'India needs one institutional mechanism for bringing all the bodies that impact energy policy within an integrated framework'

Why is India’s economy driven by fossil fuels?

An economy goes through many phases. The agricultural phase is usually followed by the manufacturing and industrial phase, after which countries tend to shift on to the service-led growth path.

India went from an agriculture-dominated economy to a service-dominated economy but we still have a substantive manufacturing base. Our economic system is such that it is driven by fuels, and the most competitive ones are fossil fuels.

The most competitive fuel in India is coal. It is abundantly available, and more affordable than oil or gas. The transport infrastructure is in place for it to be made available in different parts of the country. This is a major reason for the dominance of fossil fuels in the commercial economy.

Fuels that are liquids are the most convenient and most affordable in terms of mobility and transportation. Industries have no easily available substitute for oil.

Biomass, wood and dung are non-commercial fuels used in rural India. However, if you want fuels for commercial use, there are no accessible affordable alternatives.

What impact does this have on the environment?

The impact on the environment has been negative and harsh. There is a strong nexus between economic growth and energy demand. India’s dependence on fossil fuels has led to environmental pollution and degradation. Today, more than 10 of our cities rank among the 50 most polluted cities in the world.

How does India compare with China in terms of fossil fuel consumption?

China is the second-largest consumer of oil in the world. The numbers for 2020 and 2021 are somewhat distorted on account of Covid. But in 2019, China consumed about 14.5 million barrels of oil a day as against India’s consumption of 4.5 million. India is almost one-third the size of China in terms of oil consumption. The two countries have very different absolute requirements for oil but, they are both facing the same exposure or vulnerability to external markets.

Why are their requirements different?

Their absolute requirements are different because of the size of their economies. India’s GDP is one-fourth that of China, so the total consumption of oil and gas in China is correspondingly much higher than in India. But the extent of their exposure to the external market is comparable. Both are heavily dependent on imports to meet their domestic oil and gas consumption requirements.

What kind of policy reform would help India reduce its dependence on fossil fuels?

Today, India has a fragmented institutional structure for energy policy. There are different government ministries involved with this – the ministries of petroleum and natural gas, coal, renewable energy, atomic power, environment, fertilizers, and water – apart from the Prime Minister’s Office, and the Niti Aayog.

There are many bureaucratic and ministerial verticals involved with subjects that are directly or indirectly impacting energy policy in India. We have to create one institutional mechanism for bringing all of these bodies within an integrated frame. This reform will help us take into consideration the totality of implications connected to the transition from fossil to non-fossil fuels.

Author Vikram Singh Mehta.

We also need reforms related to pricing, taxation, development of infrastructure, relationship between Central government and state governments, the development of a robust market, investment in research and development (R&D), and investment in technology related to clean energy.

The shift from coal and oil to solar and wind can only take place if the infrastructure for bringing renewable energy from the point of production to the point of consumption exists. The sun does not shine at night. The wind does not blow all the time. Electricity is generated from them on an intermittent basis, so we need a transmission infrastructure that is sufficiently robust to absorb these electrons. That infrastructure does not exist right now. It needs to be built and scaled up.

If we develop electric cars, we also need to have the charging infrastructure to charge those vehicles, else people will not buy them even if they are affordable. One of the big constraints on the development of renewables is the cost of batteries and their storage capability. Technology will eventually bring down the cost of batteries and storage systems. For that to happen, we need investment in R & D.

Why is natural gas being championed when it is non-renewable?

Gas is a cleaner fuel than oil and coal. Even though gas is a fossil fuel, a shift away from coal and oil towards gas will reduce emissions and the impact on the ecosystem. To move from overdependence on fossil fuels to complete dependence on green fuels, there has to be an intermediate step. Gas is a bridge fuel. To accelerate the use of gas, we need affordable pricing for consumers.

To what extent is India’s interest in natural gas driven by geopolitical calculations?

Gas is more abundantly available than oil. We import most of our oil from the Middle East but gas can be imported from multiple sources – the Middle East, Australia, Myanmar, USA, Russia, Nigeria and also from Iran through Pakistan which is not likely. India can diversify its supplies to reduce the risk of a disruption.

What are your thoughts on challenges related to storage, leakage and carbon dioxide emissions?

These are serious challenges that can be addressed only through the technology of carbon sequestration, which is the process of capturing and storing carbon dioxide from the environment. It is being developed by many countries but the cost is high. We need a technology solution that is affordable to all stakeholders. We are in the pilot phase. There is a long way to go before scaling up.