Cleaning and greening Indian energy
New Delhi has signed up to the Paris climate-change agreement. Now it needs a cogent plan for natural gas
India last month ratified the Paris climate-change agreement, bringing the international accord to the brink of implementation. The third-largest emitter of greenhouse gas emissions (GHGs), accounting for 4.1% of the world total, India is not setting an outright cap on emissions. Instead, it plans to increase use of green energy and reduce emissions relative to GDP.
Emissions will continue to rise, in other words, but at a slower rate. By 2030, the government hopes, GHG emissions per unit of GDP will be down by 33-35% and the country will be getting at least 40% of its electricity from non-fossil fuels.
More carbon-free energy will come from renewables-notably solar PV and wind-and, it is hoped, nuclear power. The government has set an ambitious target of a fivefold increase in installed renewable-energy capacity to 175 gigawatts by 2022, including 100GW of solar capacity and 60GW of wind power, compared with 5GW and 27GW at present, respectively. Recent growth in both has been impressive: excluding China, India led Asia in solar photovoltaic capacity additions in 2015-and was in ninth position in capacity additions globally, according to research by Ren21, an industry body. And it made the world's fourth-largest wind-capacity additions in 2015, with an extra 2.6GW installed, says Global Wind Energy Council.
Meanwhile, state-owned Nuclear Power Corporation of India hopes to increase nuclear generation capacity to 63GW by 2032, from just under 7GW at present-and is discussing funding mechanisms with various publicly owned companies. By 2050, the country wants to be getting a quarter of its electricity from nuclear plants.
For now, though, the contributions of solar PV, wind and nuclear to primary energy demand remain small. In 2013, estimates the International Energy Agency (IEA), nuclear accounted for just over 1% of primary energy demand. Bioenergy, with a share of 24%, was the dominant form of renewable energy, while the combined contribution of other renewables, including solar and wind, provided less than 1%.
Coal's share of primary-energy demand has, meanwhile, risen rapidly-from 33% in 1990 to 44% in 2013. Its share of electricity generated amounted to almost 60% in 2013, according to IEA. Natural gas, by contrast, accounts for just 6.5% of primary-energy demand and generated less than 15% of the country's electricity in 2013.
Given its potential to replace both coal in power generation and oil in transport, the government is eager to boost the role of gas in the energy mix, which it rightly sees as a quick, economically effective route to decarbonising the energy sector. A large-scale switch to gas has genuine upside for consumers too-cleaner cities and, where gas replaces oil, cheaper fuel.
So far, though, the government has not established a firm plan for developing gas in the way it has for renewables. Government officials suggest gas's share of primary-energy demand might reach around 20% by 2040, but the target is vague and is not yet supported with a cogent, nationwide strategy for expanding gas use. Also, India has previously made wildly optimistic forecasts for growth in gas: the Hydrocarbon Vision 2025, created in 2000, envisaged gas's share of primary-energy demand being around 15% by now and 20% by 2025.
The principal obstacle to achieving the desired level of growth has been inadequate infrastructure for moving gas around the country. Investors have been reluctant to put money into expanding it in the absence of established end-user markets and without large anchor customers willing to sign up to long-term offtake deals. Despite numerous plans for expanding the pipeline network, few consumption centres are grid-connected. The country's LNG-import terminals are all on the west coast and much of the capacity is idle because of the lack of pipelines to carry the gas to markets inland. Petronet LNG's Kochi terminal, for example, a 5m-tonne-a-year regasification plant on the southwest coast can only use around 5% of its capacity, because of delays in the development of a pipeline system from Kochi to Bangalore and Mangalore.
If leaving gas development to the market hasn't worked, at least the state is throwing greater weight behind infrastructure development. In September, Indian Oil and Gail agreed to acquire half of the equity in the proposed 5m-t/y Dhamra liquefied natural gas receiving terminal-one of three such facilities planned for the east coast. More significantly, both state-owned companies say they will book regasification capacity of 3.0m t/y and 1.5m t/y respectively in the terminal-almost its entire output.
Separately, the government is funding 40% of Gail's planned $2bn Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) project-the first time it has extended a capital grant to a natural gas pipeline project. The 2,539km JHBDPL project is expected to be completed by the end of 2020. Petronet LNG, meanwhile, believes construction work on the Kochi-Bangalore-Mangalore pipeline system will start imminently. Also in September, the government launched Gas4India, a media campaign publicising government efforts and strategies to manage a shift to gas.
Further government statements on financial assistance-in the form, for instance, of guarantees to infrastructure developers that they will receive some kind of compensation for idle capacity while markets take root-would lend additional credibility to efforts to create a gas-based economy. But it is the sometimes prickly nexus of central and state governments that might prove to be the game changer in gas: the most urgent reason for increasing gas use in India at the expense of coal and oil, is improving air quality; strict local controls on urban pollution could prove the catalyst for an acceleration in demand. Once established, economics will take care of the rest.