater flexibility for smaller grid, and integration with renewables and non-electric applications such as hydrogen production and water desalination. Innovative designs will also generate less waste or even run on recycled spent fuel.
Five years after the Fukushima Daiichi accident, as the Paris Agreement entered into force, an increasing number of countries were looking to nuclear power as a means not only to address climate change, but to improve energy security, reduce the impact of volatile fuel prices and make their economies more competitive.
Around 30 countries are working with the IAEA to explore the introduction of nuclear power for the first time.
Bangladesh and Turkey are building their first reactors while Belarus and the UAE started generating nuclear electricity last year, demonstrating the important role that newcomer countries will play in the future of nuclear power.
Nuclear energy’s share of global electricity production also ticked up slightly in 2019, to 10.4%, while generating almost one third of the world’s low carbon power. And in 2020, during the pandemic lockdowns, nuclear power played an important part in providing secure, flexible and stable generation in markets characterized by significant drops in electricity demand and large shares of variable generation
Over the last decade, the centre of nuclear power expansion has shifted to Asia, which accounts for more than two thirds of all reactors under construction. In total, 59 GWe in capacity has been added between 2011 and 2020, including 37 GWe in China alone.
Momentum has also begun to build behind the idea that nuclear power has a key role to play in climate change mitigation as well as sustainable development. When the UN Sustainable Development Goals (SDGs) were unveiled in 2015, it was clear that nuclear power could contribute to many of them, including economic development, energy access and climate change.
In its 2018 Special Report on Global Warming of 1.5° C, the IPCC’s model pathways showed that nuclear power will need to make a major contribution to keeping the average global temperature increase (relative to pre-industrial times) under this key threshold. In 2019, an IEA report explained how the transition to net-zero emissions by 2050 will be more difficult and expensive without nuclear energy.
The road ahead
Nuclear energy can help slash emissions beyond the electricity sector as well as address electricity consumption growth, air quality concerns, energy supply security and the price volatility of other fuels. Yet its prospects in some countries remain clouded by policy uncertainty, which adds to the cost of financing this capital-intensive technology.
In its latest annual projections published in September 2020, the IAEA said nuclear generation capacity could almost double by 2050 or decline to slightly below current levels.
According to the report, immediate and concerted action is required to reach the high case scenario. Commitments made under the Paris Agreement and other initiatives could support nuclear power development, but that would require the establishment of energy policies and market designs to facilitate investments in dispatchable, low carbon technologies.
One immediate challenge is the age of the reactor fleet. More than two thirds of operational reactors are over 30 years old and will either be retired in the coming decades or have their lifetimes extended. The anticipated shutdowns of a combined 13 reactors in Germany and Belgium by 2022 and 2025 respectively represent some 14 GWe of lost capacity. The fate of existing reactors in Europe, Japan and the US also remains unclear.
The challenge ahead is to build a safe bridge between ageing reactors and the deployment of advanced technologies. Existing rectors must maintain safety and reliability while staying economically competitive. Advanced reactors under development must be backed up by a proof of concept to successfully clear regulatory hurdles.
Beyond electricity
Global electricity needs, meanwhile, are poised to rise in the decades to come and in key energy scenarios that achieve stringent mitigation targets, a significant role for nuclear power is envisaged. That’s because decarbonizing electricity production through greater use of nuclear power, hydro, wind and solar is only the first step. Clean energy is also needed by sectors such as industry, transport and buildings if the world is to achieve net zero by 2050.
Nuclear power can be used to produce low carbon hydrogen at a competitive cost. Low carbon hydrogen is a key future option for the transport sector, where emissions have tripled since 1970.
While nuclear power’s role on climate change and sustainable development has become better known since the Fukushima Daiichi accident, public acceptance and policy uncertainty still constitute hurdles to the nuclear renaissance once envisaged—but it’s role for future is undeniable.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.
Globally, around 80% of wastewater flows back into the ecosystem without being treated or reused, according to the United Nations.
This can pose a significant environmental and health threat.
In the absence of cost-effective, sustainable, disruptive water management solutions, about 70% of sewage is discharged untreated into India’s water bodies.
A staggering 21% of diseases are caused by contaminated water in India, according to the World Bank, and one in five children die before their fifth birthday because of poor sanitation and hygiene conditions, according to Startup India.
As we confront these public health challenges emerging out of environmental concerns, expanding the scope of public health/environmental engineering science becomes pivotal.
For India to achieve its sustainable development goals of clean water and sanitation and to address the growing demands for water consumption and preservation of both surface water bodies and groundwater resources, it is essential to find and implement innovative ways of treating wastewater.
It is in this context why the specialised cadre of public health engineers, also known as sanitation engineers or environmental engineers, is best suited to provide the growing urban and rural water supply and to manage solid waste and wastewater.
Traditionally, engineering and public health have been understood as different fields.
Currently in India, civil engineering incorporates a course or two on environmental engineering for students to learn about wastewater management as a part of their pre-service and in-service training.
Most often, civil engineers do not have adequate skills to address public health problems. And public health professionals do not have adequate engineering skills.
India aims to supply 55 litres of water per person per day by 2024 under its Jal Jeevan Mission to install functional household tap connections.
The goal of reaching every rural household with functional tap water can be achieved in a sustainable and resilient manner only if the cadre of public health engineers is expanded and strengthened.
In India, public health engineering is executed by the Public Works Department or by health officials.
This differs from international trends. To manage a wastewater treatment plant in Europe, for example, a candidate must specialise in wastewater engineering.
Furthermore, public health engineering should be developed as an interdisciplinary field. Engineers can significantly contribute to public health in defining what is possible, identifying limitations, and shaping workable solutions with a problem-solving approach.
Similarly, public health professionals can contribute to engineering through well-researched understanding of health issues, measured risks and how course correction can be initiated.
Once both meet, a public health engineer can identify a health risk, work on developing concrete solutions such as new health and safety practices or specialised equipment, in order to correct the safety concern..
There is no doubt that the majority of diseases are water-related, transmitted through consumption of contaminated water, vectors breeding in stagnated water, or lack of adequate quantity of good quality water for proper personal hygiene.
Diseases cannot be contained unless we provide good quality and adequate quantity of water. Most of the world’s diseases can be prevented by considering this.
Training our young minds towards creating sustainable water management systems would be the first step.
Currently, institutions like the Indian Institute of Technology, Madras (IIT-M) are considering initiating public health engineering as a separate discipline.
To leverage this opportunity even further, India needs to scale up in the same direction.
Consider this hypothetical situation: Rajalakshmi, from a remote Karnataka village spots a business opportunity.
She knows that flowers, discarded in the thousands by temples can be handcrafted into incense sticks.
She wants to find a market for the product and hopefully, employ some people to help her. Soon enough though, she discovers that starting a business is a herculean task for a person like her.
There is a laborious process of rules and regulations to go through, bribes to pay on the way and no actual means to transport her product to its market.
After making her first batch of agarbathis and taking it to Bengaluru by bus, she decides the venture is not easy and gives up.
On the flipside of this is a young entrepreneur in Bengaluru. Let’s call him Deepak. He wants to start an internet-based business selling sustainably made agarbathis.
He has no trouble getting investors and to mobilise supply chains. His paperwork is over in a matter of days and his business is set up quickly and ready to grow.
Never mind that the business is built on aggregation of small sellers who will not see half the profit .
Is this scenario really all that hypothetical or emblematic of how we think about entrepreneurship in India?
Between our national obsession with unicorns on one side and glorifying the person running a pakora stall for survival as an example of viable entrepreneurship on the other, is the middle ground in entrepreneurship—a space that should have seen millions of thriving small and medium businesses, but remains so sparsely occupied that you could almost miss it.
If we are to achieve meaningful economic growth in our country, we need to incorporate, in our national conversation on entrepreneurship, ways of addressing the missing middle.
Spread out across India’s small towns and cities, this is a class of entrepreneurs that have been hit by a triple wave over the last five years, buffeted first by the inadvertent fallout of demonetization, being unprepared for GST, and then by the endless pain of the covid-19 pandemic.
As we finally appear to be reaching some level of normality, now is the opportune time to identify the kind of industries that make up this layer, the opportunities they should be afforded, and the best ways to scale up their functioning in the shortest time frame.
But, why pay so much attention to these industries when we should be celebrating, as we do, our booming startup space?
It is indeed true that India has the third largest number of unicorns in the world now, adding 42 in 2021 alone. Braving all the disruptions of the pandemic, it was a year in which Indian startups raised $24.1 billion in equity investments, according to a NASSCOM-Zinnov report last year.
However, this is a story of lopsided growth.
The cities of Bengaluru, Delhi/NCR, and Mumbai together claim three-fourths of these startup deals while emerging hubs like Ahmedabad, Coimbatore, and Jaipur account for the rest.
This leap in the startup space has created 6.6 lakh direct jobs and a few million indirect jobs. Is that good enough for a country that sends 12 million fresh graduates to its workforce every year?
It doesn’t even make a dent on arguably our biggest unemployment in recent history—in April 2020 when the country shutdown to battle covid-19.
Technology-intensive start-ups are constrained in their ability to create jobs—and hybrid work models and artificial intelligence (AI) have further accelerated unemployment.
What we need to focus on, therefore, is the labour-intensive micro, small and medium enterprise (MSME). Here, we begin to get to a definitional notion of what we called the mundane middle and the problems it currently faces.
India has an estimated 63 million enterprises. But, out of 100 companies, 95 are micro enterprises—employing less than five people, four are small to medium and barely one is large.
The questions to ask are: why are Indian MSMEs failing to grow from micro to small and medium and then be spurred on to make the leap into large companies?
At the Global Alliance for Mass Entrepreneurship (GAME), we have advocated for a National Mission for Mass Entrepreneurship, the need for which is more pronounced now than ever before.
Whenever India has worked to achieve a significant economic milestone in a limited span of time, it has worked best in mission mode. Think of the Green Revolution or Operation Flood.
From across various states, there are enough examples of approaches that work to catalyse mass entrepreneurship.
The introduction of entrepreneurship mindset curriculum (EMC) in schools through alliance mode of working by a number of agencies has shown significant improvement in academic and life outcomes.
Through creative teaching methods, students are encouraged to inculcate 21st century skills like creativity, problem solving, critical thinking and leadership which are not only foundational for entrepreneurship but essential to thrive in our complex world.
Udhyam Learning Foundation has been involved with the Government of Delhi since 2018 to help young people across over 1,000 schools to develop an entrepreneurial mindset.
One pilot programme introduced the concept of ‘seed money’ and saw 41 students turn their ideas into profit-making ventures. Other programmes teach qualities like grit and resourcefulness.
If you think these are isolated examples, consider some larger data trends.
The Observer Research Foundation and The World Economic Forum released the Young India and Work: A Survey of Youth Aspirations in 2018.
When asked which type of work arrangement they prefer, 49% of the youth surveyed said they prefer a job in the public sector.
However, 38% selected self-employment as an entrepreneur as their ideal type of job. The spirit of entrepreneurship is latent and waiting to be unleashed.
The same can be said for building networks of successful women entrepreneurs—so crucial when the participation of women in the Indian economy has declined to an abysmal 20%.
The majority of India’s 63 million firms are informal —fewer than 20% are registered for GST.
Research shows that companies that start out as formal enterprises become two-three times more productive than a similar informal business.
So why do firms prefer to be informal? In most cases, it’s because of the sheer cost and difficulty of complying with the different regulations.
We have academia and non-profits working as ecosystem enablers providing insights and evidence-based models for growth. We have large private corporations and philanthropic and funding agencies ready to invest.
It should be in the scope of a National Mass Entrepreneurship Mission to bring all of them together to work in mission mode so that the gap between thought leadership and action can finally be bridged.