Cities & Energy: Two things India must get right to improve the economy

If one looks at the way India is currently growing, it is hard not to see the stress on cities and the rising energy insecurity. Congestion, urban sprawl and poor access to reliable energy make for daunting challenges to the development of the country. Course corrective measures, which focus on compact and connected cities that use more renewable energy and plan for universal energy access, are going to be needed right away for economic growth to enhance human well-being.

The Problem

India’s cities are bursting with growth. The country’s urban population will cross 600 million in the next 15 years, and cities will account for the majority – 75%- of national GDP. However, productivity is likely to be impacted by congestion, urban sprawl and high levels of pollution. Delhi, Patna, Gwalior and Raipur already have some of the worst air pollution levels in the world. In fact, the World Bank estimates that the impact of growth-only oriented policies are costing the Indian economy a staggering loss of 5.7% of the GDP, mainly due to urban air pollution, and 3.5% of the GDP for loss of ecosystem services.

The fast rising demand for energy is in keeping with India’s urban growth. Large swathes of the country, especially the rural poor, have little or no access to regular power supply. With limited natural resources for fossil fuel based domestic production, energy will continue to be a serious constraint to growth and development – unless policy change, new business models and innovative finance are deployed to harvest energy efficient resources, tap renewable energy sources and advance universal access to energy.

The Solution

Research shows that designing compact and connected, rather than sprawled, cities can save trillions of dollars globally. Key aspects of modern city development are: a) efficient public transport systems that can reliably move city-dwellers to their destinations, b) high-quality of public spaces that are walkable and c) sustainable infrastructure such as reliable water supply and sewer systems.
Focusing on renewable energy to fuel India’s growth has big advantages. Given that it is becoming more affordable, renewable sources will produce greater energy security in a country persevering to fuel its economic growth. In addition, renewable energy will reduce the harmful polluting impacts of conventional energy sources. Cities tend to suck up the majority of energy resources. A focus on making buildings and appliances more energy efficient, as well as applying an integrated energy planning model that harnesses the potential of both demand side (energy efficiency) and supply side (renewables, distributed generation) options will go a long way to ensure reliable and sustainable energy access for all.

Ambitious Targets

The Government of India has made ambitious public commitments on both the Cities and Energy front. It has said it will develop 100 Smart Cities across the country by 2020. Although plans for these are still in the works, it is generally known that they will be developed under a public-private partnership model, with gap funding from the government. On energy, the government has revised its solar targets for 2022 to 100 gigawatts – more than five times the previous goal – and is known to be considering a new target of 60 gigawatts in wind energy capacity. In fact, clean energy was a big part of Indian Prime Minister Narendra Modi’s interactions with President Obama’s visit to New Delhi last month.

A good place to start

Urban governments are the best placed to lead development on smart cities, as well as to look at integrated resource planning. A few immediate recommendations for these governments to consider are as follows

• Integrate public transport infrastructure and land development to ensure efficient expansion of urban areas to accommodate growing populations.
• Focus on infrastructure, especially public transit, water, sewage, sanitation and power
• Strengthen power sector regulation to make sustainable energy more accessible to the poor:
• Reduce power-sector losses and generate savings to invest in energy-deficient areas in partnership with clean energy entrepreneurs
• Implement innovative financing models to make distributed and grid-scale renewable energy more viable
• Focus on better distribution models for power and give micro-grids a boost
• Strengthen urban governance, by employing more transparent accountable and technology enabled decision making processes

In the long-term

In the long term, the Indian government and its partners – whether public or private – will need to look at a more holistic picture of development. Growth in cities is unstoppable: but why is there such massive growth in the cities in the first place? The discourse on sustainable development must veer towards unearthing the causes of urbanization. Eventually India’s path to economic growth will have to include the economic geography of land, food, water and energy, as well as the development of peri-urban and rural areas of the country.