The path to decarbonization in the wake of the Russia-Ukraine conflict

India must pivot the needle of its energy compass towards short-term energy security and long-term decarbonization.

Factors driving Energy Conundrum:

The international energy market has been deeply affected by the Ukraine conflict. There are primarily four factors that mark its impact:

• Fragmented Energy Market: The energy market has been fragmented and energy nationalism has taken the driver seat in policy making.
• Outcomes of the Ukrainian conflict: Irrespective of how and when the Ukraine conflict ends, Russia will not be allowed access to the western markets for as long as President Putin is at the center.
• “OPEC plus one”- “Saudi first” approach: Saudi Arabia is clear about pursuing a “Saudi first”, non-aligned approach to international relations including with the US.
• New centers of energy power: The New energy centers are emerging around countries that have a large share of the metals, minerals, and components required for clean energy.
  • China is currently the dominant power.

India’s Energy-Security and long-term decarbonization plan:

• Discounted Russian crude: It gives India an opportunistic panacea but not sustainability. To ensure the latter, India must increase the productivity of our existing producing fields.
• Leveraging India’s market potential: India must secure a long-term supply relationship with Saudi Arabia and an equity partnership with Iran.
• Strategic petroleum reserves: It should enhance the strategic petroleum reserves to cover at least 30 days of consumption.
• Pan-India national gas pipeline grid: The construction of a pan-India national gas pipeline grid should be

Dependency on Coal:

• Coal will remain the bulwark of India’s energy system for decades.
• Hundreds of thousands depend on the coal ecosystem for their livelihood.
• Phasing out coal whilst environmentally compelling is not yet a macroeconomic or social possibility.

What is the way out?

• Finding the Balance: The government has to find an energy transition route that balances livelihoods and pushes forward the green agenda.
• Focusing on R&D: An increased R&D expenditure for coal gasification and carbon capture and sequestration technologies.
• Regulatory Mechanism: The establishment of regulatory and monitoring mechanisms for measuring carbon emissions from industry.
• The closure of inefficient and old plants and a decision not to approve any new ones.
• Niti- Ayog, economists, and energy experts must determine the competitiveness of coal versus solar on a full-cost basis.
• Thinking beyond supply and distribution: India must focus on demand conservation and the efficiency side equally too.
  • Europe will save 10 bcm of gas annually by simply adjusting their thermostats downwards by 1-degree centigrade.
• Setting up carbon taxes

Other Measures:

• Allocation of Funds: To upgrade the transmission grid network
• Addressing structural Issues: Scaling up of renewables must be addressed.
  • Repair of the balance sheets of state distribution companies (discoms).
  • Easing the procedures for the acquisition of land
  • Removal of regulatory and contract uncertainties.
• Diplomatic Solution: It will take decades to harness our indigenous resources of the metals and minerals critical for clean energy.
  • Diplomats should secure diversified sources of supply to reduce the country’s vulnerability.
• Creation of an enabling ecosystem: It is crucial for developing and commercializing third-generation clean energy technologies like hydrogen, biofuels, and modular nuclear reactors.
• Nuclear Energy, also needs to be pushed ahead.

What approach is needed for the decarbonization of the economy?

• Breaking up into shorter periods: The planning horizon will need to be broken up into shorter periods so that new knowledge about emerging technologies can be incorporated into plans.
• Setting up an autonomous agency: A technically credible agency like the Climate Change Committee (CCC) in the UK should be set up.
• Targeting the power sector: The power sector has to be focused on because it is the biggest source of GHG emissions and also the easiest one to decarbonize.