INDIA’S FOSSIL FUEL POLICY CONTRADICTS ITS CLIMATE POLICY

INDIA’S FOSSIL FUEL POLICY CONTRADICTS ITS CLIMATE POLICY

India’s promises to COP 21

INDC report submitted by India to United Nations Framework Convention on Climate Change during the Paris Climate Conference contained the following promises

Emission reduction – To reduce the emissions intensity of India’s GDP by 33 to 35% by 2030 from 2005 level.

Renewable energy – To achieve about 40 percent cumulative electric power installed capacity from nonfossil fuel-based energy resources by 2030.

Carbon sink – To create an additional carbon sink of 2.5 to 3 billion metric tons of CO2 equivalent through new forest and tree cover by 2030.

After having made such promises, it is surprising that Government of India is now committing itself to the increased use of fossil fuel such as natural gas and coal, even as it is pursuing renewable energy. Is this approach appropriate to its pledge to combat global warming?

Government’s LNG policy

While globally natural gas makes up for 24 percent of the energy basket; it is 6.5 to 7 percent in India. The government of India says that it would like to raise the share of natural gas in the energy basket to     15 percent in the next five years.

In Eastern India, the government is laying 2,500 km long pipeline, which will provide natural gas to industry and help in gas distribution in seven cities of Eastern India.

The government of India wants to promote LNG as a fuel for vehicles. Efforts are being made to have a LNG-driven bus in Kerala soon. Long-haul driven vehicles and trains will also be encouraged to use LNG as fuel.

India’s natural gas production

Year 2010 2011 2012 2013 2014 2015
In billion cubic meter
Production 47.5 52.2 47.6 40.7 35.4 33.7

As the Indian production of natural gas is nearly stagnant, India has to increase the import of LNG steadily,

As the government of India wants to increase the share of natural gas in the energy basket.

Plans for LNG terminals to increase LNG import

India currently has LNG import and regasification capacity of 21 million metric tons and the Government of India plans to more than double its annual LNG import capacity to 50 million metric tons in the next few years.

Petronet LNG Ltd operates a 10 million metric tons a year LNG import terminal at Dahej in Gujarat and has another 5 million metric tons facility at Kochi, which is lying mostly idle because of lack of a pipeline to take the gas to consumers.

Dahej terminal is being expanded to 15 million metric tons this year and is proposed to be further expanded to 18 million metric tons in future.

Royal Dutch Shell operates a 5 million metric tons a year LNG terminal at Hazira in Gujarat, while a 1.2 million metric tons capacity operational terminal is there at Dabhol in Maharashtra.

Government’s coal policy:

Thermal power continues to lead the electricity sector in India:  For the 12th Five Year Plan, a total of 88,400 MW of power capacity addition is targeted, of which 72,300 MW constitutes thermal power based on fossil fuel,  10,800 MW hydro power, and  5300 MW nuclear power.

The government of India appears to have no intention of significantly decreasing the usage of coal in the new thermal power projects.

This is evident from the fact that the government plans to bid out more than eight ultra-mega power projects of generation capacity 4000 MW each in two and a half years, based on coal as fuel. It is reported that Government of India will shortly auction three ultra-mega power projects (UMPP s) including Tilaiya and Cheyyur of total capacity of 12,000 MW, entailing investments of Rs. 80,000 crore.

India’s Coal production:

Year FY11 FY12 FY13 FY14 FY17E CAGR
Million metric tons
CIL 431.3 435.8 452.2 474.5 563.8 5.7%
SCCL 51.3 52.2 53.1 54.3 57.4 2%
Captive + Others 50 52 52.4 55.1 68.7 7%
Total production 532.6 540 557.7 583.9 689.9 5.5%

In 2015-16, Coal India (CIL) achieved a record production of 536million metric tons, which was 42 million metric tons more than the previous fiscal. Its production grew 8.5% year-on-year. CIL’s output target is fixed at 598 million metric tons for 2016-17.

The government of India wants to eliminate thermal coal imports by 2017 by doubling production of Coal India, which already has 80 % market share.

Government’s fossil fuel policy

Prime Minister Narendra Modi discussed with oil and gas experts on 5th Jan, 2015, focusing on subjects such as increasing the share of gas in India’s energy mix, fresh investment in oil and gas exploration in India, regulatory frameworks, international acquisition of oil and gas assets, emerging areas such as shale gas and coal bed methane, and the oil and gas sector related possibilities of ‘Make in India’.

Source: Statement from the Prime Minister’s Office, 5th Jan 2015

Obviously, Government of India has no plans for reducing the consumption of fossil fuel. Similar to natural gas and coal, the consumption of crude oil is also likely to increase steadily.

Renewable energy

While the government continues to rely on fossil fuel to sustain the economic and industrial growth of the country, it has set the following target for renewable energy

 Source Target for 2022 Present capacity as on end  2016 Additional capacity to be built between 2016 and 2022
Solar 100 GW 8 GW 92 GW
Wind 60 GW 27 GW 33 GW
Small hydro 5 GW 4.2 GW 0.8 GW
Biomass and others including waste to power 10 GW 4.68 GW 5.32 GW
Total 175 GW 43.88 GW 131.1 GW

Additional requirement for fossil fuel

As per the government’s scheme   to use more coal and natural gas in the Indian energy basket to sustain Indian industrial and economic growth, additional requirement of fossil resources would be the following

An additional requirement of coal for all applications by 2022 will be 645 million metric tons for power generation and other purposes.

An additional requirement of natural gas for all applications by 2022 70 billion cubic meters per annum for electricity generation and other uses.

Is increasing use of LNG / coal appropriate policy?

Given India’s promise to combat climate change, one wonders whether burning of more natural gas and coal in power plants and elsewhere as fuel would be the appropriate strategy.

Burning fossil fuels create carbon emission and consequent global warming.  It does not matter if it is coal, oil, propane, kerosene, gasoline or natural gas—it all contains carbon, which gets released as a greenhouse gas.

It is a fact that compared with coal, burning natural gas results in roughly half the amount of CO2 per megawatt-hour of electricity. The most advanced natural gas burning power plants can still emit around 385 kgs of CO2 per megawatt-hour of electricity produced. All those power plants that burn natural gas will still spew CO2, albeit less than the equivalent coal-fired power station.  This would make it hard to achieve the goals of CO2-emission reduction if India were to use more coal, natural gas, and diesel as fuel.

Further, it is possible that natural gas can leak. Leaks occur when the well is drilled, during transport in pipelines, at storage sites, or when methane is pumped into the natural gas (methane) powered buses. This will add methane to the atmosphere, which would increase global warming when methane gradually converts to carbon dioxide.

It can be seen that continued and increased usage of fossil fuel is contrary to the objective of a positive approach to tackling climate change issues.

It is critical that India should focus not just on growth but also on cleaner growth.

What action plan? 

Now that India has not significantly reduced its greenhouse gas emissions, government of India should be gravely concerned about the push for the use of more natural gas and coal, which are potent greenhouse fuel.

Considering the fact that there are twin challenges facing India due to the climate change issues and impending energy needs and the fact that both the issues are interrelated, the strategic approach of the Government should be oriented to find elegant and integrated solution for both the problems in one stroke.

Obviously, the focus of the strategic plan should be to utilize eco-friendly feedstocks for generation of energy to the maximum extent possible, keeping in view that the economic and GDP growth target and climate issues cannot be sacrificed.

The most important action needed is to reduce all fossil fuel use and markedly increase efficiencies and take up appropriate renewable energy projects like the wind (both onshore and offshore), solar, nuclear, algae biofuel and similar other eco-friendly fuel sources in a bigger way, where there are tremendous opportunities.

Given the fact that India plans to build renewable energy projects to the level of around 137 MW in the next 10 years, there is strong case to re-examine as whether so many new power projects based on coal or natural gas are necessary. With more than 270,000 MW of power generation capacity already in India, the capacity utilization of the power projects in India are only in the region of 50 percent at present. Why not improve the capacity utilization of existing power projects and reduce transmission loss, instead of building up more fossil fuel-based energy projects.

Obviously, Government of India has to rework the energy strategy in tune with its commitment to COP 21, instead of marching on the beaten path.

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