 "India's energy transition beyond dependence on renewables")
Cyclone Biprajoy is the latest extreme weather event that has focused attention on the impact of global warming on the lives of millions. Moving away from fossil fuels to reduce the carbon footprint of the economy has assumed increased urgency. India has accepted the goal of net zero emissions (NZE) by 2070.
Energy transition involves intense competition for the limited carbon space. Developed countries and China have exhausted 80 per cent of the carbon budget and they are now eating into the meagre space remaining at a faster pace since their per capita emissions are higher than that of India or other developing countries. China has emerged as the largest emitter. Its emission stood at 11.4 billion metric tons, or 30 per cent of the global emissions of 37.12 billion metric tons in 2021. The Indian share was 2.7 billion metric tons, or 7.27 per cent, well behind China, the US, and the EU. China’s relative share in the global basket will go up in the future since the emissions of the EU and the US have started declining, while China will ‘peak’ its emissions only in 2030.
The developed countries and China have completed their infrastructure development and industrialisation. Accepting the goal of net zero emissions imposes smaller sacrifices on their part. India has a more difficult choice as its infrastructure development will take time. In case the emissions are capped before diversification to clean energy is made, its development trajectory will be affected. The window is closing fast as the recent G7 Summit called for major economies to accept ‘peaking’ by 2025.
Reaching the goal of NZE requires converting energy into electricity generated from emission-free sources. Electricity accounts for 20 per cent of the energy basket globally. Its share in the energy mix will go up as new sectors like mobility and industry are electrified. This increases the demand for electricity. What is the minimum electricity required for India to reach the goal of NZE by 2070? There are different estimates by think tanks. Most have placed their estimates in the range of 3,500 TWhr to 6,000 TWhr, though their timelines are different and some have not charted the full course to NZE. The International Energy Agency (IEA) has given an estimate of 3,400 TWhr as India’s demand by 2040. A study by Vivekananda International Foundation (VIF) Task Force, with mathematical modeling by IIT Bombay, has projected the demand at 24,000-30,000 TWhr by 2070. A CEEW study has placed the demand at 24,000 TWhr by 2100. Thus, there is a wide divergence. Which one is correct? According to NITI Aayog data, India’s energy consumption in 2020 was 6292 TWhr. Is it conceivable that India’s energy consumption 20-50 years down the line will be less than its consumption in 2020, a pandemic year when economic activities slowed down?
If these demand estimates (3,400-6,000 TWhr) relate to the power sector alone, we will never reach net zero emissions. According to IEA, the power sector in India accounts for 45 per cent of its total emissions. India just does not have forest cover or sink to absorb the balance of 55 per cent of emissions.
It is worth mentioning that the VIF study has chosen a more stringent standard. The mathematical modeling by IIT Bombay is based on converting 75 per cent of total energy into electricity with hydrogen supplying 10 per cent to 25 per cent of demand to cater to hard-to-abate sectors. The IEA prescription is based on 50 per cent of energy being converted into electricity. If the remaining 50 per cent of energy is to be based on fossil fuel, will we achieve NZE? India does not have a sink to absorb emissions on this scale. The IEA model does not meet the requirement of either energy adequacy or a clean environment.
What is the most cost-effective solution for the minimum quantum of electricity needed? There is a widespread perception that renewables are far cheaper than coal or nuclear power. However, the tariff structure in India does not include the cost of systems. Renewables are intermittent and have to be backed by other sources of power to supply electricity when the sun is not shining or the wind is not blowing. A study by the Forum of Regulators estimated the additional cost of renewables which is not captured by the existing tariff at Rs 2.12 per unit in 2021. Adding this, the actual cost of solar power is in the range of Rs. 4.12 per unit or more, which makes it more expensive than either coal (Rs. 3.25 per unit) or nuclear (Rs. 3.47 per unit).
What is the experience of other countries? Germany has the highest renewable penetration in the world (46 per cent). It is no coincidence that the German power tariff is the highest in the world. Though Germany is phasing out nuclear power generation at home, it draws nuclear power from the Czech Republic and France. India does not have the luxury of a regional grid. All its neighbours are energy deficient, except Bhutan.
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While we should work to achieve the target of 500 GW of installed capacity based on non-fossil sources by 2030 as announced by the government, there is a need for caution in case of further expansion. MIT and OECD studies have brought out that exclusive reliance on renewables for achieving low emission targets will increase the cost ‘disproportionately’. This can be moderated by the inclusion of nuclear in the energy mix. The VIF-IIT Bombay study has found that the renewable-high scenario to achieve NZE by 2070 is the costliest at $ 15.5 Trillion. The nuclear high scenario at $ 11.2 trillion is the cheapest.
Renewables are also the most land-intensive option. The installed capacity (more than 25,000 GW) needed to reach NZE in 2070 by renewable high route will require more than double the surplus land available (2,00,000 sq. km) in India now.
The share of nuclear power in India’s generation mix (3 per cent) is lower than those of other major economies. This percentage is 20 per cent for each of the US and EU-28. China is trying to raise this to 10 per cent by 2030. Japan is restarting its nuclear programme despite the Fukushima accident. Ramping up nuclear power rapidly requires incentives to be given to this sector, including parity with renewables. An expansion on this scale requires resources that cannot be internally generated by NPCIL. While joint ventures with other PSUs are welcome, there is a need to look at the examples of the UK and UAE, which not only allow the private sector but foreign vendors to bring in capital and technology. This will require an amendment of the Atomic Energy Act.
The writer is a former ambassador and Coordinator, VIF Task Force on India’s Energy Transition in a Carbon-Constrained World.
These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the 'Business Standard' newspaper.