The Indian government has decided that boosting the energy sector must be one of its top priorities. With good reason, for economic growth and poverty alleviation are closely linked to energy issues.
Over the coming years, millions of Indians will swiftly improve their living standards. India’s energy requirements are set to increase at a commensurate rate. A comprehensive approach, including policy directives to facilitate exploration and accelerated development of domestic resources, is crucial for meeting demand. This is true especially from an energy security perspective.
The challenge, however, is to grow the economy while protecting the environment and ensuring energy security. It is well established that there is no ‘silver bullet’ to achieve this. Only with a balanced energy mix, consisting of all conventional sources and an increasing share of renewables, it is possible to meet the multiple objectives.
India is struggling with serious air pollution. A growing share of coal in the energy mix, specifically in power generation, will only aggravate today’s health problems and socio-economic issues.
China, for example, is compelled to soften the adverse effects of higher coal use in its power sector. How can India avoid going down the same road and learn from the experience of its neighbours? Renewables in general and solar power in particular are an important part of India’s energy future. But, at least in the short run, renewables alone can’t meet the total demand for energy. The International Energy Agency estimates that, by 2035, energy from renewables could rise to 18% worldwide. Moreover, renewables still depend on flexible back-up when the wind doesn’t blow or the sun doesn’t shine.
So, India needs more than renewables to meet rising demand. Here, natural gas comes into view. Gas is cleaner than other hydrocarbons. In particular, compared to coal, it emits less of the sulphur oxides, nitrogen oxides and small particles polluting the air of many Indian cities as well as half the carbon dioxide emissions. It is widely available across the world and is linked to international markets through pipelines and LNG supply chains.
Moreover, gas is competitive, when compared with alternate fuels used inefficiently in industrial applications. And, finally, it is the most flexible back-up for power from renewables, with the ability to provide the quickest ramp-up in output at the least additional cost.
In short, natural gas is abundant, affordable and acceptable. Contrary to common belief, India itself has gas resources. The sector requires support from the government through progressive policies, from tax system to pricing mechanisms, which, if available, could be an enabler for potential gas discoveries through exploration. This would be a major breakthrough, especially since India is increasingly dependent on imported fossil fuels. To meet rising demand, however, the country should also tap more into the world’s vast resources of gas through the LNG supply chain.
We, at Shell, seek to accompany India on this journey, mainly in multiple ways—from exploring energy, sharing knowledge and expertise to building India’s energy system of the future, and as a provider of LNG to India.
Originally published in the Financial Express