India takes steps to build gas economy
India is promoting natural gas as a ‘transition fuel’ as it moves from coal and oil towards renewable energy as the main source of power. But renewable energy generation, such as that from wind and solar, is intermittent and dependent on weather conditions. Natural gas can serve as a bridge fuel in the event of power supply disruption. The demand for gas in growing at around 9 percent per annum. The growth is largely at the expense of its rival – coal and oil – which are more polluting than it (the gas) in electricity generation, industry and transport. Natural gas provides over 25 percent of energy globally.
India sees gas as a transition fuel while hydrogen and solar power would play key roles in the country’s energy mix. Investments in infrastructure will crucially enable this transition. According to the Minister of Petroleum and Natural Gas, an estimated US$60 billion will be invested for developing “One Nation One Gas Grid”. Pipeline length will double over the next few years to exceed 32,000 km. In addition, city gas distribution (CGD) currently supplies to 7 million customers and is expected to expand. Next bidding round plans to extend connectivity to additional 100 districts, reaching 500 districts over the next few years.
While energy consumption is expected to grow at an annual rate of 2.6 percent, we expect gas demand to grow at double the rate — at around 5 – 6 percent. The role of natural gas in bridging between more polluting fossil fuels and zero-carbon technologies can only be temporary because natural gas is also a CO2 emitting fossil fuel. It should be used only until renewable power supply expands and clean alternatives, like green hydrogen, become commercially viable as fuels. Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable energy. While green hydrogen produced from renewables could eventually replace gas for industrial use, it is at present too expensive for widespread use,
Ideally a gas-based economy ought to be fuelled by increased domestic production, enabled by pricing and taxation reform. The infrastructure build presents the country with a unique opportunity to lead the world in a sustainable architecture with minimal leakage, and with provisions for increasing use of clean technologies such as renewables and electrolytic green hydrogen produced from renewables.
Half of India’s natural gas is produced within the country while half is imported from Qatar, Australia and the US, among other countries. India is also trying to diversify sources of natural gas by partnering with countries such as Russia that can supply a stable flow of natural gas, the government said in October 2020.
Investments in infrastructure will crucially enable this transition. According to the Minister of Petroleum and Natural Gas, an estimated US$60 billion will be invested for developing “One Nation One Gas Grid”. Pipeline length will double over the next few years to exceed 32,000 km. In addition, city gas distribution (CGD) currently supplies to 7 million customers and is expected to expand. Next bidding round plans to extend connectivity to additional 100 districts, reaching 500 districts over the next few years.
Increasing natural gas in the power sector will also help scale-up renewable energy to 500 GW by 2030. A series of policy initiatives in the last two years, including open access to the pipeline network, launch of a gas exchange and marketing reforms, points to the government’s commitment to move towards cleaner fuels.
The Parliament Standing Committee on Energy’s report has identified 14.3 GW of stranded gas-based plants with an investment of over Rs 650 billion, most of it lent by banks. Capacity utilisation of LNG terminals such as in the case of Ennore and Kochi is another concern. Low utilization increases cost to customers, erodes profitability and creates non-performing assets. The centre, state, and private sector must collaborate to increase utilization of gas-based plants.
Challenges of transition
The role of natural gas in bridging between more polluting fossil fuels and zero-carbon technologies can only be temporary because natural gas is also a CO2 emitting fossil fuel. It should be used only until renewable power supply expands and clean alternatives, like green hydrogen, become commercially viable as fuels.
Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable energy. While green hydrogen produced from renewables could eventually replace gas for industrial use, it is at present too expensive for widespread use, we reported in September 2021.
Investments in infrastructure will crucially enable this transition. According to the Minister of Petroleum and Natural Gas, an estimated $60 billion will be invested for developing “One Nation One Gas Grid”. Pipeline length will double over the next few years to exceed 32,000 km. In addition, city gas distribution (CGD) currently supplies to 7 million customers and is expected to expand. Next bidding round (11th) plans to extend connectivity to additional 100 districts, reaching 500 districts over the next few years.
