Source– The post is based on the article “The path to decarbonisation in the wake of the Russia-Ukraine conflict” published in The Indian Express on 2nd January 2023.
Syllabus: GS3- Infrastructure: Energy
Relevance– Issues related to energy markets
News– The article explains the major changes happening in international energy markets. It also explains the future strategy for the Indian energy market in the changing dynamics.
Energy market is fragmented and energy nationalism is the driving force behind policy.
The Iron curtain has come down. Russia will not be allowed access to western markets as long as Putin is holding the Presidency in Russia. It will lead to a tightening energy embrace between Russia and China.
OPEC plus one has stepped out of western influence. It is actually increasing the closeness between Russia and Saudi Arabia on energy matters. Saudi Arabia has made it clear that it wants to pursue a “Saudi first” non-aligned approach to international relations.
New centers of energy powers are emerging around the world that have a large share of metals, minerals required for clean energy. China is currently the dominant power.
What is the way forward for India?
Petroleum sector– Russian crude is not a sustainable option to meet the energy requirements for India. Government must increase the productivity of existing producing fields. There is a need to increase the country’s market potential to secure a long-term supply with Saudi Arabia and equity partnership with Iran.
Strategic petroleum reserves should be enhanced to cover at least 30 days of consumption. The construction of the pan-India national gas pipeline grid should be expedited.
Coal sector– Coal will remain an important component of India’s energy system for decades. Hundreds of people depend upon the coal ecosystem for livelihood. The government has to find an energy transition route that balances livelihoods and a green agenda.
Some steps in that direction are increased R&D expenditure for coal gasification and carbon capture technologies; carbon tax; establishment of regulatory and monitoring mechanisms for measuring carbon emissions from industry and closure of inefficient and old plants. NITI Aayog should determine the competitiveness of coal versus solar on a full-cost basis.
Demand side measures– The demand conservation and efficiency side is equally important. It is the cheapest, easiest and quickest way to reduce dependence on external sources.
Other measures– There is need for upgradation of transmission grid network to make it resilient for clean energy. The structural issues impacting the renewable actor should be addressed. The improvement in balance sheets of state distribution companies; easing the process for acquisition of land and removal of regulatory uncertainties are important.
Mineral and chip diplomacy is needed to diversify the source of supply of minerals for clean energy.
Creation of an enabling ecosystem for developing and commercializing third-generation clean energy technologies like hydrogen, biofuels and modular nuclear reactors should be pushed.