The mantra (sonic form) of energy security, energy efficiency and green energy requires energy transformation, which is possible when Economy, Ecology, and Energy achieve complete embrace with balance. Alongside, ‘Just Transition’ governance must go hand in hand making economic and political power shift from an extractive economy to a regenerative economy.
The energy sector is presenting Bharat with its toughest of challenges as Bharat will see the largest energy demand growth of any country in the world over the next three decades. Bharat’s overall energy consumption is likely to be closer to 100 percent surge by 2050 as heatwaves will be more frequent, durable and intense. The energy sector is responsible for around three-quarters of global greenhouse gas (GHG) emissions. Energy efficiency, however, could slash Bharat’s GHG emissions by up to 50 percent through advanced technologies. For now, Bharat is overwhelmingly reliant on coal for power generation.
Besides, our fossil fuels requirements are heavily import-dependent: 87 percent for crude oil, 53 percent for gas and 24 percent for coal. Energy security and green energy mean diversifying energy supplies, boosting oil & gas exploration footprint, transitioning to a gas-based economy, smart room air-conditioning, heat-proofing, electric vehicles, and an inevitable transition to clean renewable fuels embracing green hydrogen, solar, and nuclear power etc.
Bharat has made a ‘net-zero’ commitment, setting 2070 as its target year (net-zero or carbon neutrality means that the amount of CO2 produced by a country is balanced by the amount removed from the atmosphere). It has also made tangible commitments of one-billion-ton reduction in the carbon emissions projected for 2030, and raising its non-fossil fuel energy capacity to 500 GW by the same year (requiring USD 360 Billion investments), which would also meet 50 per cent of its energy needs by renewables.
Keeping in view Bharat’s nationally determined contribution (NDC) commitment to reducing carbon emission intensity, coal is in the crosshairs. The viable options would be: Mining in an environmentally responsible manner, reducing imports, coal-washing and gasification etc. Needing to increase the terminal regasification capacity, and expand the usage of E20 fuel etc., Bharat is seeking to invest large amounts for developing the gas sector. Power on the rooftops scheme has the potential to change the dynamics of access to electricity and the country’s climate-change commitment, once structural problems are addressed. Bharat has faltered in locating its oil reserves for decades, but its Exclusive Economic Zone (EEZ), a vast area of 2.36 million square km, is likely to have reserves much higher than those discovered so far.
The state-owned Distribution Companies (DISCOMs) are in fragile financial health due to the high level of Aggregate Technical and Commercial (AT&C) losses, the levy of inadequate tariffs compared to the power supply cost, and insufficient subsidy support from state governments. Each unit of energy sold results in a loss of 60 paise for the DISCOMs, and if Bharat has to ramp up its non-fossil capacity, the financial health of the DISCOMs must improve phenomenally which necessitate dealing with serious systemic issues, including separating political objectives from the electricity system.
Renewables (including large hydro) make up almost a fifth of the country’s generation. Solar accounts for almost half of this output, followed by large hydro and wind power. There have been several policy reforms involving wind and solar power, and local manufacturing is being pushed through a combination of incentives for manufacturing and disincentives for imports. But we need out-of-box thinking beyond tariffs, non-tariff barriers and capex-linked incentives. Similarly, the key to integrating Renewable Energy into a round-the-clock availability of power to cope with demand cycles is battery energy storage systems (BESS). Energy storage may become just a transitional technology if commercial nuclear fusion takes off. For the shift to be sustainable and meaningfully carbon-reductive, many new technologies will have to be developed and stabilized. This is to intensify the R&D of clean energy technologies – battery storage, carbon capture and sequestration (CCUS), green hydrogen, coal gasification, modular nuclear reactors, etc.
Green hydrogen is the future of energy. The National Hydrogen Mission is set to make Bharat a global hub for green hydrogen production and export. It promises to afford dimensional shifts across industry, power and mobility; and, of course, to meet the country’s decarbonization goals. The amount of energy produced per unit of hydrogen is estimated to be three times the equivalent weight of petrol and seven times that of coal.
Policy support will continue to be necessary and enormous R&D will have to be devoted to developing technologies to produce cheap green hydrogen and synthetic petrol, and to develop and stabilize critical elements of the supply chain like storage solutions, electrolytes, better recycling of industrial metals (recycling is much less energy-intensive than virgin production), etc. The US government, for example, targets green hydrogen production costs of $1/kg by 2030 – it costs anywhere between $3 and $8/kg now in different places. With our single unified grid and large renewable capacity, Bharat can produce the cheapest green hydrogen in the world.
The share of nuclear power in India’s generation mix (3 percent) is lower than those of other major economies. This percentage is 20 per cent for US and EU. Nuclear power is zero-emission. It has no greenhouse gases or air pollutants. And according to the US government data, a typical 1,000-megawatt wind farm requires 360 times more land than a similar capacity nuclear facility and solar plants 75 times more. Bharat cannot reach the status of a developed nation, without nuclear energy playing its due role, through Thorium-HALEU (High-Assay Low-Enriched Uranium fuel) in Pressurized Heavy Water Reactor (PHWR) and Small modular reactors (SMRs). Scaling up nuclear energy will require investments, and further evolution of policies and regulations.
China has a near monopoly on global supply of materials essential for green energy. Bharat needs a strategic frame similar to CHIPS and Science Act of USA that aims to lower costs, create jobs, strengthen supply chains, counter China, invest in research and development, science and technology, and the workforce of the future. Policy changes may be needed to attract big players in mining and exploration of critical minerals needed for India’s energy transition targets. There is a need for national carbon market. Trading for a greener tomorrow is the way forward for a well-regulated domestic emission trading mechanism.
Energy transformation is going to be the biggest thematic governance opportunity of our lifetime. Per one estimate, Bharat would require USD 20 trillion of Capex to meet the 2070 net-zero target. Bharat needs ONE Energy enterprise, balancing carbon and non-carbon fuels, and promoting coherence between the electricity system in Bharat and the energy transition instruments of the external world. The current individual ministries of Power, Coal, Petroleum, Mines, Minerals, Atomic Energy, and Renewables etc. must be part of ‘ONE Energy’. What is needed is a well-architected energy governance. An integrated energy policy, coalescing the currently listed items of the Seventh Schedule of the Constitution pertaining to ‘energy’ into the ‘Union List’, barring ‘electricity’ remaining in the ‘concurrent list’, will usher into redesigning the energy architecture. The critical ‘energy governance’ will include policy and finance, clean energy R&D, proportional regulations, and a communication strategy to raise public awareness and navigate the green and ‘Just Transition’.
The global green agenda will be fought on three axes – supply chain resilience, domestic investment and national security. A decarbonized energy system by 2050 will save the world USD 12 trillion, along with 55% more energy services. Net-zero for Bharat must mean net positive for economy, ecology, and the people, aligning with Viksit Bharat goal of 2047. Hence, ‘ONE Energy’ governance!
Arun Agarwal is an author, columnist, teacher and ex-CEO. He is currently a Professor of Practice at Rizvi Institute of Management Studies and Research, Mumbai.