India’s energy transition strategy

General Studies Paper 3

Context:

• Just Energy Transition Partnership (JET-P)is emerging as the key mechanism for multilateral financing by developed countries to support an energy transition in developing countries.
• This has taken on particular significance following the insertion of the phrase ‘phase-down’ of coal in the Glasgow Pact. After South Africa, Indonesia, and Vietnam, India is considered the next candidate for a JET-Partnership and India’s G-20 presidency could potentially be an opportune moment to forge a deal.
• However, India must develop a coherent domestic Just Energy Transition (JET) strategy in order to negotiate a financing deal that addresses its unique set of socio-economic challenges.
• India’s initial JET-P negotiations last year reportedly stalled over coal ‘phase-down’ and how to operationalize India’s just transition. The emphasis by developed countries on coal phase-down, without adequate attention to country context, disregards the crucial difference in energy transition between industrialised and emerging economies.

Just Energy Transition:

• Just Energy Transition refers to the shift from reliance on non-renewable, fossil fuel-based energy sources to renewable,clean energy sources in order to mitigate the impacts of climate change and promote sustainability.
• The transition to a just energy system seeks to ensure that access to energy is equitable and benefits all members of society,rather than primarily benefiting corporations and the wealthy.
• This includes promoting renewable energy sources such as wind and solar, as well as energy efficiency measures and the development of energy storage solutions.
• Among the three JET-P deals signed so far, only South Africa’s deal mentions a ‘just’ component– funding reskilling and alternative employment opportunities in the coal mining regions.
  • The other two JET-Ps (Indonesia and Vietnam) are focused on mitigation finance for sector-specific transitions.

Issues with the Just Energy Transition:

• Affect Near-term Fossil-Dependent Jobs:
  • The transition to a more sustainable energy mix can impact workers who are currently employed in the fossil fuel industry.
  • The shift away from fossil fuels may result in job losses, which can be disruptive for affected communities and workers.
• Disrupt Forms of Future Energy Access:
  • The transition to a cleaner energy mix may disrupt traditional forms of energy access, particularly in developing countries where access to reliable electricity remains limited.
  • The cost and infrastructure requirements of new energy sources,such as wind and solar power, may be challenging to implement in areas with limited resources.
• Shrink the State’s Capacity to Spend on Welfare Programmes:
  • As the government invests in new energy infrastructure and technology, there may be less funding available for programs such as healthcare, education, and housing assistance.
  • This can result in reduced support for vulnerable populations and potentially worsen existing socio-economic disparities.
• Cost:
  • Despite the long-term benefits, the initial cost of transitioning to renewable energy can be higher, making it a challenge for some communities, particularly those with limited financial resources.
• Energy Storage:
  • Renewable energy sources, such as wind and solar, are not always available and must be stored for use during times when the sun isn’t shining, or the wind isn’t blowing.
• Energy Infrastructure:
  • Significant investments in energy infrastructure are needed to support the transition to renewable energy sources.

What are the Related Steps taken by India?

• India has signalled a commitment to clean energy with ambitious targets like 500GW of non-fossil, including 450 GW Renewable Energy (RE) capacity addition and 43% RE purchase obligation by 2030.
  • These targets are supported through complementary policy and legislative mandates(Energy Conservation (Amendment) Act), missions (National Green Hydrogen Mission), fiscal incentives (production-linked incentives) and market mechanisms (upcoming national carbon market).
• Net Zero Target:
  • India has set itself an ambitious long-term goal of reaching net zero emissions by 2070.
  • In August 2022, India updated its Nationally Determined Contributions (INDC)under the Paris Agreement to reflect its aim of achieving 50% cumulative electric power installed capacity from non-fossil fuel based energy sources by 2030
• Energy Conservation Amendment Bill, 2022:
  • In August 2022, the Lok Sabha passed the Energy Conservation Amendment Bill, 2022which aims to mandate the use of non-fossil fuel sources including green hydrogen, green ammonia, biomass and ethanol for energy and feedstock in industries.
  • The Bill also gives the power to the Central Government to establish carbon markets.

What should be India’s Strategy for a Fair Energy Transition?

• Acceleration in RE Deployment Rates:
  • To accelerate RE deployment that can have significant developmental co-benefits, a low-hanging option is shifting energy demand patterns in ways that enable faster RE capacity addition:solarisation of agricultural electricity demand; electrification of diesel-powered Micro, Small and Medium Enterprises (MSMEs) and decentralised RE for residential cooking and heating.
  • Stimulation of energy demand through rural productivity enhancement will further aid RE acceleration as well as help to address the rural-urban economic divide, create rural jobs, and thereby address inter-generational and spatial inequities.
• Domestic Manufacturing of Clean Energy Components:
  • Domestic manufacturing of clean energy components is critical to sustain a JET, build energy self-sufficiency, and tap the green jobs promise of 21st century energy.
    • The challenge is in achieving cost competitiveness (Indian components are 20% costlier than Chinese components) and giving preference to domestic components without addressing cost competitiveness may slow down the pace of deployment.
  • The way around this is to negotiate access to markets outside India as part of a JET-Partnership,to reduce the cost gap through economies of scale.
• Re-aligning the Current Use of Coal Resources:
  • The current use of coal resources needs to be re-aligned to enhance efficiency until the phase-down period.
  • An alternative solution could be to optimize coal-fired power plants near coal mines,rather than positioning them according to energy demand in different states.
    • This would enable coal to be used more efficiently because transportation of coal is more energy-intensive than transmission of electrons (electricity), and also lead to fewer emissions.
    • It would also lead to cheaper power, as transportation accounts for one-third of the cost of coal for power plants;the resultant savings could also help finance much needed emission control retrofits.
    • It would indirectly reduce emissions due to more efficient use of coal.