UNCHS Habitat) Regional Conference on Sustainable Consumption Patterns in Asian Cities

Fukuoka, June 29 through July 1, 1998

Problems, Challenges and Prospects for Sustainable Management of Energy Demand in Asian Cities

By R.K. Pachauri, Ardhendu Sen

Tata Energy Research Institute, New Delhi

1. Growth in Energy Demand

The Asia-Pacific region has accounted for most of the rise in demand for commercial energy in the 1990's. Energy consumption grew in Asia by 6.2% per year over 1990-1993 while there was a decline of 1% for the world as a whole. The outlook for growth and energy demand for different regions is shown in Table 1.

Table 1

World Energy Consumption by Region, 1970-2020 (Quadrillion BTU)






Annual Percentage Change









United States














Developing Asia














Total World







Source: Energy Information Administration 1998

As may be seen from the above, the fastest growth is projected to take place in the region classified as developing Asia. Even though the growth during 1995-2020 is expected to slow down to 4.2% as against an average of 5.5% during 1970-95, this rate is far above that of other major regions. Consequently, the share of developing Asia in total energy consumption would be substantially larger by the year 2020 than the current level. The share of petroleum in the total primary energy use has been high and over the last two decades, the growth in oil consumption has been 4.6% as against the world average of 1.3%. This may be seen below.

Figure 1

Oil Consumption Growth

Source: Fesharaki 1998

In most Asian countries, the demand for electricity is growing 2-3 times faster than the demand for energy. The developing countries of Asia had 250,000 MWs of generating capacity in 1990. Around 70% of this was thermal, mostly coal based and 30% was mainly hydropower. This capacity was planned to be doubled by the year 2000. (Carter 1993 )

Population growth, economic growth and rapid urbanisation have been the major drivers of this demand. The Asian population grew at rates between 2.4% and 2.9% over 1965-1990. The growth rates projected over 1995-2025 vary between 0.5% for East Asia and 2.3% for South Asia (ADB 1997) Economic growth in the region has been impressive. The developing countries of the Asia-Pacific grew at the rate of 7% over 1991-1994 compared to the world average of 1.1%. The fastest growing economies in Asia were projected to maintain a growth rate of around 7% over the next decade. However, there will be a setback due to the financial crisis which affected many Asian countries. Economic growth has been accompanied by rapid urbanisation. The urban population in Asian developing countries grew between 3 and 6.5% a year in the 1990's. About 35% of the region=s population is urban compared to 43% for the world as a whole. The region contains 13 of the 25 largest cities in the world. By 2015, some 900 million Asians will live in cities with populations over 1 million. By 2025, Asia will be 54% urban. Today, Asia has 9 out of the 14 Megacities of the world; by 2015, it will have 18 out of 27 (WRI, UNEP, UNDP, WB 1996 and ADB 1997)

The break up of the energy supply by sources in 1990 and the likely breakup for 2020 are shown below.

Table 2

Regional Fuel Shares



South Asia


South Asia

Fossil Fuels










Natural Gas

























Source: AESIEAP 1998.

2. Resource depletion issues

One set of issues that have to be looked at in this connection are the questions connected with resource depletion. Can we meet the projected demand without seriously running down our reserves of oil and coal? The reserve to production ratio for oil is currently 43 years. Over the years since the 1970s when the first alarms were sounded by the Club of Rome, this ratio has remained steady or has increased. In the 1990s, the ratio has remained stable and the end-of-the year reserves have not fallen below 135 million MT in spite of a slightly increasing production as shown below.

Figure 2

Production and R/P Ratio for Oil

Source: BP Statistical Review of World Energy.

The market price of oil has, for several reasons, been higher than the cost of production and consumers have, in effect been paying the resource cost and more. As a result, oil reserves have not been depleted too fast and oil has just about kept its market share. Exploration for new oil reserves has been successfully continued and there are large and promising areas yet to be explored. There is, therefore, no cause for pessimism in respect of supplies of petroleum for the present. The situation is similar in respect of coal. The R/P ratio for coal has developed as below.

Figure 3.

Production and R/P Ratio for Coal

Source: BP Statistical Review of World Energy.

Even if we consider only the R/P ratio for the Asia Pacific, this ratio has remained above 150 over this period. We see no cause for concern. So far as the use of natural gas is concerned, the share of natural gas is well below the world average, which is around 23%. Efforts need to be made to increase the utilization of gas in this region. We come back to this topic later.

3. Renewable sources

The traditional renewables are consumed mainly in rural areas although the urban poor use a substantial share too. What will be the contribution of modern renewable energy sources in the total energy supply? Among renewables, the only significant contribution will come from large hydroelectric projects. There is a large untapped potential for hydroelectric power but this potential can be tapped only if the controversies around projects like the Narmada project in India or the Three Gorges project in China could be settled. Of the other probable sources, microhydel, wind power and solar photovoltaic are the most promising. However, these sources will be viable mainly in isolated rural areas and will not contribute to city supplies appreciably. Wind power can contribute increasingly to the grid but the contribution may not be substantial in the aggregate. If the current low petroleum prices continue, the development of these technologies will be delayed. It is heartening to note that several Asian countries, particularly India and China are actively promoting the development of these technologies. The installed capacities for power generation from renewables in India are as below.

Bagasse based cogeneration: 82 MW.
Biomass gassifiers: 14 MW.
Biomass combustion: 69 MW
SPV: 84KW.
Wind power: 969 MW.
Small hydro: 155 MW.
Source: TERI 1998.

4. Environmental pollution

The other set of issues in sustainable energy supplies relates to the environmental problems created by energy use. Many of these are quite visible in Asian cities, which are among the most polluted in the world. Many of the Megacities of Asia have concentrations of particulate matter, lead and sulfur dioxide which exceed the WHO air quality standards. 12 of the 15 dirtiest cities ranked by levels of particulate pollution belong to Asia.(Carter1993) The following plot of urban pollution by country income group brings out the plight of the underdeveloped countries.

Figure 4.

Urban Air Pollution, by country income group.

Source: World Bank 1992.

As is to be expected, air pollution has taken its toll in terms of health problems. It is estimated that 2 to 5% of the deaths in cities with excessive particulates could be avoided by lowering the particulate levels to WHO standards (Carter 1993). In a study carried out in Delhi, TERI has used the total exposure method for calculating the cost of health hazards due to particulates.

Using the concept of total exposures, it is predicted that the health impacts due to PM10 (respirable particulate matter) are likely to be 4 times higher at the national level and 2.5 times higher in Delhi than those predicted by studies that used just ambient concentration levels. If the WHO standard for air quality is met, the economic gains for each urban dweller would range from $17 to $43; for each slum dweller, they could be as high as $57 to $211. Using total exposure as a measure reveals that in India, the use of biofuels for cooking has an enormous impact nationwide, although increasing concerns about urban air pollution among the public today emphasize the transport and industrial sectors. In Delhi itself, if all the households that use dung cake for cooking, were to switch to kerosene, the net economic gains would be at least 8 million dollars.

Exposure is a more appropriate measure than the more commonly used ambient air concentration to assess the strategies to check air pollution. Exposures are a function of how long people are exposed to pollutants in different places, and the levels of air pollution in each of the environments. Using the total exposure approach can help developing countries put their money where it will yield the greatest returns, and also target those worst affected by air pollution. For instance, our results indicate that 74% of India's population, which is rural, bears 84% of the exposure burden.

Energy use also has a number of effects that take place outside the city limits. These include deforestation, acid rains, etc. Satellite images have shown that the forest cover within a 100 km radius of Delhi has reduced by 60% between 1972 and 1982.The use of fuel wood in the city, among other reasons has caused this damage. Overall in Asia, deforestation is a major problem as half the forest cover has been lost in the last 30 years and 1% is being lost every year. With half the population of the world, Asia is left with only 13% of the world=s forest cover. (ADB 1997)

Tackling the problems arising out of energy use will require action on two fronts. First, we must increase the efficiency of energy use. Secondly, energy must be correctly priced so that the full costs of energy use are realised from the consumer.

5. Efficiency of energy use

The importance of increasing efficiency was well recognised by the Brundtland Commission as shown by the categorical reference to it in AOur Common Future@ in the following words:

"By using the most energy efficient technologies and processes now available in all sectors of the economy, annual per capita GDP growth rates of around 3 per cent can be achieved. This growth is at least as great as that regarded in this report as a minimum for development. But this path would require huge structural changes to allow market penetration of efficient technologies and it seems unlikely to be fully realisable by most governments during the next 40 years. The crucial point about these lower, energy efficient futures is not whether they are perfectly realisable in their proposed time frames. Fundamental political and institutional shifts are required to restructure investment potential in order to move along these lower, more energy efficient paths. The Commission believes that there is no other realistic option open to the world for the 21st century. The ideas behind these lower scenarios are not fanciful. Energy efficiency has already shown cost-effective results. In many industrial countries, the primary energy required to produce a unit GDP has fallen by as much as a quarter or even a third over the last thirteen years, much of it from implementing energy efficiency measures. Properly managed, efficiency measures could allow industrial nations to stabilise their primary energy consumption by the turn of the century. They would also enable developing countries to achieve higher levels of growth with much reduced levels of investment, foreign debt, and environmental damage".

Efficiency gains require an initial outlay on improved technology but can repay the investment many times over as the following estimate shows.

Table 3.

Potential Gains from Improved Energy Efficiency

Type of Energy

Total Consumption

Potential efficiency savings

Cost of efficiency gains

Cost of energy


1,080 TWh




$9 billion to $13 billion
Residential and Commercial energy

645 million toe




$26 billion to $39 billion

Source: ADB 1997

By themselves, these efficiency gains may not bring about a reduction in energy use as they may encourage users to travel more or use more air-conditioning. It is necessary that technology upgradation be reinforced by correct pricing of energy and other urban services. One major cause of deterioration in environmental quality in cities round the world is the growth in ownership of motor vehicles. The dramatic increase in the use of these vehicles not only poses problems in terms of air pollution, but also on account of traffic congestion, thereby increasing demand for road space, and expanded area for parking, which has implications for land use in towns and cities. In the case of ownership of motor vehicles also, a substantial increase is projected to take place in the developing countries as shown below:

Figure 5.

Increase in Motor Vehicles (1970-2010)

Source: Livernash, 1998.

A large proportion of urban energy use takes place in the transport sector. This sector also causes the maximum amount of air pollution. Low fuel costs have encouraged city designs including low-density residential areas around the city centres, calling for large movements of people from home to work. Correct fuel pricing would encourage more compact and less sprawling cities. The major gains in this area will, of course, come from progress in information technology, which will eliminate the need for much of today=s travelling. Preference for personal cars is another case in point. Public transport is much less energy intensive, per passenger, than cars. Buses take up less road space and cause less congestion than private cars. There is a need to set the balance right by properly taxing the preference for cars, charging the right fees for parking, etc. The World development Report 1992, dealing with Development and the Environment has reported how urban pollution could be reduced by increasing the price of energy in Poland.

Figure 6.

Effect of Energy pricing on Urban Pollution in Poland (1988-2000).

Source: World Bank 1992.

6. Results of TERI study for New Delhi

Studies conducted by TERI in New Delhi bring out the above points . The results of the TERI study are presented below:

Delhi has seen a phase of fast expansion in the 1980's and the 1990's. Industrial units in Delhi increased from 62,000 in 1984-85 to 85,000 in 1991. The number of vehicles in the transport sector had an annual growth of 10 percent during 1970-1990. Motorized vehicles increased from 0.2 million to 1.9 million over this period. Installed capacity of electricity in Delhi increased from 258 MW in 1985-86 to 607 MW in 1993 (an increase of 135%) but despite this impressive growth in the power sector, there was a net deficit during the peak hours and Delhi Electric Supply Undertaking had to resort to power cuts. The increasing urbanisation has led to progressive environmental degradation in particular air and water pollution, road congestion, and sub-standard housing.

Strategy for the domestic sector

Cooking dominates domestic energy use in the low income groups. Air conditioning and refrigeration gain importance in higher income groups. About 47% of the total per capita annual energy consumed (716,410 kCal) went for meeting cooking energy requirements. The share of energy for other end-uses were - lighting 17%, space cooling 10%, water heating 5%, space heating 1% and others 19%. Efficiency of energy use for cooking was 52% in the lowest income households, and increased to 63% in the highest income households. The difference in efficiency is mainly due to greater dependence on kerosene for cooking in low income households as compared to the highest income groups, where LPG use is high. Kerosene stoves have relatively poor efficiency as compared to LPG stoves.

The use of electrical appliances is increasingly becoming popular particularly in higher income households due to their availability and ease of use. A significant change in the electricity consumption norm was observed between the lowest and highest income group. The use of electrical appliances for cooking, lighting and other purposes is nearly four times greater in the highest income households as compared to that in the lowest income households, while the use of space conditioning appliances - water coolers and air conditioners - is nearly 28 times higher.

Out of the total electricity use in the domestic sector for lighting: incandescent bulbs consume 23%, fluorescent tubes 10%, for space cooling: ceiling fans 17%, desert coolers 4%, and air conditioners 0.5%; for "others": refrigerators consume 30%. Moreover, the domestic sector alone consumed about 41% of the total electricity sold in Delhi during 1991-92.

There is potential for energy conservation in the domestic sector, through use of following options:

- Efficient use of kerosene and LPG stoves;

- Efficient lighting systems including high efficiency fluorescent lamps, compact fluorescent lamps (CFLs), electronic ballasts and sensors;

- High efficiency fans and electronic speed controls;

- Moderate and high efficiency refrigerators;

- High efficiency air conditioners;

- Improving efficiency of evaporative coolers;

- Recycling of urban waste.

Nearly 23% of the total electricity use in the domestic sector is for incandescent lighting, while only 10% is used for fluorescent lighting. In the domestic sector, there exists a strong case for replacing low efficiency incandescent bulbs with high efficiency fluorescent tubes or CFLs, while maintaining or increasing the level of lumen output.

A typical 60 watt GLS can be replaced with 20 watt FTL (plus 14 watt for ballast) thereby saving 43% of electricity use, while providing about 50% more light output. Thin diameter fluorescent tubes (called `slimlines') consume 10% less energy compared to FTLs for same levels of light intensity. There is no difference in the costs of `slimlines' and FTLs.

Refrigerators account for 30% of the total electricity consumed by the domestic sector in Delhi. Efficiency of refrigerators used in India is very low. A typical 165 litre Indian refrigerator consumes 540 kWh per year, compared to a Brazilian model of 225 litre which consumes 410 kWh, while a new Korean 200 litre model consumes 240 kWh per year. Apart from poor efficiency, Indian refrigerators also have low power factors (0.5-0.7), resulting in excessive distribution losses. The following energy-saving options may be considered for refrigerators:

- Efficiency of refrigerators may be increased moderately, through use of foam insulation, increased thickness of insulation, use of high coefficient compressors, increased evaporator surface, and use of tighter door seals. All these measures are estimated to reduce electricity consumption in 165 litre refrigerators to 410 kWh/year. Refrigerator models incorporating some of these measures are already available in India, and their market share is expected to increase in the coming years.

- Further efficiency improvements in refrigerators are feasible through technical improvements. High efficiency, CFC free refrigerators are in advanced stages of development. Electricity consumption by these refrigerators (165 litres) is estimated to be of the order of 300 kWh per year - savings of more than 44% compared to conventional models in use. It is expected that high efficiency CFC free refrigerators will be available in India by 2001/02.

The transport sector

A comparative study of environmental implications of private cars and buses carried out in India has brought out the following:

This suggests that mass transportation is vastly superior to personal and intermediate vehicles (taxis and 3 wheelers). The desirable cost-effective solution, to move people with fewer vehicles using less energy and less pollution, could be achieved by increasing the share of mass transport based on buses As an illustration, it is estimated that an increase in share of buses in road transport from 66% to 80% in Delhi during 2001, would lead to a saving of 0.35 million tonnes of petrol. The other advantages that ensue are over 50% reduction in total vehicles on the road, significant reduction in road congestion, and reduced air pollution. However, diesel requirements will increase by about 8% (from 0.74 to 0.80 million kl).

This too can be overcome to a sizeable extent by improving the fuel efficiency of buses and improved traffic management measures with preference to buses, for example the provision of exclusive bus lanes. Also, to meet the total travel demand, 24,000 buses would be required in 2001. This means an additional 8,000 buses have to be added to the fleet strength by the turn of the century. At the present costs this would mean an additional investment of Rs.400 crores (USD 100 million ). However, the net financial savings in fuel costs alone would amount to Rs.800 crores annually by 2001.

A system of road pricing which has proved to be effective in some countries is the concept of area licensing, whereby low occupancy vehicles pay a charge for entering a congested area during the rush hours. The system encourages greater use of public transport and shared private cars or taxis, and discourages avoidable journeys.

There is potential scope for increasing traffic speed from the present average figure of 20 kmph to the optimum level of 45-55 kmph. Simple measures such as separation of fast and slow traffic, better signalling, policing of traffic flow, and well designed and maintained sidewalks and pedestrian crossings need to be implemented. As a medium term strategy, programmes to improve and widen road surfaces need to be initiated. Studies conducted in India have firmly established the advantages of road improvements, not only in saving fuel and reducing emissions, but also in improving the life of the engine, tyres, and other components of a vehicle.

The industrial sector

There are four categories of energy intensive manufacturing industries in Delhi. These include, food and food products; cotton textiles; rubber, plastic, petroleum and coal products; and basic metal and alloys

A survey carried out by the National Productivity Council (NPC) and the Petroleum Conservation Research Association (PCRA) at the national level estimated possible energy savings of the order of 15-20% through proved operation and maintenance practices. Another 10-15% savings could be achieved by investing in more efficient technologies. Energy audits carried out for 45 industries in 6 energy intensive sub-sectors of industry under a GOI-UNDP programme, estimated a savings potential of 15%.

Source: TERI 1994

7. Instruments for environmental control

Most Asian countries have adopted emission or effluent standards to control pollution. This has led to high compliance costs and widespread under-compliance. It is possible to achieve the same levels of abatement at lower costs with economic instruments replacing regulatory standards. Such instruments would include:

Pollution charges- Effluent charges for wastewater, emission charges for air pollution etc. would be examples. The problem with these is that the pollutant streams have to be measured.

Many of these measures are in use in Asian countries. A number of studies by the ADB and the World Bank have shown that they reduce the cost of abatement. This is an area where considerable benefits can be derived from experiences generated in the developed countries. The well-known environmental Kuznets curve generally shows a relationship between per capita income levels and improvement in environmental quality. Typically, most developed countries started programmes for environmental improvement in the 1960s and 1970s by adopting command and control methods. These proved to be less effective than the regime of market based instruments that followed in the 1980s and 1990s. As a result, even those countries in the developed world which had relatively low income levels were able to bring about major improvements in environmental quality, effectively lowering the environmental Kuznets curve. Developing countries can meet the growing challenge of deterioration in environmental quality by adopting market based instruments even at low levels of income to promote efficiency of resource use and effectiveness in environmental protection programmes.

8. Supply-side reforms

The production and distribution of coal, petroleum and electricity has till recently been dominated by government undertakings. Under pressure of growing demand, the private sector has been invited to enter oil exploration and production, electricity generation, etc. This has necessitated the move away from administered prices and subsidies. Most Asian countries have deregulated petroleum product prices over the last decade. The government of India has announced a phase out of most of the subsidy on kerosene and LPG by 2002. Policy reforms in the power sector have also been initiated. These will, on the one hand, introduce competition in electricity generation, which has the potential of inducing a highly desirable shift to the less polluting natural gas as the fuel. On the other hand, electricity consumption may be rationalised by better metering and proper pricing. So far as urban areas are concerned, pricing reforms will have to be extended to all urban services.

9. Strengthening of local government institutions

There seems to be a general agreement that local government institutions are the most appropriate institutions to plan for a city's development. This has been noted in a number of UNCHS publications. In fact , the empowerment of these institutions has been seen both as an instrument for sustainable development and as one of its goals. In India, a constitutional amendment has given wider powers to local government. In practice, these institutions continue to suffer from inadequate finances and lack of legal and administrative powers. This situation needs correction urgently. Recent experience in India shows that wherever local bodies have attempted to join hands with the private sector for activities such as solid waste management, and have resorted to generating financial resources from the market, success has been surprisingly high. If, therefore, local bodies were to be given adequate powers and autonomy, they could build up expertise to make rapid progress, and develop capacity locally to tackle problems of urban decay and environmental degradation.

This is a key issue requiring further research, experience sharing among countries and concerted action.

10. Asian regional cooperation

The government of India, in the national report prepared for Habitat-II, identified a number of areas for international experience sharing and cooperation, such as:

Management of Megacities
Building up a database for fast growing settlements;
Policies for involving the private sector in urban development while ensuring that the needs of the poor are met;
Technology development and upgradation in water supply, solid wastes, MRTS, etc.
Source : Government of India 1996.

Many of the Asian cities are at comparable stages of development and are experiencing similar problems. Besides, most of the cosmopolitan cities are culturally similar. There is a strong case for a forum for consultations and it would be appropriate if UNCHS could examine ways of providing such a forum.

As noted earlier, the use of natural gas in Asia is much lower than the world average. This is in spite of the fact that there are enormous reserves of gas in South-East Asia, Central Asia and the Middle-East. Regional gas grids have been under consideration in South-East Asia and South Asia. Much larger pipelines linking China and Japan with Central Asia have also been proposed. There are obvious difficulties in such large projects but these are feasible projects and it makes sense to pursue the concepts. Unlike the case of oil, large gas projects can be successful only with the cooperation of all the countries. TERI is taking up a study of the implications of these issues for Asia as a whole.