India needs an economic stimulus that can also aid green energy transition

Relevance: Areas where India can direct its economic stimulus for maximum effect.

Synopsis: Some innovative and affordable pathways for a green stimulus which would create dispersed demand and jobs with large multiplier effects.

Background

• A large demand stimulus seems necessary in getting the V-shaped economic recovery that India need right now.
• A green stimulus can create demand, address air pollution and accelerate the green energy transition.

Innovative Ideas for Green stimulus

Conversion of crop waste into briquettes

• Within a few months from now, the burning of rice crop residue in northern India will create an air pollution crisis. This can be avoided by procuring all the crop waste at a remunerative price.
• The waste can be converted into briquettes, which can be substituted for coal in thermal power stations.
• NTPC has already done this successfully without adding to the cost of generation, as the cost of briquettes is comparable to that of coal in energy terms.
• The crop waste can be given for conversion into briquettes to private entrepreneurs.
• Dispersed private investment for conversion would take place, creating demand for the conversion equipment, labour and transport. Air pollution would be reduced without any cost to the government.

Investments in EV charging Infrastructure:

• Electric vehicles are eco-friendly and are cheaper to run on a life cycle per km basis.
• But demand is not rising because of the lack of charging infrastructure.
• Till a critical mass of charging infrastructure is created, demand for EVs will not pick up and the investment on charging stations would not generate returns.
• A national programme for building charging stations in all cities with a population of over a million is needed. It can be financed fully through a central government-guaranteed debt.
• The purchase of electric buses for city bus services may also be fully financed through government-guaranteed debt.
• These measures, in addition to creating a demand stimulus, would also lead to substantial improvement in air quality in our highly polluted cities.

Policy Guidelines to support Solar Power

• India has made an ambitious commitment under the Paris Agreement to aim for 450 GW of renewable energy capacity by 2030.
• To achieve this, electricity distribution companies should be persuaded by states to announce a remunerative price for solar power in rural areas. This does not need any transmission investments.
• Rather, Distribution companies would save money.
• Solar power generated in a village would make it much easier to provide electricity in the day to farmers for irrigation. This would also facilitate more efficient use of water.
• If generating 1 MW from a village is realistic, with 6 lakh villages, there is a potential of 600 GW capacity creation.
• Such a programme would generate widely dispersed private investment and increased incomes.
• Germany used a feed-in tariff with great effect to become a global leader in the use of solar power.

Conversion of cow dung into useful commercial energy

• With increased access to LPG stoves and cylinders and electrification in rural households, cow dung is no longer required for cooking.
• It can be converted in small village-level plants to gas which can be used as a fuel for cooking and transport, or, to generate electricity.
• India has the largest cattle population in the world and the goal should be to convert all the cow dung into useful commercial energy.
• A government-promoted system for procurement of this gas, at a remunerative price, would create the right incentives for private investment and income generation across all villages.