Big ticket investments in oil & gas as Modi opens India Energy Forum

Dense forests like these in Chhattisgarh have been opened up for coal mining by the government (Photos: Brian Cassady)

Inaugurating the fourth edition of the India Energy Forum-CERA Week, earlier this week, Prime Minister Narendra Modi assured the participants that India was well on track to meet its commitment of 275 GW of installed capacity in renewable energy by the year 2022. He went on to say that the government had now raised the objective to 430 GW by the year 2030.

He said this was in line with India’s commitment to fight climate change. “India’s energy plans aim to ensure energy justice and it will be secured while fully following our country’s global commitments for sustainable goals. India is one of the most active nations in furthering renewable sources of energy. A self-reliant India will also be a force multiplier for the world economy. Energy security is at the core of our efforts. With a smaller carbon footprint, our energy sector will be growth-centric, industry-friendly and environment-conscious,” he added.

India’s hunger for energy is not limited to the renewables. Over the past two decades as Indian economy grew rapidly, it was fired by an interesting mix of energy sources. Historically mainly coal-fired, it began adding serious capacity in oil and gas as well as nuclear besides the green energy sources. India is world’s third-largest consumer of oil and gas, after China and the United States, and it stands just after China in coal consumption globally.

Even though coal and indeed all fossil fuels were coming under increasing pressure globally due to the air pollution as well as their role in climate change, for several decades successive Indian governments refused to forsake these, saying that renewable energy sources were expensive and that the entire economy of the developed nations was built on fossil fuels and it was unfair to ask the developing world to make the sacrifices for the pollution and climate change caused by the rich nations.

India’s power mix remains heavily dependent on fossil fuels (MIG photos)

Though India had begun to adapt green energy sources, they had remained limited due to the price at which they came, at least till about a decade ago. A major shift towards renewable energy adoption in India came in the early part of last decade as prices of renewable energy, notably solar energy, fell dramatically.

It was in this light that India signed on to its commitment of 275 GW of green energy by 2022 in the Paris Agreement after the 21st meeting of Conference of Parties (CoP21) of the United Nations Framework Convention on Climate Change (UNFCCC). It was at this meeting that India displayed global leadership and created the International Solar Alliance (ISA) jointly with the host nation France with the objective of creating a financial institution that would allow all nations located between the two tropics to build their solar energy power generation.

Since then, the country has kept pushing its solar energy generation capacity at a fast clip, despite troubles over the economic viability of some solar projects that the utilities bid for, due to extremely low rates for sale of that power.

For nearly five years it seemed that while India would not forsake coal and fossil fuels, it would definitely keep the focus on minimising its carbon footprint by switching to cleanest of these fuels, such as more efficient and less polluting coal, mainly imported from Australia as Indian coal is highly polluting and a switch to the cleanest forms of gas.

Thus, it was a big surprise when the government took a highly controversial decision of permitting mining in the most pristine and primitive forests of India, which are believed to have India’s largest coal deposits. It called bids for 41 coal mines across the country, even though until 2015, the government was considering declaring dense forests with hydrological value, and those near or overlapping streams and rivers as inviolate and hence no mining zones. The then government had proposed go and no-go area classification for coal mining in 2009-10, and nine major coal blocks were studied for their biodiversity and forest cover. As many as 70 pc of the blocks were found to be suitable for mining while 30 pc were categorised as no-go areas. But the classification was never implemented following stiff resistance from steel, power and coal sectors. In 2012, the government decided that all forests that could not be regenerated to the desired capacity ought to be protected.

Opening of 41 mines in highly vulnerable forest lands, amongst the oldest in the world, raises the question of the sincerity of the government towards environment protection, which is a confusing signal in view of the public statements made by the Prime Minister as well as the investments in renewable energy and rapid scaling up of the capacity of power generation in this domain. Also, the Indian government has set a target to increase oil refining capacity to 450 million tonnes by 2025 from the current 250 million tonnes.

In view of these statements and goals, there remains a great degree of confusion about the long-term objectives of the government. At a time when at least some nations, including China, Japan and the European Union, have committed to turning carbon neutral by 2050, India is yet to set a target date for the same. A key step in that direction would be try and keep the energy demand in check, besides going in for green energy wholeheartedly while opting out of fossil fuels.

But at the India Energy Forum, the Prime Minister said India would drive the global energy demand and highlighted some key measures taken by his government to attract global investors to invest in the sector. He said the coronavirus pandemic had resulted in global energy demand falling by one-third, impacted investment decisions and predictions of a contraction in demand over the next few years. But India was likely to see energy consumption double over the long term, he said. Fossil fuels already account for 75 pc of India’s current energy mix. Its green energy investments have seen levelling off, if not a drop in the past year especially due to the financial distress in the segment.

The temptation to stay with coal and other fossil fuels is high for politicians anywhere in the world. But India is already paying the highest price due to air pollution which has risen so sharply that a global list of most polluted cities reads like a map of India as nearly 80 pc of the 30 most polluted cities are in India. With air pollution levels already tens of times higher than the prescribed safe limits, it is important that Indian government gave priority to clean air and climate change than the narrow interests of a few business houses that deal in coal and ‘dirty’ power, however influential and close to power they may be.