India’s difficult transition from fossil fuels to net-zero emissions

Synopsis: India faces many challenges in reducing dependence on coal and oil but the greater use of gas in our energy mix could ease the way.

Introduction

The coal crisis has forced the Indian government to ramp up domestic production and imports of coal, the dirtiest fossil fuel, while the world focuses on net-zero carbon emissions by 2050.

This irony reflects the reality that power generation and hence our economy is heavily dependent on coal, followed by petroleum.

What are the constituents of India’s energy generation basket?

Data from the International Renewable Energy Agency (IRENA) indicate that non-renewable fossil fuels account for 70% of the current (2020) generation capacity of 462,3038 MW, followed by hydro/marine power at 11%, solar and wind power at 6% each, nuclear power at 5% and bio-energy at 2%.

The share of gas in primary energy supply and power generation have been stuck at only 5- 6% in India. India is ranked 29th in global production of gas at a little over 1 trillion MMcf per year and 14th in global consumption at around 2 trillion MMcf per year.

What are the challenges in India’s transition from fossil fuels to a net-zero?

Council for Energy, Environment and Water (CEEW) report has highlighted challenges to India’s transformation.

Capacity-The technological know-how, managerial and regulatory capacity needed to manage this revolutionary transformation.

Finance-The transformation will involve massive high-cost, high-risk, long-gestation investments. There is little fiscal space for large public investment in renewables, while private investment in renewables at scale is just starting.

External support- Various climate agreements envisaged help from developed countries. However,the willingness of developed countries to make available adequate low-cost finance and required technologies remains uncertain.

Land- CEEW estimates that creating renewable power generation capacity for a net-zero economy could require between 4% to 6% of India’s land mass.

Political economy– Closure of coal mines, oil wells and power plants will be resisted by the owners of these assets as well as workers employed at these establishments.

If the cost of power based on renewables turns out to be higher than fossil-fuel-based power, even consumers will resist the transformation.

What is the future strategy needed for transformation to net-zero emissions?

CEEW report has explored the implications of a number of alternative net-zero scenarios, though whichever scenario plays out, it is quite clear that emissions will be rising for the next 30 to 50 years.

A two-pronged strategy of ‘accelerating renewable power‘ generation and the fossil-fuel basket in favor of gas could significantly reduce that period of transition.

What is the present and future scenario of the global energy market?

The case of Gas: International Energy Agency (IEA) projections indicate that gas will overtake coal as the second largest energy source after oil within this decade.

Emissions – Carbon dioxide and other emissions from gas are only a small fraction of emissions from oil, and especially coal.

Supply – Planned pipelines from Central Asia having floundered due to issues with Pakistan, our gas imports are still mostly from West Asia, especially Qatar.

Global gas supplies have grown dramatically following the shale revolution. Traditional supplier of Gas like Qatar besides the new ones like Australia and USA can ensure adequate and diversified supply of gas to India.

Market-The diversification of supply sources and the emergence of active spot and futures markets is transforming the global gas market.

Technology-Two recent technological developments, enabling liquefaction and re-gasification of LNG on board ships, will further disrupt the market and reduce costs.

Shale gas has seen revolution driven by ‘hydraulic fracturing‘ and ‘horizontal drilling‘ technologies.

Why India has not seen Shale Gas revolution?

Terrain- India may have gas reserves of over 100 MMcf, though only 40% of this is in accessible terrain and would be depleted within a couple of decades.

Cost to benefit-Given the high risks and costs of gas exploration and extraction, expected returns are low.

Distorted ‘administrative pricing‘ and ‘taxation‘ system, combined with a regulatory night-mare of multiple overlapping systems.

The result is neither public investment by GAIL nor private investment has been forthcoming.

Source: This post is based on the article “India’s difficult transition from fossil fuels to net-zero emissions” published in “Livemint” on 21st October 2021.