India’s just energy transition is more than a coal story

Source– The post is based on the article “India’s just energy transition is more than a coal story” published in The Hindu on 6th February 2023.

Syllabus: GS3- Infrastructure: Energy

Relevance– Issues related to clean energy transition

News– Just Energy Transition Partnership (JET-P) is emerging as the key mechanism for multilateral financing by developed countries to support an energy transition in developing countries.

India is considered the next candidate for a JET-Partnership.

What are the issues with Just Energy Transition Partnership?

Energy transitions could give rise to intra-generational, intergenerational, and spatial equity concerns. Transitions affect fossil-dependent jobs, disrupt forms of future energy access.

It shrinks the State’s capacity to spend on welfare programmes. Thus, it increases the existing economic inequities between coal and other regions.

Existing JET-P deals pay limited attention to intra-generational inequity, such as job losses. Among the three JET-P deals signed so far, only South Africa’s deal mentions a ‘just’ component.

What are the difficulties faced by India in JET-P negotiations?

These have remained stalled over coal ‘phase-down’ and how to operationalise India’s just transition. The emphasis on coal phase-down disregards the crucial difference in energy transition between industrialised and emerging economies.

India’s transition requires significant simultaneous growth in energy demand. The Central Electricity Authority projects a near doubling of electricity demand by 2030. India cannot afford to put its development on hold while decarbonising.

What are the steps taken by India for clean energy?

India has set the goal of 450 GW renewable energy capacity addition and 43% RE purchase obligation by 2030. These targets are supported through complementary policy and legislative mandates like Energy Conservation (Amendment) Act and missions like National Green Hydrogen Mission.

Fiscal incentives through production-linked incentives are provided. Market mechanisms like the upcoming national carbon market supports these efforts.

What is the basic requirement for clean energy transition in India?

Accelerating the pace of Renewable Energy deployment is needed to match the pace of demand growth. In 2021-22, coal power served one-third of the new demand.

Meeting India’s 2030 target requires accelerating non-fossil capacity addition from 16 GW a year in 2022 to 75 GW a year by 2030.

What is the way forward to achieve it?

Shifting energy demand patterns– This is low hanging fruit. It will enable faster RE capacity addition.

Solarisation of agricultural electricity demand; electrification of diesel-powered MSMEs and decentralised RE for residential cooking and heating are some of the steps needed for shift in energy demand patterns.

Components of clean energy– Domestic manufacturing of clean energy components is critical to sustain JET, build energy self-sufficiency. Indian components are 20% costlier than Chinese components.

Giving preference to domestic components without addressing cost competitiveness may slow down the pace of deployment.

The way around this is to look for markets outside India as part of a JET-Partnership and to reduce the cost gap through economies of scale.

Optimal use of coal power– There is a need to have a relook at the current use of coal resources to enhance efficiencies until the period of phase-down. One option is to optimise use of coal-fired power plants closer to coal mining areas rather than based on energy demands.

This would enable coal to be used more efficiently because transportation of coal is more energy-intensive . It would also lead to cheaper power and indirectly reduce emissions due to more efficient use of coal.

The investment requirements for this transition are beyond the means of domestic capacity of developing countries. Any future JET-P deal must consider this broader framework for financing and supporting an energy transition.

India’s G-20 presidency is an opportunity at hand to negotiate a deal for itself while also shaping international cooperation on just energy transitions.