Organising the union government for the climate transition

by Akshay Jaitly and Ajay Shah,
Business Standard, 10 June 2024

Every cabinet formation is an opportunity to rethink the activities of the union government. Many areas of mission creep are into areas where government involvement in the economy is unnecessary or even harmful. In the fields where the presence of government is required, the present organisation design often hinders performance. Optimists about government reform in India have long argued that the entire union government ought to be fit into 15 ministries and Raisina Hill.

The clean energy transition is one of the biggest problems awaiting attention. The presence of multiple departments creates a siloed environment. M. Coal pursues the objective of more coal, M. Renewable Energy pursues the objective of less coal, and M. Power pursues the objective of more electricity. The M. Environment thinks about climate change but has little influence upon the energy ministries. Climate change is also a subject of M. Earth Sciences. This results in policy incoherence: initiatives of different parts of the executive are in inconsistent directions.

This incoherence hampers the performance of the union government within India (in its engagement with state governments, where the bulk of the electricity system lies) and outside India (in its engagement with the external world). Compared with many other fields, the energy transition is one in which the external world matters more. Economic statecraft is harder to conduct when the policy strategy, and the national interest, is relatively incoherent.

The energy transition is not a unique problem where the structure of departments and ministries is faulty. In the Indian policy environment, bureaucratic inertia often trumps rational organisation design. Similar problems are found in transportation. The finance complex is also poorly organised: There is a Vijay Kelkar chaired committee report, titled A Ministry of Finance for the 21st Century, and the first 24 years of the century have witnessed low improvements on this problem.

What is the present arrangement? The energy transition is the work of (1) Coal; (2) Environment, Forests and Climate Change; (3) New and Renewable Energy; (4) Petroleum and Natural Gas; (5) Power; (6) Atomic Energy (7) Electric vehicles is at Heavy Industry and (8) Economic policy is at Economic Affairs. Most people would agree that this is not a good arrangement. How could it be done better? There are five areas for work.

  1. We need to rethink the list of departments. Do we really need a Department of Coal and a Department of Atomic Energy? For example, there could be just two departments, one for Carbon Based Fuels and another for Carbon Free Fuels.
  2. It is possible to fuse everything connected with energy into a single Ministry of Energy, which could have an MEA style structure with many departments headed by secretary rank officers and then a leadership by one minister and one Energy Secretary. This delivers less than meets the eye, because the fundamental unit of government is the department, and under this solution, we would still have a proud Department of Coal that is trying to increase carbon emissions.
    Fusing a set of departments into a new ministry has ample precedent. There is a long history of departments moving from one ministry to another. Hence, such changes are quite feasible. It may make sense to merge Heavy Industries into Energy. But it would not make sense to merge DEA into Energy. The Allocation of Business Rules require a fresh look and many modifications to reflect the problem of the energy transition.
  3. To improve coordination between multiple ministers, there is a case for a Group of Ministers for the Climate Transition which brings together the eight or fewer ministers concerned with this. This is a good solution in that there is an institutional memory and bureaucratic capability around Groups of Ministers. At the same time, such Groups have been a bit unsatisfactory in the past. A key limitation is that there is no technical secretariat which supports the Group: we are down to ministers competing for influence where each has been briefed by their officials based on the self-interest of their department.
    The self-interest of existing energy departments could be partially addressed by having this GOM chaired by the Minister of Finance, who should have a strategic economic policy capability in the DEA. A key failing of GOMs in the past was the lack of a technical secretariat. A group of research organisations can be drawn to work together as the technical secretariat to the GOM.
  4. Alongside the traditional three branches of the state, in India we have a new concept of a state organisation, the regulators, which pack tremendous power through fusing executive, legislative and judicial powers. Improving organisation design for the energy transition requires rethinking these regulators also.
  5. Alongside the organisation design of the executive branch there is the problem of state capability in the legislative branch. Fragmentation at the level of Parliamentary Standing Committees can be solved by creating a unified Parliamentary Standing Committee on the Energy Transition and fusing the work of standing committees for seven of the eight departments into this. Here also, it will help to have a (different) group of research organisations supporting the Standing Committee.

India is unusual in having an excessively fragmented and sprawling union government. It is interesting to see that in other countries also, where such a pre-existing problem was not present, new government structures have been established in recognition of the difficulties of climate change. In Germany, the Federal Ministry for Economic Affairs and Climate Action (BMWK) oversees energy transition policies. In France, the Ministry for the Ecological Transition focuses on climate change. In Spain, there is the Ministry for the Ecological Transition and the Demographic Challenge. In Uruguay, energy transition falls within a Ministry of Industry, Energy, and Mining. In Indonesia, energy transition is done through the Ministry of Energy and Mineral Resources. In the US, John Podesta is the `climate czar' who is playing a unique role. This solution, however, sits uneasily in the Indian constitutional arrangement, where the machinery of government is run through the cabinet, cabinet ministers and departments.

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