Quicksand ahead

President George W Bush?s State of the Union address surprised observers across the world for its reference to the US ?addiction? to oil and his appeal to reduce drastically that country?s dependence on oil imports. Other leaders round the world have been encouraged by this apparent shift in position by an administration whose energy policy appeared to be based solely on opening up virgin and ecologically precious areas of land in the US for oil exploration. The US has indeed been addicted to oil, and the love affair of that society with the automobile is the reality, which prompted Bush to say that the American way of life is not up for negotiation, when he summarily rejected the Kyoto Protocol. But how do we in India manage our own growing addiction to oil? The mounting sale of cars in this country certainly helps the economy to grow. And modern living certainly glamorises the use of automobiles. But if we have any concern for the future we need to curb our dependence on automobile usage and as a consequence on oil imports. India is currently using around 2.7 million barrels of oil per day. This would most likely double in the next 25 years if we continue on a business as usual path. A sudden increase in global oil prices would hit the Indian economy and the consumer brutally. Projections indicate that at the end of 25 years India may have around 200 million cars running on our roads, a nightmare scenario for reasons of traffic safety, congested road space and local pollution. Ownership of cars is becoming part of the Indian middle-class dream but we have to find solutions whereby the intensity of car usage is limited and other options created and encouraged involving public transport on a large scale. Transport remains the largest user of liquid fuels, but in our country several sectors use petroleum products for power generation because of inadequacies in supply of power from the grid. These range from large industrial units generating their own power to shopkeepers and farmers deploying diesel pumpsets for irrigation. Hence, any effort to reduce dependence on oil must involve a major improvement in power supply, a daunting challenge given the current deficiencies. But there are enormous opportunities for improving the efficiency of electricity use in the country, which could be realised with rational pricing of power, such as in agriculture. Major efficiency gains are also possible with the growing number of household appliances including light bulbs and refrigerators. Almost one sixth of our electricity is consumed for lighting, which could be reduced through the use of compact fluorescent lamps (CFLs). Such improvements in technology can be attained only with differential tax rates based on progressively higher rates for inefficient devices. Similar differentials should also be devised for the automobile industry with higher taxes being imposed on gas guzzling models and designs. Rational pricing would move the Indian economy towards higher efficiency of energy use. A particularly perverse case of irrational pricing is the subsidy on kerosene, which leads to large-scale adulteration of other petroleum products. Kerosene usage in rural areas is largely for lighting purposes. A recent study by TERI shows that if the subsidy was shifted to solar lanterns not only would this provide a clean and pollution free form of lighting for rural households, but would also eliminate the menace of adulteration of petroleum products. Subsidies on LPG should also be removed, and provided only to benefit those below the poverty line through the issue of smart cards across the country. A nation that prides itself in the use of electronic voting even in the most backward areas can surely implement a system using smart cards for various benefits. Some institutional changes would become necessary if we are to bring our addiction for oil under control. Firstly, the Indian Railways have to bring about substantial upgradation of services and technology and must also set up a joint venture for public transport systems. The government will have to provide a stable framework for the creation and operation of public transport infrastructure which is remunerative for the railways. We also need a massive programme for R&D and largescale production of biofuels. In the short term, however, we need to curb private vehicular transport by imposing road user charges in congested areas, incentives for car-pooling and multi-passenger movement of private vehicles and increase in registration fees for passenger cars. This would therefore not be a painless exercise, but no process of de-addiction ever is.