Biomass - Energy Toolbox

Conclusions and Recommendations - part 2

India Energy Policy

India, is clearly facing a major energy issue as demand for electricity power accelerates as the country continues to modernise. Although India has a basket of energy sources, coal is the dominant source, since the country has its own sources of coal – albeit of a low quality. Clearly there is greater role for the renewables and the policy decision to reach at least a 10% target by 2012 is to be welcomed. The strong positive moves that India has now taken to promote investment in the energy sector, including such from foreign companies, is to be welcomed and provides a good example of the sort of strong positive policy framework that needs to be in place if countries in the region are going to come to grips with their growing energy problems. Several key agencies have been established to provide national and state support to those able to invest in the power industry and direct support is being provided for biomass energy along with co-generation. It now remains to be seen if these positive moves will be translated into the level of investment that will be needed to ensure the continued growth of the power sector in the country.

The Role of the CDM

In terms of international funding, the CDM offers a valuable component to entice foreign investment in energy-linked programmes within the developing world. The process has been slow to start and it is really only within the last 1-2 years that it has become a practical source of funds. The process of project preparation, approval and validation is however not straight forward and many investors are going to be put off by the relatively difficult procedures. We have been able to identify some of the key problems that prevent or at least slow down successful registration. Specialist consultancy companies fully conversant with the requirements for registration will emerge and provide the necessary service. For the smaller investors, some form of joint or group registration will probably be necessary to make the process economically viable. At the current time it is not clear how critical CDM funding will be to the financial viability of biomass and forestry projects, certainly for the very small off-grid projects, the cost of registration and validation will greatly out-weigh the benefits unless the project can be liked to others. It is clearly a process to watch and it would be valuable to return to provide a more complete analysis of the benefits derived from some of the regional projects that have been recently registered and provide a more complete assessment of the real benefits of the scheme within the South Asia region.