It is such a pleasure to be talking with you on the leadership role of India in the energy sector. We are at a very monumental and a real game-changing time for India. At one level, India is dealing with a global pandemic that has taken its worse consequences on India. India is right now battling the pandemic and taking it on head on. And in this context, energy becomes even more important. It becomes important for two reasons: first, we recognize that to deal with the shocks that constantly are hitting economies around the world, whether they are pandemic shocks or whether they are climatic shocks, energy is fundamental. This is therefore a very important time to talk about energy transformation and energy leadership in the world today.
First, let me begin by saying that the world has changed, and it has changed in a very particular way. Prior to the arrival of the pandemic and indeed the climate shocks, we kind of looked at as adverse natural shocks, events that happen once in a while. Today we are in a world where these events are constant, constantly with us; they're affecting us directly. So, they're not what we call Black Swans – the unpredictable events. These are what we call the White Rhinos, meaning they're in front of us and we need to deal with them. We're in a world where managing shocks is now the norm. Public policy must create resilience. Energy is one of the sectors that offers economies the ability to build resilience. India's leadership in building a resilient India depends on the energy transformation that it must undertake - that indeed it is undertaking. But let's begin with some examples that we should not forget which gives you a sense of where India is today.
First of all, today one of the fastest growing renewable energy markets in the world is India. India made an aspirational goal of 175 gigawatts of renewable energy. It is now up the game to 450 gigawatts of renewable energy by 2030. That's an extraordinary aspiration and it's an aspiration which India is indeed intending to fulfill. The second point - look at the reality of what that means - today 50%, if not more, of the power that drives Delhi’s metro is from a renewable energy plant - a solar plant in Madhya Pradesh. Who would have thought that 50% of the power of Delhi metro would be driven by renewable energy? Let's take another example - India is one of the few countries that can not only have passenger railway but also parallel freight railway – the whole freight corridors that are being developed. So, we're now moving into a parallel freight corridor system in rail, and that freight corridor system will be driven by electricity and hopefully renewable energy. Now it has double implications; not only will this electricity be of renewable quality, but the fact that you'll be moving freight traffic out of road onto the railways will have great impact in reducing greenhouse gas emissions. When India makes that kind of a shift, it makes a shift to emissions globally. You take another example - today India has launched the EESL - Energy Efficiency Services Limited. It is the world's largest energy efficiency company, and it is bringing down, if you will, the demand for energy. In the first round, it delivered LED lights into municipalities. It is now looking at other equipment that it will procure globally across the scale of India driving its prices down, bringing in more private companies and driving energy efficiency. These steps are critical in the way India is leading the whole transition in energy.
Now a lot of us are focused on COP 26 and the NDCs (the Nationally Determined Contributions of Countries). Now remember these were the agreements made in Paris where countries said they would achieve certain goals and by achieving those goals, it would keep the world's climate warming within a certain degree. In the case of India, it may well be one of the few, if not the only G20 country, that will achieve its NDC's targets, and it will make its contribution to keeping the world below the two degrees centigrade. But ladies and gentlemen today unfortunately Paris is well behind us. The deal we made in Paris is already redundant. The commitments we made are not enough. We have to make even greater commitments to ensure that the world is climate resilient and here I'd like to make a point that I think a lot of people are forgetting. India today is undertaking many transitions; energy transitions, agriculture transition, transport transition, and managing forests; all these transitions are the development transitions of India and if India succeeds in these transitions, it will reclaim and regain its high growth part path.
These development transitions, if done correctly, will not only secure India's growth path, but it will also secure the climate transition of the world. I think that's the message India must take to COP 26. NDCs are important, but even more important are the development transitions of India; and core to that development transition is the energy transition. This is something that at COP 26, India must make loud and clear. To achieve the energy transition successfully, I want to focus on something very important - what I would call the Achilles’ heel of the energy transition of India and that Achilles’ heel is the reforms of the Distribution Companies (Discoms).
Today, India’s discoms are the weakest point of its energy system. If these discoms do not become creditworthy, if they do not become efficient, if they truly do not move away from the non-performing assets that they have become over the last several decades, into vibrant distribution companies, then India's commitment to this energy transition will indeed begin to falter. So, the fulcrum, the nexus, the absolute key to the future of India's energy transition lies in ensuring that the discom reforms contributes to the renewable energy transformation, to the storage transformation, to the electrification that's ongoing. Now this is not going to be easy; it will require deep rewriting of the compact – the compact between politicians, between citizens, between industry, between agriculture. It will require whole of India compact to enable the discoms to be reformed. Now, how do you get these discoms to be reformed? First, one must make them truly bankable institutions - real corporate agencies, not run as government line departments, but run as true public companies that can go into the capital markets and raise money. To do that, you have to enable them to work as corporate entities and price electricity better - not 100% price in terms of market pricing - but certainly that enables operations costs, that enables capital costs to be recovered. Now these kinds of shifts in distribution companies have already happened in India. There are discoms in Delhi, Kolkata, and Mumbai that follow these market principles. Now critical to the market principles as I’ve said is corporatizing them, taking them into the capital markets changing electricity pricing.
Now a lot of people will say that if you change electricity pricing, how are you going to support farmers and the low-income households. Here we should look at another revolution that has happened in India, which is the incredible shift in the social protection system in India. India has traditionally had a rural-based social protection system - - MNERGA being one. But today's India is an urban India; it's an India with a lot of informal economy; it’s an India with migrants; it's an India which is in a federal system and in that kind of SYSTEM, you want to pivot the social protection from being a purely rural one to being a pan-India rural system, where direct benefit transfers to citizens, to households, to farmers can happen and that's exactly the revolution that India is undergoing now. So, if you can begin to create direct benefit transfers to enterprises, to women headed households, to farmers, then you can delink income support from pricing of services, including electricity. Part of the discom reforms, the corporatization of discoms, requires better pricing of electricity, meaning a more efficient, if you will, social protection system. These are fundamental parts of the energy transition that India is undergoing and will need to go through.
Let me give you another very important part of this transition - it's what I call the regionalization of energy on the eastern side of South Asia. If you take Bhutan, Nepal, India, northeast and Bangladesh, and even Myanmar and you bring them into a regional pool of electricity where who sells power into the pool and who buys power is unknown, but you create a vibrant powerful market. This would tap into the hydro potential of Nepal and Bhutan; it would also tap into the renewable energy potential of India to create a vibrant power pool in the eastern side. This power pool would not only deliver a vibrant renewable energy market, but it would also actually provide economic benefits to nearly 350 million people that really form the economic market on the eastern side of South Asia.
Ladies and Gentlemen, India is at a crossroads, where its development transitions will shape the world’s climate transitions and core to that development transition is the energy transition. What I have focused on today is the leadership challenge of how to completely reform the discom sector which is the Achilles heel of the energy system. An efficient, corporatized, and creditworthy discom system will enable India to achieve not only its targets in terms of renewable energy, but it will give the economy a significant boost and ultimately give the region of fundamental boost. This is the leadership that is expected of India; this is the leadership that India is on its path to deliver and you will find that the world is ready to support India on it.
The World Bank is committed to India. We've been delivering about $4-$4.5 billion a year to the Indian economy and a key role for us is to be a partner in the energy transformation of India. You can count on the World Bank Group as a whole to be a partner in this leadership transition in the energy sector. Thank you very much.