Page 128 - CW E-Magazine (31-10-2023)

Point of View

Despite being a net importer of crude oil, India now has surplus refining capacity, and is now a sizeable exporter of some petroleum products,
particularly liquid automotive fuels (even as it imports others such as LPG.)

‘Dynamic new phase’
According to the WEO 2023, “India is moving into a dynamic new phase in its energy development, marked by a long-term net zero emissions
ambition, increased regulatory sophistication, a focus on clean energy deployment, and the creation of domestic clean energy technology supply
chains.”
The government has committed to achieving a net-zero emissions target by 2070 – ten years behind China – and announced policies to
scale up manufacturing of clean energy supply, including, but not limited to green hydrogen, SPV, wind and biofuels. While clean energy investments
are expected to more than double in the STEPS by 2030, from around US$60-bn in 2022, the investment needs to triple by the end of the decade
to be on a trajectory to meet net zero challenges.

The aim is to have 50% of power generation capacity fuelled by non-fossil sources by 2030, compared to 41% in 2022, and to have in place
500-GW of non-fossil electricity capacity by 2030. The recently announced ‘National Green Hydrogen Mission’ targets low-emission hydrogen
production capacity of 5-mtpa (with an associated renewable energy capacity addition of 125-GW). Policies to generate demand for this hydrogen,
particularly from industry, are being put in place. In 2022, the government passed a law that sets the stage for the creation of an Indian Carbon
Market – a carbon credit trading scheme – to economically incentivise performers and penalise laggards.

While population growth is slowing and has reached replacement levels, urbanisation and increasing per capita incomes will drive increased
consumption of all sorts of goods and services, implying higher energy consumption per capita. By 2050, India’s urban population is expected
to expand by 74% from current levels and per capita income is expected to triple. Industrial output will expand rapidly: iron & steel production,
for example, is expected to triple from current levels, and demand for air conditioners (ACs) in residential spaces increase nine-fold – faster
than any other major household appliance (including television, refrigerators, and washing machines). By 2050, India’s total electricity demand
from residential ACs (under STEPS) is expected to exceed total electricity consumption in all of Africa today, while in the Announced Pledges
Scenario (APS), which assumes all national energy and climate targets made by governments are met in full and on time, it is 15% lower as a
result of increased use of energy-efficient ACs and thermal insulation in buildings. To put in another context, the latter reduction is larger than
the total current electricity generation of the Netherlands!

Rising demand for oil and gas
Demand for oil and gas in India in the STEPS is expected to rise by 70% between 2022 and 2050, while coal demand rises by 10%, even
as SPV makes significant inroads into electricity generation. As a result, India’s annual CO emissions still rise 30% by 2050 – one of the largest
2
increases in the world. While in the STEPS, SPV provides nearly 45% of total generated power by 2050, in the APS it crosses 50%. Clean energy
investment in the APS over and above those in the STEPS will also drive faster growth in electromobility, low-emissions hydrogen, grid expansions
and other clean energy infrastructure. As a result, India’s annual CO emissions fall sharply in the APS by over 40% from current levels by 2050,
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even though its GDP quadruples over this period.
Catalysing domestic production
To address concerns that the energy transition will trade a fossil dependence on imports to another form – such as for SPV modules – the
government has launched a Production Linked Incentive (PLI) scheme to catalyse the domestic manufacturing of SPV modules and advanced
chemistry cell manufacturing. The former, with a budget of $2.5-bn for subsidies, aims to create 65-GW per year of new manufacturing capacity.
These are expected to come online in the next 2-3 years, and will not only serve national needs in the STEPS and APS, but enable India to emerge
as a reliable exporter.

Five-pronged approach
The WEO-2023 proposes a five-pronged strategy for getting the world on track by 2030: tripling global renewable capacity; doubling
the rate of energy efficiency improvements; slashing methane emissions from fossil fuel operations by 75%; creating innovative, large-scale
financing mechanisms to triple clean energy investments in emerging and developing economies; and putting in place measures to ensure an
orderly decline in use of fossil fuels.

As things stand now, demand for fossil fuels is set to remain far too high to keep within reach the Paris Agreement goal of limiting
the rise in average global temperatures to 1.5°C. The WEO is optimistic that bending the emissions curve to enable achieve this ambitious goal
is still possible, but very difficult.
The energy transition will be neither swift nor cheap. But the costs of inaction will be even greater!
Ravi Raghavan

128 Chemical Weekly October 31, 2023

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