Dr. Arvind Kumar, Editor, Focus Global Reporter conducted an interview with Mr. Kapil NARULA, Ph.D., Senior Analyst Breakthrough Agenda, Climate Champions Team, Dubai, UAE. Excerpts from the Interview are reproduced here.
Mr. Kapil Narula is Senior Analyst, Breakthrough Agenda at the UN High Level Climate Champions Team where he works on catalysing international cooperation for ambitious climate action. He has over two decades of versatile work experience in international organisations, government, think tank and universities. He works on clean energy transition, climate change and maritime sustainability. He is the author/editor of seven books and more than 100 articles/papers. He has earlier worked as Economic Affairs Officer at the United Nations, Advisor (Energy) at NITI Aayog, lecturer at the University of Geneva and an officer in the Indian Navy. He holds an interdisciplinary Ph.D. degree in economics, master’s degree in engineering and has a certification in sustainability and climate risk.
INTERVIEW
EDITOR: Energy markets are undergoing significant transformations, with trends like decentralization, digitalization, and electrification reshaping the landscape. What implications do these trends have for energy security and sustainability, particularly in emerging economies?
MR. KAPIL NARULA, Ph.D.: The global energy landscape is evolving rapidly and an energy system transformation is already underway. In 2012, I formulated the concept of Sustainable Energy Security (SES) – defined as “the provisioning of uninterrupted energy services in an affordable, equitable, efficient and environmentally benign manner” and proposed that it should be the goal a developing country. Today we see that countries are embracing SES and energy policies are driven by the goal of energy affordability, equitable and just energy transition, energy efficiency, and minimizing GHG emissions. The five emerging trends – democratisation, decarbonisation, decentralisation, deregulation and digitization – of energy are enabling the global energy transition. The implications of the energy system transition are profound – from reshaping the international fossil fuel trade to significant geopolitical and economic power shifts. Today, emerging economies have a once in a lifetime opportunity to leapfrog from traditional centralized energy system architecture to a decentralized, flexible, clean, and smart energy system to provide affordable and reliable energy services for their citizens.
EDITOR: As someone who has worked at the United Nations and advised the Government of India on energy matters, what do you see as the most pressing challenges in achieving sustainable energy access and security, especially in developing countries?
MR. KAPIL NARULA, Ph.D.: The energy system is complex and requires expensive infrastructure which takes several years to build. Hence large-scale energy system transformation is challenging, particularly in the face of limited access to low-cost capital for developing countries. Secondly, the world is addicted to cheap energy sources and most often energy prices do not fully reflect the negative environmental externalities from energy use. Lastly, capitalistic economic systems favour privatization of profits and socialization of costs leading to increasing concentration of wealth. Hence, we observe rapidly increasing income inequality and inadequate progress on SDGs.
While challenges differ across countries, the three most pressing ones in achieving sustainable energy security are:
- Resistance to change
- Managing the vested interest of diverse stakeholders
- Influencing large scale behavioral change
Today, there is sufficient money, technological solutions and human capital to shift to a decarbonized global energy system. What is lacking is the political will to make the change.
EDITOR: As we strive to achieve the objectives of the Paris Agreement and decarbonize our energy systems, what role do you see for innovative technologies such as energy storage, carbon capture and storage/utilization (CCS/CCUS), and advanced nuclear reactors in enabling a sustainable energy future?
MR. KAPIL NARULA, Ph.D.: We must remember that energy demand is the driver and the entire energy system including primary energy extraction, energy conversion, storage and distribution infrastructure is developed to meet this demand. I would like to share the energy action pyramid which shows the interventions which must be undertaken for large scale decarbonization. We need to start at the bottom of the pyramid by energy conservation and energy efficiency. In a conventional energy system 1 unit of electricity saved at the consumer end is 3 units of energy saved at producer end, due to inherent conversion and distribution losses. Energy system optimization and demand side management also avoids investment in new energy infrastructure. Low emission energy supply sources such as wind and solar coupled with storage technologies such as pumped hydro must be deployed after the above opportunities are harvested. Electricity and hydrogen are energy carriers which provide flexibility but are not suitable for use in all applications. CCS/CCUS and CDR technologies should be the last resort as these are comparatively much more expensive than other options for decarbonization. Nuclear power including modular reactors is a viable option, but has inherent risks and its deployment is essentially a political decision.
EDITOR: Energy security is often intertwined with geopolitical dynamics and national interests. How do you assess the geopolitical implications of shifting energy paradigms, such as the rise of renewable energy and the transition away from fossil fuels?
MR. KAPIL NARULA, Ph.D.: As I had mentioned earlier, the energy system transformation will lead to redistribution of geopolitical power. Oil importing countries such as those in the EU, China and India will eventually lower their dependence on energy imports and will emerge as winners as they gain more favorable trade balance. On the other hand, fossil fuel exporters countries in the Middle East and Russia will lose their global influence unless they diversify to other economic activities. There is already a growing risk of stranded fossil fuel assets which is reflected in Saudi Arabia’s recent decision to abandon plans to increase its oil production capacity by 8 per cent to 13 million barrels a day by 2027.The signals of change can also be seen in the outcomes of COP 28, where a transition away from fossil fuels was endorsed by UAE Presidency – a fossil fuel exporter country. Shifting energy paradigms and the resulting climate policy is also determining domestic politics. This is evident from the widespread discontent and rebellion against the European Green Deal which is escalating across Europe.
EDITOR: Given your expertise in energy economics and policy, how do you assess the role of governments and international organizations in fostering the transition to a low-carbon economy? Are there any notable policy initiatives or frameworks that you believe have been particularly effective?
MR. KAPIL NARULA, Ph.D.: Governments have the power to frame polices (incentives and penalties) and regulations which can become drivers of deep decarbonization. Mechanisms such as COP summits provide a framework for formal negotiations for a coordinated global response to climate change. These negotiations are based on political consensus(not a majority vote) which may lead tolack of ambition in the outcomes. Nevertheless, the intergovernmental process brings together all countries and provides a common ground for discussions. However, this process does not limit governments options to aggressively act against climate change. For example, Finland has set a legally binding net zero target for 2035and Maldives is targeting 2030 to achieve net zero emissions subject to receiving adequate international support. The EU has also proposed a bold new target of 90% reduction in CO2 emissions by 2040 compared to 1990. In terms of other frameworks, I would like to highlight the role of Climate Champions Team which complements UNFCCC efforts and the efforts of the national governments by connecting the work of nonparty stakeholders such as subnational governments, companies and businesses to deliver the goals of the Paris Agreement. These real economy actors can play a vital role by implementing decarbonization actions for real world impact.
EDITOR: Carbon pricing mechanisms, such as carbon taxes or emissions trading schemes, are often touted as essential tools for incentivizing emissions reductions and driving investments in low-carbon technologies. What are your views on the effectiveness and feasibility of carbon pricing policies, particularly in diverse economic contexts?
MR. KAPIL NARULA, Ph.D.: Carbon pricing in an important tool to account for the environmental externalities caused by use of fossil fuels. Carbon taxes are administratively easier to implement and provide a source of revenue for the government. On other hand, ETS provides incentives to participants and are economically efficient but setting the emissions cap is difficult and it has higher administrative costs. Both mechanisms increase the cost of goods and services and international competitiveness must be examined prior to their implementation. International trade of carbon credits must also be carefully examined before implementation as there is a risk of exporting low-cost carbon credits and being left with the higher marginal cost carbon credits at a later stage.
Each mechanism has its benefit and is suitable for a specific sector and country. Ideally a country with weak administrative and monitoring capacity should start with a low carbon tax to build political acceptability and then incorporate ETS progressively, starting with the industry sector. Voluntary carbon markets are also expanding rapidly and can add to financing the transition to clean technologies.
EDITOR: The concept of a circular economy is gaining traction as a means to reduce waste and promote sustainability. How do you see the emergence of this concept?
MR. KAPIL NARULA, Ph.D.: Per capita resource consumption was much lower half a century ago. With the trend of growing income, our resource consumption is increasing rapidly and so is our per capita waste production. Each year, a third of all food for human consumption in the world (1.3 billion tons) is lost or wasted. Fast fashion is taking its toll and the average number of times an item of clothing is worn has decreased by 36% in the last two decades with close to 100 million tons of clothes-related waste each year. Rising material extraction has actually shrunk global circularity: from 9.1% in 2018, to7.2% in 2023, leaving a huge circularity gap. Circular economy approaches are gaining attention because they are being formalized and advertised, but on ground there is little action especially in emerging economies. Some good developments have taken place such as the French Food Waste Bill in 2016, which required supermarkets to sign contracts with charities to regularly distribute edible food products nearing their expiration date. This has allowed redistribution of about 50,000 tons of food every year to the needy and could serve as a good model for emerging economies.
EDITOR: The concept of energy justice emphasizes equitable access to energy resources and benefits for all segments of society. How can policymakers and stakeholders ensure that energy transition efforts prioritize and address the needs of marginalized communities and vulnerable populations?
MR. KAPIL NARULA, Ph.D.: Equitable access to energy resources needs to be prioritized for weaker segments of the society. Low-income households spend a larger share of household expenditure on energy sources and inequality is also observed between rural and urban households. Targeted energy subsidy is one way to address this inequality. The redistribution of LPG subsidies from higher income households to BPL households is one such example. Another way is through adopting an appropriate electricity tariff structure where per unit cost increases significantly with the increase of electricity consumption. Introduction of higher road taxes for private diesel-powered cars and lowering the price of clean public transportation provides equitable mobility. Capital expenditure to improve electricity and clean cooking access for indigenous people, marginalized communities and vulnerable populations also bolsters energy justice.
EDITOR: Energy transition pathways vary widely across different regions and countries due to factors like resource availability, policy frameworks, and technological capabilities. Can you share examples of successful energy transition initiatives from your experience, and what lessons can be drawn from these cases for other regions?
MR. KAPIL NARULA, Ph.D.: The fundamentals of energy transition are the same but the pathways are different for different countries. I will list two successful examples.
Today, Norway has the highest electric vehicle adoption rate in the world and 82% of new car sales were EVs in 2023. The next place was occupied by Iceland with 40% share and countries including China were far behind with 24% share. In 2017, Norway adopted a goal of goal to phase out internal combustion engine vehicle sales by 2025. Government policies of free parking, permitting use of bus, no toll, zero taxes and free ferry travel for EVs since the last two decades have encouraged public to shift to EVs. There is an added advantage of lower running cost as over 98 percent of electricity production in Norway is through renewables.
Another example is the rapid rural electrification in India – a feat which was considered nearly impossible, a decade ago. Under the ambitious Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) launched on August 15, 2015, more than 18000 villages were electrified within 1000 days of the launch of the program. A budget of USD 11 Billion was allocated for this program and the entire government machinery was mobilized to achieve this mission.
The first lesson to be learnt is to have an ambitious goal. The second is to develop an ecosystem which supports the transition through public action. Lastly, rural electrification in India demonstrates that strong political will is necessary for rapid positive change.
*Senior Analyst Breakthrough Agenda, Climate Champions Team, Dubai, UAE.
