There’s More To India’s Energy Transition Than the Coal Story

Context

• The Just Energy Transition Partnership (JET-P) is quickly becoming the primary means by which developed nations finance multilateral energy transitions in developing nations.
• This has special significance now that the Glasgow Pact contains the phrase “phase-down” of coal.
• India is the fourth potential candidate for a JET-Partnership, following South Africa, Indonesia, and Vietnam. The G-20 presidency by India may present an ideal opportunity to reach an agreement.

Relevance

GS Paper-3: Infrastructure: Energy

Mains Question

What are India’s main obstacles to achieving a just energy transition, how can they be overcome, and how can this be done within the framework of India’s overall energy policy and development objectives? Explain. (250 Words)

Issues of Concern

• Economic inequality is one issue that transitions raise. Energy transitions may also raise concerns about intergenerational, intragenerational, and spatial equity.
  • Transitions have an impact on jobs that are dependent on fossil fuels in the near future, disrupt future energy access, reduce the state’s ability to fund welfare programmes, and exacerbate already existing economic disparities between coal and other regions.
  • Current JET-P deals give little consideration to intra-generational inequity, such as job losses brought on by a phase-down of coal.
  • Only the South African JET-P agreement, which was signed first, refers to a “just” component that will be financed as part of the initial $8.5 billion mobilisation and will fund reskilling and alternative employment opportunities in coal mining regions.
  • Indonesia and Vietnam, the other two JET-Ps, concentrate on mitigation financing for sector-specific transitions.
    • Country context of coal phase-down: o The developed countries’ emphasis on coal phase-down ignores the significant distinction in the energy transition between industrialised and emerging economies.
  • In the industrialised world, energy transition entails a natural decline in energy consumption as well as a shift to clean energy sources; India’s transition necessitates a significant concurrent increase in energy demand.
  • The Central Electricity Authority predicts that by 2030, the demand for electricity will have nearly doubled. A nation with a rising energy demand needs to have a sufficient supply from a variety of sources. India cannot afford to halt its development while attempting to reduce carbon emissions.

The Pathway for Clean Energy

• Achieving clean energy: India has set ambitious goals like 500 GW of non-fossil capacity addition, including 450 GW of renewable energy (RE) capacity addition, and 43% RE purchase obligation by 2030.
• The Energy Conservation (Amendment) Act, missions such as the National Green Hydrogen Mission, financial incentives such as production-linked incentives, and market mechanisms all support these goals (upcoming national carbon market).
  • These interventions demonstrate India’s commitment to the energy transition, but more supporting actions are required for a comprehensive JET strategy.

Taking the following steps could quicken India’s energy transition:

• Speeding up RE deployment rates: India’s JET depends on speeding up RE deployment rates to keep up with the rate of demand growth.
  • Although the deployment of RE has surpassed coal in recent years, coal power will still meet one-third of the additional demand in 2021–2022.
  • Accelerating non-fossil capacity addition from 16 GW per year in 2022 to 75 GW per year by 2030—a 22% annual growth—is necessary to meet India’s 2030 target.
  • Despite persistent efforts, India fell short of reaching 175 GW of RE capacity by 2022. Decentralized deployment, which offers greater potential for acceleration, largely accounts for the gap.
• A low-hanging option is changing energy demand patterns in ways that enable faster RE capacity addition, such as solarizing agricultural electricity demand, electrifying diesel-powered Micro, Small, and Medium Enterprises (MSMEs), and decentralised RE for residential cooking and heating. These two complementary approaches can accelerate RE deployment and have significant developmental co-benefits.
• Stimulation of energy demand: Stimulation of energy demand through rural productivity enhancement will further aid RE acceleration and help to close the rural-urban economic gap, create rural jobs, and thus close intergenerational and spatial inequities.
  • Domestic production of clean energy components: o It’s essential to maintain a JET, increase energy independence, and take advantage of the promise of green jobs that comes with 21st-century energy.
    • Achieving cost competitiveness is difficult because Indian components are 20% more expensive than Chinese components.
    • Decreasing the rate of deployment by favouring domestic components without addressing cost competitiveness
• The solution to this is to negotiate JET-Partnership access to markets outside of India in order to close the cost gap through economies of scale.
  • Re-aligning the way coal is currently used: Up until the phase-down period, efficiency needs to be improved. One option is to make the most of coal-fired power plants that are located close to coal mines rather than those that are based on energy demand in States.
    • Because the transportation of coal requires more energy than the transmission of electrons, this would allow coal to be used more effectively and result in lower emissions.
    • As one-third of the cost of coal for power plants goes towards transportation, it would also result in cheaper power; the resulting savings might even be used to pay for urgently required retrofits for emission controls.
    • Because coal is used more effectively, it would indirectly reduce emissions.
• This policy change makes it possible for India to later consider capping the capacity of coal-powered generation. India’s projected demand for electricity in 2030 can be satisfied by existing generation capacity plus plants that are currently under construction.
  • The possibility of utilising existing plants more extensively to meet future demand is further enabled by the low capacity utilisation factor (58% in 2022).
• The coal re-alignment helps address concerns about energy security by resulting in cheaper and more effective power, making it possible to even consider a future coal-based power capacity cap.

Conclusion:

• These actions will not only address equity issues in a variety of ways, but they will also generate new employment opportunities, reduce emissions, and get the nation ready for a future phase-down of coal that will further decarbonize the economy.
• In addition to shaping international cooperation on just energy transitions, India has the opportunity to negotiate a deal for itself while holding the G-20 presidency. India must create a comprehensive domestic just energy transition (JET) strategy in order to negotiate a financing deal that addresses its particular set of socio-economic challenges.