Editorial of the Day: Roadmap to Energy Justice (Indian Express)

Context: The article is discussing India’s energy strategy and its importance as the country is experiencing rapid economic growth. It highlights that India is the world’s fastest-growing major economy and is projected to account for a significant portion of global energy demand growth between 2020-2040. Amidst this scenario of transitioning and where the nation’s energy strategy is recognized globally as being pragmatic and balanced, India must ensure energy access, availability, and affordability for its large population.

Roadmap to Energy Justice Background

India’s Energy Profile

According to the Ministry of Power, the share of different sources of energy in India’s power sector is as follows:

• Coal: 70.6%
• Renewable energy sources (including solar, wind, small hydro, and biomass): 11.4%
• Hydro: 12.3%
• Natural gas: 3.3%
• Nuclear: 1.8%
• Diesel: 0.4%
• Others (including waste heat and imported coal): 0.2%

It’s worth noting that the share of renewable energy sources has been increasing steadily in recent years, and the government has set a target of achieving 175 GW of renewable energy capacity by 2022 and 450 GW by 2030.

Key Highlights of India Energy Outlook 2021: IEA

• Energy consumption:
  • Presently, India is the fourth-largest global energy consumer behind China, the United States and the European Union.
  • India will overtake the European Union as the world’s third-biggest energy consumer by 2030.
  • India’s energy consumption is expected to nearly double as the nation’s GDP expands to an estimated USD 8.6 trillion by 2040 under its current national policy scenario.
• Industrial Value Added:
  • Over the last three decades, India accounted for about 10% of World Growth in Industrial Value-added [in Purchasing Power Parity (PPP) terms].
  • By 2040, India is set to account for almost 20% of Global Growth in Industrial value-added, and to lead global growth in industrial final energy consumption, especially in steelmaking.
• Reliance on imports:
  • India’s growing energy needs will make it more reliant on fossil fuel imports as its domestic oil and gas production has been stagnant for years despite government policies to promote petroleum exploration and production and renewable energy.
  • India is largely dependent on fossil fuel imports to meet its energy demands – by 2030, India’s dependence on energy imports is expected to exceed 53% of the country’s total energy consumption.
• Oil demand:
  • A five-fold increase in per capita car ownership will result in India leading the oil demand growth in the world.
• Gas demand:
  • India will become the fastest-growing market for Natural gas, with demand more than tripling by 2040.
• Coal demand:
  • Coal currently dominates India’s electricity sector, accounting for over 70% of overall generation.
  • By 2040, 42% of India’s new energy demand will be met by coal.
• Renewables:
  • India’s share in the growth in renewable energy is the second-largest in the world, after China.
  • Currently, solar accounts for less than 4% of India’s electricity generation.

Decoding the Editorial

India’s situation, as a rapidly growing major economy with a large population and significant energy demand, is unique unlike any other country.

• India has managed its energy needs in a way that has allowed it to maintain stable fuel prices and avoid energy shortages despite being heavily dependent on imports for crude oil and natural gas.
  • When petrol and diesel prices went up by 35-40 per cent in the US, Canada, Spain and the UK, and despite importing over 85 per cent of its crude oil requirements and 55 percent of its natural gas requirements, prices of diesel in India have actually gone down in the last one year.
  • When several countries in our neighbourhood have had dry outs and power cuts to manage demand, there has been no shortage of fuel anywhere in India.

The article is discussing how India managed to achieve this.

• Vision of Energy Justice: The Government’s vision for ensuring “energy justice” to Indian citizens has been a driving force behind India’s successful energy strategy.
  • Measures such as cutting excise duty and VAT rates twice, helped keep fuel prices low for Indian consumers.
  • Also, oil PSUs in India have absorbed losses to prevent passing on the massive hikes in crude oil and natural gas prices in the international market to Indian consumers.
  • The government has also increased the supply of subsidized APM gas for city gas distribution, even at the cost of cutting down captive use of domestic gas by Indian PSUs.
    • Gas priced under APM (Administered Price Mechanism) is set by the Government of India.
    • Under this system, the oil and gas sector is controlled at four stages viz. production, refining, distribution and marketing.
  • The Government has imposed an export cess on petrol, diesel, and ATF, as well as a windfall tax on domestically produced petroleum products, to prevent refiners and producers from profiteering at the cost of domestic consumers.
• Diversifying suppliers:
  • India has expanded its network of crude oil suppliers from 27 nations to 39 nations.
  • It has also further strengthened its ties with countries like the US (energy trade has gone up 13 times in the last four years) and Russia to ensure a reliable supply of crude oil.
  • This strategic market card, as the world’s third largest importer, not only ensured affordable energy for Indian consumers but also had a calming effect on global petroleum markets.
• Balancing Global Demand and Supply:
  • India’s purchase of petroleum products from certain nations has actually kept the global demand and supply of around 98-100 million barrels/day balanced, thereby keeping oil prices in check for the global value chain.
  • Had this not been done, global prices would have shot to $300/barrel.
• Destination for Exploration & Production: India has been  focusing on both traditional fuels exploration and energy transition.
  • The reforms introduced by the government have made India an attractive destination for exploration and production of traditional fuels.
  • A consulting firm named Wood Mackenzie has recognized India as a wildcard in licensing for the year 2023.
  • India aims to increase its net geographic area under exploration from 8% to 15% by 2025.
    • To achieve this, the Indian government has reduced the prohibited/no-go areas in its Exclusive Economic Zone (EEZ) by 99%, freeing up nearly 1 million sq km for exploration.
    • This shows India’s commitment to promoting exploration and production of traditional fuels and expanding its energy sector.
• Steadfast Climate Change Commitments: Despite focusing on traditional fuels exploration, India remains committed to its climate change commitments.
  • The country aims to become net-zero in emissions by 2070 and reduce emissions by one billion ton by the end of 2030 (Glasgow commitment).
  • India recognizes the need to transition to cleaner energy sources to mitigate the impact of climate change.
• Expanding Petrochemical Production:
  • India is currently a global exporter of petroleum products, and its refining capacity is the fourth largest in the world after the US, China, and Russia.
  • The country aims to further enhance this capacity to 450 MMT by 2040.
  • This expansion of India’s refining capacity is seen as a key factor in ensuring fuel price stability during the international oil price volatility seen last year.
  • This shows the country’s efforts to diversify its energy sources and move towards a more sustainable and self-reliant energy future.
  • By expanding its petrochemical production, India can reduce its reliance on imports and become a more significant player in the global energy market.
• Gas-based Economy:
  • India is also accelerating its efforts to move towards a gas-based economy by increasing the share of gas from the current 6.3 percent to 15 per cent by 2030.
  • India has connected more than 9.5 crore families with clean cooking fuel in the past nine years.
  • PNG connections have increased from 22.28 lakh in 2014 to over 1 crore in 2023.
  • The number of CNG stations in India has gone up from 938 in 2014 to 4,900 in 2023.
  • Since 2014, India has increased the length of its gas pipeline network from 14,700 kms to 22,000 kms in 2023.
• E20 and Ethanol Blending:
  • The government has launched E20, which is a blend of 20% ethanol and gasoline, and plans to roll it out in 15 cities initially, with plans to expand it across the country in the next two years.
  •  India has made significant progress in increasing the use of ethanol blended gasoline, with the percentage increasing from 1.53% in 2013-14 to 10.17% in 2023.
  • The government is also setting up five second-generation ethanol plants that can convert agricultural waste into biofuel, which will help reduce pollution from stubble burning and provide additional income to farmers.
• National Green Hydrogen Mission: The mission aims to develop a green hydrogen ecosystem in the country.
  • The government has set aside a budget of Rs 19,744 crore for this initiative, which will help India to achieve its target of producing 4 million tonnes of green hydrogen annually and save Rs 1 lakh crore in fossil fuel imports by 2030.
• Promotion of Electric Vehicles:
  • India is also supporting electric vehicles through a production linked incentive scheme to make advanced chemistry cells of 50 GW hours.
  • The Government has announced viability gap funding and customs duty exemptions for the sector.
  • India has set a target of installing alternate fuel stations (EV charging/CNG/ LPG/LNG/CBG etc.) at 22,000 retail outlets by May 2024.

All these efforts by the government will make us achieve India’s target of becoming a $26 trillion economy by 2047.

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