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2nd January 2023 (8 Topics)

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

Context

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.
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