Working Papers

India claims to be undertaking a thorough transition to low-carbon electricity, stepping up renewable energy and energy efficiency efforts. Yet, two puzzling paradoxes weigh upon this dynamic. First, although energy efficiency measures offer high collective returns, at least as high as those for renewable energy, the energy efficiency agenda is receiving a lot less attention and priority, even though it would require significantly less investment. Second, within the energy efficiency domain, implementation is lower and slower in sectors where the savings potential is the highest, notably among agricultural and domestic (household) consumers. Drawing on a range of interviews, documentary analysis and policy observations, this paper helps to shed light on this conundrum. In particular, it points out the discrepancy between individual and collective incentives in promoting energy efficiency, the biases and weaknesses of Indian governance at both the central and state levels, the influence of lobbies, the weight of parallel governmental agendas, and the built-in preference of the government, as well as international donors, for a technological rather than a governance focus. Nonetheless, striking a new balance between energy efficiency and renewable energy as complementary agendas is of crucial importance if India is to achieve its developmental, social, environmental and energy security goals.