Evolution of Energy Law

Evolution of Energy Law

 Energy is crucial for modern economies, driving industrial and individual consumption across various industries. The European Union’s Court of Justice emphasizes the importance of petroleum products in the modern economy. Energy law and international energy law have gained popularity as academic disciplines. Regulation in energy sources has been in existence for over a century, including nuclear, hydropower, wind, solar, and biomass. Energy has traditionally centered the global economy, but industrialization has made access to energy sources a major concern for businesses and governments.The development of energy law is different for India. Energy law in India evolved in five distinct stages:

• Phase I concentrated on supply adequacy, with an overall emphasis on infrastructure development as the backbone of the Indian economy.
• Phase II was focused on addressing the energy crisis.
• Phase III focused on increasing, diversifying, and streamlining supplies for energy security.
• Phase IV was the period of modernization of the Indian electricity system as a whole.
• Phase V is the present phase of market transformation and climate change mitigation energy policies.

Phase I (1947-1970):

Phase 1 of India’s energy planning focused on electric supply and the development of the oil and gas sector. Institutions such as the Planning Commission of India, Central Electricity Authority, and Energy Survey of India Committee were established to allocate resources efficiently and recommend policy planning. The Electricity Supply Act of 1948 (ES 1993) acknowledged the importance of a sustainable power system and paved the way for India’s energy agenda. The Central Electricity Authority was founded as a central advisory body for national power planning and policymaking, and the State Electricity Boards (SEBs) were established. The government also established the Oil and Natural Gas Commission (ONGC) and the Indian Oil Corporation (IOC) to regulate energy supply sectors and decentralize the electricity secretary in response to rising energy demand.

Phase II (the 1970s)

Phase II witnessed the focus being changed to energy conservation in response to meet the energy crisis triggered by the worldwide oil shock. The main goal in this phase was to reduce petroleum consumption. Regulation of the coal-mining industry was a high point of this phase. It allowed the government to make lumpy investments and distribute profits from a sovereign resource. It prompted the nationalization of the coal industry in two stages:

• Coking coal,1972
• Non-coking coal, 1973

Coal India Limited (CIL) was founded in 1975 to plan and develop mines. This was the same institution that established the regulations and revolutions in the thermal power sector in India, along with the foundation of the National Thermal Power Corporation in the same year. During this phase, the government began to think about enforcing regulations in the coal-fueled energy sector. On the proposal of the Oil Prices Committee in 1976, regulatory rules in the form of administered pricing mechanisms were implemented in the oil-and-natural-gas industry.

While conservation mandates evolved in India’s energy governance, no steps were taken to replace fossil fuels with sustainable energy sources. The Planning Commission in the 1970s were more focused on meeting people’s fundamental needs for electricity and cleaner form of household energy than on transitioning to more sustainable energy sources.

Phase III (the 1980s)

Phase II was the time of soaring expectations which resulted in a significant increase in energy demand. New energy productivity and management tactics had begun to characterize the course of the energy industry in India. This was the first time that energy conservative goals were set. This phase concentrated on increasing, diversifying, and streamlining the supply side to improve India’s energy sector. The Advisory Board on Energy was established in 1983 and was set up to develop an integrated national energy policy. The goal of the integrated national energy policy was to expand on the potential of non-conventional and renewable energy as a way to replace the costly imported coal and oil. Owing to this situation, the Nuclear Power Corporation of India Limited was founded in 1987. It was during this phase that all energy departments were consolidated into a single Ministry of Energy, except for the atomic energy department.

Phase IV (1990s)

The 1991 phase marked a turning point in India’s energy scenario, as the country liberalized its closed economy and adopted policies for deregulation, privatization, and foreign investment in the energy sector. The creation of the Bureau of Energy Efficiency and the drafting of the Energy Conservation Bill emphasized the government’s growing concern for sustainable energy policy. The Ministry of Non-Conventional Energy Sources (MNES) was founded in 1992, later changed to the Ministry of New and Renewable Energy (MNRE) in 2006.

The electricity sector faced a substantial fiscal burden at the beginning, but amendments to the Electricity Supply Act in 1991 allowed large-scale private investment. However, these reforms failed to address the underlying causes of the sector’s poor performance, such as state government political clout. The Regulatory Commission Act of 1998 created the Central Electricity Regulatory Commission (CERC) and restructured the State Electricity Regulatory Commission, bringing regulatory consistency to the Indian power sector.

The 1991 economic reforms abolished the public monopoly in the electricity sector, leading to increased power generation and the adoption of sustainability initiatives such as plant renovation, modernization, new capacity creation, and private sector participation. However, FDI was unable to attract the necessary private investment, and progress towards a more efficient coal-based power industry was delayed.

Phase V (2000s)

India’s Phase V is the active energy planning phase, with the Central Electricity Regulatory Commission (CERC) introducing availability-based tariffs in 2000 and the Accelerated Power Development and Reforms Program (APDRP) in 2002. The Restructured-APDRP was introduced in 2003, improving the APDRP by providing an incentive-based methodology. The Progressive Electricity Act of 2003 (EA 2003) was based on these policies, aiming to improve competition, accountability, and commercial viability in the sector. The EA 2003 also introduced the National Electricity Policy 2005, National Tariff Policy 2004, Integrated Energy Policy 2006, and Hydropower Policy 2008. Other important policy measures include the National Action Plan on Climate Change (NAPCC) of 2008, the Energy Conservation Act of 2001, the Perform, Achieve, and Trade (PAT) Agreement, and the National Mission for Enhanced Energy Efficiency and Market Transformation on Energy Efficiency. The current power policies are based on NAPCC principles, emphasizing renewables in the primary energy mix.The rapid completion of power plants in India has led to a shortage of coal, increasing reliance on imported coal. This has impacted the country’s cross-subsidy mechanism, hindering its 2022 renewable targets. Wind energy can reduce coal reliance and can be deployed quickly without legislative support. Solar energy requires strong policy support to make it accessible and affordable. The cost of imported coal is the second most expensive fossil-fuel-based energy in India’s overall energy mix. Subsidies on domestic petroleum products, such as liquefied petroleum gas (LPG) and kerosene, hinder sustainable practices and discourage retail efficiency. Policy initiatives like Saubhagya 2017 and Ujjawala Yojana 2017 aim to reduce subsidy burdens while maintaining social costs.