The issue of securing India's energy independence has reached the portals of the Rashtrapati Bhawan. While launching Oil and Natural Gas Corporation's Golden Jubilee Celebrations on August 14, 2005, President Dr A.P.J. Abdul Kalam stressed the need to achieve energy independence by 2030, a point that he reiterated later in his address to the nation on Independence Day eve. The challenge of building India's energy security goes far beyond the obsession with oil security.

I believe that India has the potential to be energy-independent. We do have huge reserves of coal and lignite and gas hydrates, but at present beyond the reach of mining techniques. To achieve that goal, we will have to take a holistic approach on fuels-conventional, renewables and the emerging ones, conversion and conservation, and finally, transmission and distribution and, of course, the key issue: pricing.

Let's look at domestic potentials. In the conventional category, we have thermal-both coal and nuclear energy-hydroelectric energy and oil and gas. All these fuels have their own advantages and disadvantages. For instance, coal-based energy has several serious problems-relatively low heat value, inefficiency in conversion, high ash content and difficulties in transportation and residue disposal. But there are huge positives, too: we have massive reserves of coal that can last a few generations; and recent developments in clean coal technology-and I refer here to surface and underground coal gasification in particular-has meant that the issue of poor quality coal, and the consequential environmental pollution, can be efficiently managed.

The underground coal gasification technology solves both the problems of ash disposal and gaseous pollutants-the ash is left behind in the pit and the carbon dioxide can be sequestered. A new technology power plant at the well-head can use the low pressure gas for power generation with reasonably high efficiency. Underground gasification also offers the additional advantage of near-complete conversion of coal into gas, eliminating the need to leave out considerable quantities as in the conventional mining process. Additionally, coal gasification can produce both (synthetic) oil and gas.

However, to achieve its true potential as one of the cheapest forms of energy, there is a need for cost-efficient management of the mining chain-from leasing of mines to environment-friendly exploitation. The State, as the sovereign owner of mineral resources, should set only a token royalty and zero tariff on non-mineable coal and lignite so that the huge investments in gasification, generation and transmission yield market-oriented profits. In the middle- to long-term, coal and lignite can become an effective resource.

Now that India is reaching an understanding with the Nuclear Suppliers' Club, and technology barriers are being lifted, nuclear power will become another major source of energy for India. The safety issues-relating both to the reactors as well as the residues-have to be tackled. The reserves of thorium provide the long-term and the longest-term answer. This is also true of hydro-electric power if the problems of environmental degradation, geological instability, and silting of dams can be resolved over time.

However, oil and gas-the last item on India's conventional energy list-is only a short- to mid-term resource. With less than 0.5 per cent of the world's reserves, more than 15 per cent of the population, per capita consumption at one-third the global average, and compounded annual growth in demand exceeding 4 per cent, India will remain a net importer. It is generally accepted that globally, "Peak Oil", that is, the maximum potential reserve accretion is already behind us, and "Peak Gas" may happen in the next two decades or less. Further, the new oil and gas coming from offshore, deep sea discoveries are much more expensive. Costs of drilling rigs and special steels have nearly trebled in recent years, and even then, availability is a constraint for all operators. More than two-thirds of the oil is used by the transportation sector-all road and most of rail transport in India is fuelled by diesel and, to a much lesser extent, by petrol and CNG. With the rapid growth in aviation sector, jet fuel demand is surging.

Yet, all kinds of distortions have crept into the oil value chain. The policy of cross-subsidisation in power tariffs and inevitable power cuts have resulted in almost all industrial units, hospitals, hotels and commercial establishments running their own captive power plants on diesel-a most wasteful way practice. Add to that the inefficient technologies used in conversion, for instance, in autorickshaws, agricultural pump sets and heavy vehicles, etc., and the wastage goes up. Administered pricing of oil, gas and electricity has inescapably led to utter indifference to fuel conservation. After the oil shock of 1973, the OECD (Organization for Economic Cooperation and Development) countries achieved 15 per cent saving in their fuel consumption; but precious little happened in India.

As a commercial alternative, renewable sources of energy are still some way off. Solar energy will become a viable alternative when the price of photovoltaic cells comes down. Wind energy is a supplement; geo-thermal and wave energies are still at the laboratory stage. Renewable energy sources will generally be only supplements till massive, cost-efficient power storage devices become available, and the base load will have to come from thermal energy. Therefore, energy independence will come from the creation of mass transit systems operating on thermal electricity. For inter-city movements, the railways have to be expanded and improved. For intra-city movements, the cheapest option will be to bring back the trams or trolley-busses, or other such innovative solutions. Alternative options, requiring higher costs and larger lead times, are underground or elevated railways.

So what do we get from an electric-powered mass transportation system? We get clean, safe, reliable transport capacity for hundreds of millions of tonnes of freight and tens of millions of people on a 24x7 basis for centuries to come, exploiting deep coal and lignite, thorium and, subject to R&D success, gas hydrates. We also cut costs and pollution by eliminating the need for mass-scale captive generation as is now happening.

What about the newer or emerging technologies? Can they provide a solution for India's energy need for the future? Here we are talking of gas hydrates, hydrogen, bio-diesel and fuel cells. I believe that once we have the necessary breakthrough in research and development, gas hydrates-crystalline methane on the sea-bed-can easily take care of a major portion of India's energy needs. We have huge deposits of gas hydrates in the Andaman & Nicobar Islands, on the east coast, and also on the west coast. The technological challenge lies in bringing the crystals to the surface in controlled conditions. Since these crystals are formed under high pressure and low temperature conditions in deep waters, any attempt to lift these results in the crystals dissolving prematurely. We are working with an international consortium on this R&D as the lead company under the National Gas Hydrates Programme.

Hydrogen and fuel cells are still at the laboratory stage and pricing is an issue. Bio-diesel is another supplement. If we can stop the diesel-based parallel power generation industry, we can free a lot of diesel for our transportation needs, and that itself will mitigate our import dependence in oil and gas. Another fuel, coal-based methane (CBM), will soon become a reality because we have scheduled commercial production in early 2007.

Thus, energy independence will come from a combination of coal and lignite, hydel, thorium, renewables and indigenous as well as imported oil and gas. In oil and gas, we will remain a net importer till global reserves run out. But given the other resources that we have, we may become net exporter of energy for generations beyond.

To achieve that-development of alternate fuels, better conversion and conservation technologies and better transmission and distribution-there is a need for huge investments. Whether that comes from domestic or foreign firms is not the issue. The issue is to have bankable projects. To have a bankable project, we must have a national political consensus to clean up the pricing anomalies. When you have artificial pricing, the real value of the goods is not perceived; this invariably results in wastage, besides one of the worst black money systems, perhaps next to that from narcotics. We can become energy independent only when we have cleaned up our energy pricing.

The author is the Chairman of ONGC Limited, and the article is based on his free-wheeling chat with Business Today