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Not Quite An Aliyah

19 Monday Jun 2017

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Ever since the announcement of Prime Minister Narendra Modi’s visit to Israel, few have failed to reiterate the historic nature of such a visit: it will be the first by an Indian prime minister, and more suggestively, Modi will not lump even a perfunctory visit to Palestine during his two-day stay in Israel. Pace the undeniably rich symbolism, it is still difficult to discern what makes the Indian prime minister’s trip so significant.

Modi’s trip, starting on July 5, does not upend India’s decades-long policy by betraying a tilt towards the Jewish state. Shortly before leaving for Israel, Modi played host to a three-day visit by the president of the Palestinian National Authority, Mahmoud Abbas, during which India took pains to reiterate that it stood firmly with the Palestinians who had some legitimate claims. A year earlier, in April 2016, India had shamelessly and inexplicably voted for a UNESCO resolution that denied Jewish ties to the Har HaBáyit. The de-hyphenation between Israel and Palestine that many are trying to see in Modi’s foreign policy is just wishful thinking.

The prime minister’s visit is supposed to usher in a new era of military cooperation and trade relations. However, those have been on the increase since relations were established in 1992, with bilateral trade in non-military goods increasing from $200 million to slightly over $4 billion last year. Military trade has ranged from the upgradation of India’s aging Soviet-built air force, drones, anti-tank missiles, surface to air missiles, and airborne early warning and control systems. Of course, trade can develop far beyond these one-off transactional deals into research partnerships and joint manufacturing. However, neither truly needs a prime ministerial visit to actualise; military needs, domestic compulsions, and market forces can precipitate such closeness.

Economically, the free trade agreement negotiations are languishing since the idea was first proposed in 2004 and negotiations started two years later. It is true that Modi’s visit could breathe life into the discussions but such agreements are too technical to be made over a handshake and a few hours with one’s foreign counterpart. The state visit could indicate seriousness to both the negotiating teams, but this should have been clear to them already from sentiments within their departments as well as the increasing warmth at least in rhetoric between the two countries.

It has been suggested that Modi’s visit will see the announcement of a slew of deals between India and Israel. Already, the two countries have been working closely on water management, agricultural technology, space research, terrorism, cyber security, medicine, and several other sectors. Additional agreements are always welcome but they indicate deals already made that were held back to be announced during the visit. Modi’s visit did not contribute to their achievement.

A state visit is an inherently political affair, and that is where the changes must be seen. While bureaucrats negotiate the terms and conditions of military and economic concords, the direction must be set by elected leaders. Modi’s visit comes at a time when the stability (sanity?) of the world order is in doubt and most countries are looking for new partnerships of mutual security. It is rumoured that Benjamin Netanyahu has cleared his schedule and plans to spend much of the two days Modi is in town ensconced with him in discussions representing the wide range of mutual interests the two states share. As India looks to develop a foothold in the Middle East, Israel is looking east for other partners.

A truly historic moment would be if India were to disassociate itself completely from the Palestinian question – it is not as if it has contributed in any meaningful way all these years. The issue does not affect India and is best left to the concerned parties to resolve, much as India insists on Kashmir. If India’s voting at international fora were to shift to reflect this new position, such a move would give Israel much diplomatic room to manoeuvre.

Another substantial transformation would be for Modi to offer Israel cooperation in nuclear energy. Like India, Israel is not a signatory to the nuclear Non-Proliferation Treaty and therefore ineligible for nuclear commerce internationally. Although Netanyahu has said that Israel is not interested in nuclear energy, his Ministry of Power has something different to say in their projections of the Israeli energy scenario through to 2050. India is the perfect country to understand why a state would want to remain out of the non-proliferation cabal and it cooperation in such a sensitive area would be a true indicator of how seriously it takes its relations with the Jewish state.

Observers of Indian foreign policy always stress that dramatic changes are not possible in foreign policy. In the Indian context, they may be right but that is is not universally true: Richard Nixon’s hand of friendship towards China fundamentally altered international geopolitics from 1968 to 1972. Back home in India, the Modi government has not shown such boldness in its policies – maybe with good reason. However, there is no reason such changes cannot be made especially when the new policy makes little material demands.

None of this is to say that symbolism does not matter in the public space – it does. However, it is important to distinguish between show and substance and the Indian prime minister’s visit is not too central to Indo-Israeli relations. Indeed, the visit is a historic one in that it is a the first time an Indian prime minister has visited Israel but there are many firsts that the world has found uninteresting or forgotten and moved on – such as where the world’s first parking meter was installed (Oklahoma City, 1935), or even who took the first space walk (Alexei Leonov, 1965). While Modi’s visit is unarguably historic, the real question is if it will be equally substantive.

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An Empty Deal

12 Saturday Dec 2015

Posted by in India, South Asia

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News of an agreement on civil nuclear cooperation between India and Japan has been met with much fanfare in the Indian media. The announcement came on the second morning of Japanese prime minister Shinzo Abe’s three-day trip to India to attend the ninth annual India-Japan Summit. Despite the celebratory tone in India, the fine print and context of what was agreed upon between the two nations is less than satisfactory and will mean little in practice.

The nuclear deal has been a sensitive subject between Delhi and Tokyo for the past five years. In 2005, the United States spearheaded the effort to recommence international nuclear commerce with India, urging the International Atomic Energy Agency (IAEA) and the Nuclear Suppliers Group (NSG) to consider Delhi’s excellent nuclear non-proliferation and safety credentials and make an exception for the South Asian country despite its refusal to accede to the Non-Proliferation Treaty. The international legal infrastructure was in place by 2008, and India has since concluded several nuclear cooperation agreements enabling it to purchase nuclear equipment and fuel from the international market. Delhi’s increasingly warm relations with Tokyo had led the former to believe that the latter would also ink such an accord once the United States and other major powers had done so. Mistakenly, as it turned out.

Japan holds an important position in international nuclear commerce. Over the years, the island nation has developed expertise in manufacturing several critical reactor components of high quality and become a key node in the supply chains of at least three of the major nuclear vendors, namely the French firm Areva and the American firms General Electric and Westinghouse. Among the major players, only Russia’s Rosatom and China’s two major state-run nuclear vendors – China General Nuclear Power Group (CGN) and China National Nuclear Corporation (CNNC) – are independent of Japanese components. As per Japan’s strict export controls stipulating end-user certification and other conditions, US and French nuclear firms would first need the permission of their Japanese suppliers before doing business with India. Tokyo’s consonance on nuclear cooperation with India thus achieved a greater import, not to mention the symbolic value India put on such an agreement as an indicator of its nuclear normalisation.

The declaration at the India-Japan Summit falls considerably short of a nuclear deal. The two sides merely signed a memorandum of understanding that has punted the legal and technical differences further down the road. In essence, this means that Japan has only agreed to the principle that it can conclude a civil nuclear cooperation agreement with India, that it will make an exception to its rule of not conducting nuclear commerce with a state that is not a signatory of the NPT. This is progress, no doubt, but what price Japan will extract for its concession in terms of technical requirements or how long the nuclear deal will take to operationalise is anyone’s guess. If the joint statement between the two countries is any indication, Japan’s pound of flesh will probably include Indian concessions on the Comprehensive Test Ban Treaty (CTBT) and the Fissile Material Cut-Off Treaty (FMCT). India’s view has been that both these treaties perpetuate the nuclear apartheid regime that the NPT is the foundation of. Although India has of its own volition declared a moratorium on future nuclear tests, being party to a legally binding agreement is a bridge too far from Delhi’s perspective. Furthermore, a historical perspective on the fate of India’s MoUs may be had by looking at the country’s role in upgrading the Iranian port of Chabahar or its Medium Multi-Role Combat Aircraft (MMRCA) contract.

Even if India and Japan had succeeded in inking a comprehensive civil nuclear cooperation agreement, the chances of it having much impact on India’s nuclear energy sector are slim. As part of its agreement with the United States, India agreed to bring into force a nuclear liability law like all other states with nuclear facilities. However, Delhi’s interpretation of liability, informed as it was by the Bhopal Gas Tragedy of 1984, was not in congruence with the international standard that limited damages and made the operator solely responsible for economic compensation. Consequently, no vendor is willing to enter the Indian nuclear market. Chairman Jeff Immelt stated categorically that he was not willing to expose his company to the risks Indian liability law required of nuclear suppliers, and Areva has slowed down its work at Jaitapur pending further clarifications regarding liability despite signing a pre-engineering agreement for the site with Larsen & Toubro in April 2015. Similarly, Westinghouse has been remarkably silent on its interest in India since January 2015 when US president Barack Obama and Indian prime minister Narendra Modi achieved an expensive and convoluted workaround on supplier liability by establishing an insurance pool for nuclear vendors.

The only benefit India is likely to accrue from an agreement on nuclear cooperation with Japan is the transfer of technology for reactor components, particularly Japan Steel Works’ forging of large, single-plate reactor pressure vessels. India may also diversify its suppliers and develop its indigenous nuclear energy industry. While both of these are welcome developments, they will not amount to the rapid expansion of nuclear energy in India that was envisaged in the wake of the Indo-US nuclear deal in 2008. Another possible benefit, if Modi is capable of being so bold, is the acquisition of plutonium and spent nuclear fuel for use in India’s Fast Breeder Reactors (FBR). This will expedite the introduction of thorium reactors in India, which are safer, cleaner, cheaper, and more proliferation-resistant than conventional reactors.

There is some debate about why Japan has made even this slightest of shifts in its position on nuclear cooperation with India. The Yomiuri Shimbum, arguably Japan’s leading daily, suggests that China’s forays in emerging as a major nuclear vendor has Tokyo worried. By various means, Beijing has acquired advanced Western technology and incorporated it into its own designs that are now being marketed to the world. China’s large reserves of foreign exchange also allow it to extend generous lines of credit to its customers who would be happy with a greater range of international partners. Additionally, by retreating from the international nuclear market and refusing to supply major customers, Japan will lose its technological edge in the field as Britain has. This is a plausible explanation but betrays the newspaper’s conservative leanings more than reveal Tokyo’s reasons: any argument along these lines must also take into account that there is still a large lobby against nuclear relations with a non-signatory of the NPT like India as well as the opposition to nuclear energy expansion in Japan; restarting the country’s fleet of 43 idling reactors has itself been a challenge for the Abe government.

From an Indian point of view, there are strategic as well as economic considerations at play here. Abe is not unaware of this, but he must also be able to sell this deal to his domestic audience and have it approved by the Diet. It might be his thinking that this is best achieved in small, incremental steps as the MoU was. In the meantime, there is much Modi can do to maximise the gains from a nuclear deal with Japan when it comes. It involves reforming the Atomic Energy Act to allow active participation by the private sector, establishing a de facto and de jure independent regulatory authority, improving transparency in the nuclear sector, and amending India’s nuclear liability to conform to international norms. Whatever the potential benefits of a civil nuclear cooperation agreement with Japan may be, India has not achieved them today.

This post appeared on FirstPost on December 13, 2015.

Chasing the Solar Unicorn

01 Tuesday Dec 2015

Posted by in India, South Asia

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Great headlines do not necessarily make for great policy. The announcement of the Solar Alliance by Prime Minister Narendra Modi and President François Hollande on the opening day of the United Nations Climate Change Conference in Paris certainly fits the bill. The aim of this alliance of 121 countries, including the United States and China, is to mobilise $1 trillion dollars by 2030 to fund solar energy throughout the world. Each member of the alliance will also strive to reduce the cost of financing for solar projects within its realm and support development of solar technology around the world.

For India’s part, Modi has pledged $30 million to build, host, and support the headquarters of the International Agency for Solar Technologies and Applications (IASTA) for five years. Modi also committed India to installing 175 GW of renewable energy by 2022, of which 100 GW will be solar power. The economy of scale, the government hopes, will drive down prices and make the power of the sun affordable to India’s teeming millions. International cooperation, greater economies of scale and shared technological development should remedy the shortcomings of solar power eventually.

In principle, this is not a bad policy; any move away from fossil fuel must be applauded. However, there are severe limitations to solar power that are yet to be addressed and India’s wholesale embrace of a technology that might not give the best bang for the buck is worrisome. Worse, Modi seems to have put all his eggs in one renewables basket that he wishes to grow to 40 per cent of the total energy mix by 2030. At present, this seems like little more than chasing the solar unicorn.

Network engineers classify power consumption into two broad categories – baseload, which is the minimum amount of power that is needed at any time of the day, and peak power, which is the maximum amount of power needed at certain specific times of the day. One problem that restricts solar energy from becoming the primary source of baseload power is that it is intermittent. This means that it comes and goes according to nature’s rhythms and and does not quite fit the pattern of a normal human workday. Solar power may help meet peak demand if the requirement coincides with a clear and sunny afternoon. With a heavy emphasis on solar power expansion, India would be hitching its electricity generation, and by implication, economic growth, to the vagaries of nature. Germany’s Energiewende has shown that excessive dependence on renewable energy has raised the cost of electricity to consumers as well as increased reliance on coal and gas power plants for backup for when the sun is not shining. As a result, Germany’s green solution is looking rather brown.

Solar enthusiasts recommend energy storage systems to overcome its questionable reliability. If energy can be stored whenever it is generated and drawn when it is needed, surely solar power can serve as another baseload contributor. This sounds good in theory but fails in practice. There is, as yet, no viable energy storage device for a single home, let alone across entire grids. Lead-acid batteries have efficiency and environmental issues but even opting for the more expensive and recyclable lithium ion batteries provides little solution: just to compare numbers and put matters in perspective, the world’s annual production of Li-ion batteries stood around 8.3 GWh in 2014; India’s energy consumption that year was slightly over 1.1 million GWh.

There are also some serious questions about material availability. Some 95 per cent of the world’s lithium is found in Bolivia, Chile, China, the United States, Argentina, and Australia. Mining sufficient volumes would present a challenge but not an insurmountable one. If Li-ion batteries took off, this concentration of suppliers could create its own geopolitical problems not dissimilar to today’s petropolitics. To be fair, however, the recyclability of lithium would prevent it from becoming as amoral.

The efficiency of solar panels is another concern. Most solar panels have a rating of approximately 20 per cent and a lifespan of 20 years. Each year, the panels lose about a percentage point in their efficiency. To generate the sort of power that India would need – 1.25 billion (and counting) people with GDP growth between 8 and 10 per cent – vast tracts of land would be required despite India’s more fortunate insolation.

The difficulties over land acquisition in India are well known, and if solar farms are moved into desolate areas to circumvent legal entanglements, the cost of both, their maintenance and transmission, would be higher. Furthermore, the impact of utility-scale solar power on land is not favourable and low-quality locations such as barren land or abandoned mining sites would have to be used to minimise ecological impact. The amount of land required should also give the government some pause. Even the most advanced solar panels remain inefficient and to generate the same amount of power a nuclear plant can on a 400-acre site will require land more by at least an order of magnitude.

Solar panels need water to keep them clean. Photo voltaic cells are not friendly to dust, grime, or rain and deteriorate over time. Dirt reduces the already low efficiency of solar panels. Ironically, some of the site most suited to solar farms like Rajasthan, north-west Gujarat, central Maharashtra, western Andhra Pradesh, and northern Karnataka are also some of the drier regions of the country. In a country where even agriculture flounders because of a slightly delayed monsoon, it seems unlikely that solar panels will have the priority over water use.

Whom does a national solar strategy benefit? Presently, the solar power market in India is dominated by Chinese companies. Despite distance and logistics favouring them, Indian manufacturers cannot match the price quoted by their Chinese competitors. Petitioned by local business, the government considered anti-dumping duties and reluctantly imposed them after a time but the World Trade Organisation recently disagreed with India’s claims and forbade such measures. With the construction of a 100 GW capacity in play, one wonders if it is China, Taiwan, Malaysia, and the United States that will benefit or Make in India. The flip side to this conundrum, of course, is the environmental cost of polysilicon manufacture that India will avoid by importing solar panels.

An oft-neglected aspect of solar power and its ‘zero ecological footprint’ is the highly toxic manufacturing process. The chemicals required to clean and purify silicon leave behind a toxic sludge that can be an environmental hazard. Most manufacturing has moved to countries with lax environmental laws such as China to lower production costs. As a result, large swathes of the Chinese countryside have been polluted with dangerous chemicals such as silicon tetrachloride, gallium arsenide, copper-indium-gallium-diselenide, cadmium-telluride, sulphur hexaflouride, thiourea, selenium hydride, nitrogen trifluoride, indium phosphide, hydrofluoric acid, and hexafluoroethane. These seep into the groundwater with deleterious effects on crops, fish, animals, and humans. Polysilicon can be recycled but little investment has been made in the process, which consumes a lot of energy and is expensive.

When solar power was in its infancy, no one noticed the problems it caused the grid because they were small and did not matter much. However, with countries like Germany ramping up solar power, grid stability has become a much greater problem. Electricity grids must always function on the total power generation being equal to the total power demanded. If this is not true, it could cause problems and even trip the grid. With reliable sources of power such as hydro and nuclear, this is easy to manage. However, with solar power, grid engineers experience wild fluctuations in power generation. The amount of power generated by photo voltaic cells can change dramatically in response to unpredictable environmental factors such as cloud cover or temperature. Fast-moving clouds, for example, can reduce the electrical output of solar panels by up to 50 per cent within a few seconds. Currently, engineers use frequency regulation services to compensate for these fluctuations. These add to the total cost of solar power but more importantly, point to the need for significant grid upgradation if solar power is to be accommodated. Does India really need to incur these unnecessary costs?

Even if India were to accept the pains and costs of a decentralised power market and smarter grids, the economics of solar power can also inhibit optimal growth. There is a serious mismatch between the diurnal variation of electricity generated by renewable sources and the diurnal variation of demand for electricity. Simply put, in such markets, the value of solar power decreases as the volume added to the grid increases. When solar power generation is at its maximum on a sunny afternoon, the demand for it is low and utilities will hesitate to pay generators the same amount as earlier or later in the day. According to studies in California, Texas, and Germany, the value of solar power will fall by half by the time it reaches 15 per cent grid capacity and it will be only a quarter as valuable if its capacity reaches 50 per cent. Given that Modi intends to generate about 40 per cent of India’s electricity from renewables by 2030, this might be an important factor to keep in mind.

To be sure, any step away from fossil fuels is good. However, solar power is not the optimal use of India’s resources upon which there are many other demands already. Currently, without large government subsidies, solar power is little more than a fashion statement – rich people who can afford solar panels and storage and do not care about a timely return on their investment may be interested in solar power for its symbolic value. In this manner, solar power can still play a role in the national energy mix, albeit a small one – rooftop, off-grid solar installations can reduce the demand on the national electric grid. Yet to take a personal solution and to inflate it to an international agenda might be to overlook a few hiccups.