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EPIC Solutions

The Energy Policy Institute at the University of Chicago (EPIC)-India works to expand access to reliable and affordable energy, while reducing pollution to provide a cleaner, healthier environment.

Access to energy is critical to economic growth. And ensuring this, while limiting social and environmental impacts, is one of society’s most complex challenges. The Energy Policy Institute at the University of Chicago (EPIC) is confronting this challenge using a cross-cutting approach that links the university’s renowned economists with leading thinkers in policy and law, business, big data, engineering and natural and physical sciences throughout the university and at partner institutes.

EPIC launched EPIC-India in 2014 to focus on cutting-edge research and targeted engagement with local stakeholders. Housed at the University of Chicago Center in New Delhi, EPIC-India is employing a comprehensive strategy to test new approaches to expanding energy access and achieving low-cost reductions in pollution. USAID  is also supporting EPIC-India in this endeavor and has given a grant of $440,000 for a three-year project in Gujarat and Maharashtra which aims to reduce industrial air pollution at low cost to both government and industry. 

Excerpts from an interview with Anant Sudarshan, executive director of EPIC-India.

What was the idea behind establishing EPIC-India three years ago? What’s its long-term vision?

Emerging countries like India must rapidly improve living standards through sustained economic growth and expanded access to reliable, affordable sources of energy. At the same time, they face significant local environmental challenges which already impose extremely high health costs on the country, which in itself reduces welfare and growth. Lastly, both these issues must be tackled in the backdrop of global climate concerns, especially since India is projected to be especially vulnerable to a warmer climate.

Achieving these multiple objectives requires cutting-edge research and the use of both innovative policy, based on sound economics, and modern technology. EPIC serves as a hub of university research in these areas.

The motivation for the University of Chicago to launch EPIC-India three years ago was to help tackle these challenges head-on through cross-disciplinary, innovative research and partnerships with government, industry, research institutes and other stakeholders. 

Our goal is to collaborate with policymakers to generate the rigorous evidence needed for innovative policy design, and help build the capacity and skills required for successful policy implementation.  

Which new approaches have you been testing for expanding energy access and achieving low-cost reduction in pollution in India? What have been the major findings?

Often the biggest bottlenecks to providing access to reliable, affordable electricity are not supply or technology constraints. Rather the problem lies with institutionally and economically inefficient electricity distribution. Therefore, EPIC has been working closely with various state electricity distribution companies to improve the effectiveness of electricity distribution.

On the environment side, our research has been informed by the power of modern environmental regulation which are designed specifically to reduce pollution at the minimum possible costs. An interesting example is the launch of India’s first information disclosure scheme around industrial air pollution in Maharashtra where, for the first time, industries are being publicly ranked on environmental performance.

We have found that introducing innovative solutions can lead to immediate improvements in the outcomes we care about, without necessarily requiring expensive new technology. As an example, a recent pilot project to reduce theft and improve payment rates in Bihar led to significant increase in revenue and the potential to purchase and supply more electricity. Prior work in Gujarat showed that a simple change in the payment mechanism to environmental auditors improved the data regulators received on air pollution from industries, and led to lower pollution.

A particularly ambitious ongoing project involves an effort to set up India’s first cap-and-trade market in particulate emissions, working with the Ministry of Environment and Forests, the Central Pollution Control Board and the State Pollution Control Boards of Gujarat, Maharashtra and Tamil Nadu.

As an emerging economy, India is going to use more and more energy in the coming years. How challenging is it for India to ensure sustainable growth?

The Indian government is already on the right track to ensuring that its energy use becomes increasingly more sustainable. India’s renewable energy and energy efficiency schemes are some of the most ambitious programs in the world. Additionally, India is also sticking by the commitments it made during the Paris negotiations. The challenge ahead is to achieve our own targets.

Most of our projects involve us working closely with Indian policymakers and coming up with ideas in a collaborative manner. We call this a co-generation approach and believe it enables the highest quality research and applications to policy. We have found that senior Indian policymakers are very aware of the challenges of ensuring a sustainable energy pathway for the country. The challenge is to successfully achieve this goal and we have been fortunate to find policy partners from whom we have learned a great deal, also being receptive to new ideas.

Enabling growth, energy access and protecting the environment together is difficult, but both necessary and possible, and India is well-placed to set an exceptional example for the world.

Most of your research work is being conducted in collaboration and consultation with ministries of the Government of India and state governments. How do you ensure that things move fast and solutions are identified in time?

EPIC’s model is to work collaboratively with its government partners. Therefore, when identifying solutions, we look toward problems where new research and ideas can have a substantive impact, and which are also of immediate relevance to pressing policy issues. Where both these aspects exist, we have been able to forge very successful partnerships and when new ideas work, they are then much more likely to be scaled up. This process certainly takes time, but if the eventual goal is to produce work that will change things on-ground for many people, this is time well spent.

EPIC also places young researchers within the state departments that we are working with. These researchers are trained in policy and data aspects and are guided by senior faculty and staff from EPIC-India. As these researchers work very closely with the ministry or department that we are collaborating with, they have a good sense of how these department work. When challenges arise it becomes simpler to identify solutions to tackle them and keep the project moving along smoothly.

How successful was the real time monitoring and market-based cap-and-trade pilot program to regulate industrial particulate matter emissions?

The real-time monitoring pilot program is currently being implemented in Surat, Gujarat. Even as we speak, plants all over the city are having their continuous emissions monitors calibrated and are sending data to the state regulators. The overall goal is to observe if better information provided to regulators and to plants, leads to lower industrial pollution. A survey planned at the end of this year will give us more definite answers but preliminary results appear promising.

The market-based cap-and-trade program is designed to be a completely unique approach to environmental regulation in India and will utilize the data from continuous emissions monitoring systems. The market has not yet been implemented but there is now experience from many parts of the world showing that this type of policy may be very helpful as part of the toolkit India uses to tackle air pollution.

Results from a large engineering-economics model, using data from a survey of over 1,000 plants conducted by the Central Pollution Control Board, suggested that the costs of reducing air pollution under a cap-and-trade regime could fall by as much as 70 percent, relative to the status quo.

Please tell us about the innovative group collective incentive scheme being tried in Bihar to reduce the amount of unbilled power. Does it have the potential to succeed?

In partnership with the government of Bihar, we are testing if an innovative group collective incentive can be used to increase payment rates. The pilot scheme links amount of electricity supplied to groups of industrial and residential consumers to the groups’ overall performance in paying for the electricity they consume. This implies that higher payment rates lead to increased supply hours.

This scheme has already shown great potential with revenue per feeder increasing by 40 percent. The scheme currently runs in eight districts and the government of Bihar is considering whether to expand it throughout the state. Given existing results, such an expansion would lead to extra revenue for the government large enough to buy an additional 300 MW or 10 percent of their current electricity supply.

We are currently engaged in a large survey across all eight districts and will soon have estimates of these longer-term changes in social beliefs towards electricity theft and payment of bills. EPIC India and the NITI Aayog are also collaborating to find out whether this idea and others can help other states also.

What kind of policy tests does India require before implementing an energy efficiency program all over the country, especially looking at its diversity and vastness?

India has already implemented a number of energy efficiency programs all over the country, the most well-known being its successful LED bulb program.

However, the success of the LED program, doesn’t provide a one-size-fits-all strategy or complete solution.

Energy efficiency programs can be expensive so a good approach is to pilot new energy efficiency schemes first, rigorously evaluate them on suitable parameters and then see if they are worth scaling up. This is especially important because energy efficiency savings are often calculated from lab tests—which may vary a lot from actual field conditions. In addition, when appliances use less electricity, consumers may also use them for longer hours, which also reduces the total energy savings. These aspects can only be studied through pilot projects in the field and are important because they have potentially large implications for the cost-effectiveness of subsidies or other government schemes in the energy efficiency area.

In what more ways can India and the United States cooperate to see that there is efficient use of energy which takes care of the environment too?

Both knowledge and technology exchange between the two countries is essential for both countries to use energy more efficiently and to reduce the environmental costs of energy use. It is important to see whether the innovations in policy or technology used in one country can enable similar change in another country.

India and the United States are at very different levels of economic development but in some ways, face similar challenges regarding the economic costs and benefits of environmental regulation, and the need to invest in cleaner energy. We believe EPIC’s work has benefited enormously from having significant roots in both India and the University of Chicago, allowing us to learn from both sides and draw upon expertise in both countries, and thus come up with better solutions to the environmental and energy challenges we hope to solve.

Kushagra Agarwal is a business technology analyst and an alumnus of Delhi Technological University, New Delhi.