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India’s Long-term Energy Priorities

India’s Long-term Energy Priorities

The recent increase in the international oil price has imposed a significant cost on the Indian economy. India has softened the blow by buying discounted Russian oil, but this is a risky policy because the international oil trade has become a political issue, making oil’s future availability more uncertain than before.

Since what happens to oil soon carries over to natural gas, dependence on imported natural gas also makes our economy vulnerable to external forces. Hence, it is in India’s long-term interest to reduce our vulnerability to supply and price shocks of imported oil and natural gas.

In any case, as part of India’s commitment to fighting climate change, India has to reduce its reliance on fossil fuels. That’s another powerful reason to reduce the economy’s dependence on imported oil and natural gas.

India’s economic growth is closely linked to using more energy. We need increasing amounts of energy to power economic growth. Higher output in industry, transport, agriculture, and even the production of services needs more energy. Further, economic growth increases people’s demand for energy to power their appliances. Thus, we must increase India’s total energy supply every year, and this increasing supply must be reliable and affordable.

These structural features of the energy demand and supply constrain and define India’s long-run priorities.

First, India should shift cooking away from LPG and other fossil fuels, which will reduce our import dependence and our reliance on fossil fuels. This is not an easy talk because LPG cooking is convenient with no health-harmful emissions in the kitchen. And India has just hooked up so many households to LPG (though the poorer among them find it expensive to refill the cylinder), who are unlikely to give up LPG easily or quickly.

However, large-scale food preparation facilities are different. At the low end, commercial food preparation includes local dhabas and other small-scale establishments that make consumable items. At the other end, the range is from facilities that prepare a large number of meals every day to establishments that make brand-name eatables.

This large-scale cooking segment is important because the demand for prepared food tends to rise as incomes increase, and people opt for the convenience of eatables prepared outside the household. Thus, bringing about fuel changes in this type of cooking can lead to meaningful changes away from LPG. At the moment, we do not have many well-established, non-fossil-fuel alternatives to LPG. But there has been good progress in using solar power for large-scale cooking. For example, the Brahma Kumaris use solar thermal cooking to prepare thousands of meals every day at their Mount Abu facility. And other options will emerge when their importance is clearly understood.

Regardless of the selected option, it is likely that the shift away from LPG in large-scale food preparation will be led by non-profit groups. So, it will be very important for experts to donate some of their time to non-profit groups that are interested in making this shift.

Second, India should focus sharply and move aggressively on energy storage. Without cheap, plentiful storage, we cannot make full use of renewable energy. Renewable energy is a flow, which is available intermittently, not 24x7. In contrast, fossil fuels are stores of energy, and this stored energy is available without interruption. Hence, it is critical for renewable energy to be stored, so that it too is available without interruption.

At present, there are two major ways of storing renewable energy: as electricity in batteries, and as green hydrogen. Both of them are likely to be useful in the future, possibly in different types of uses. Batteries will surely be needed to store large-scale renewable electricity generation, and battery-based electric vehicles are already well-known. What perhaps less well-known is that hydrogen-powered forklifts and long-distance buses are already in use in India.

So, India has already begun to work on energy storage. While India is not a world leader in these fields now, there is no inherent reason why India should be a follower forever. Here, we need significant financial support and promotion by the Central government so that the technically capable experts have world-class facilities and skilled people to push India ahead.

Third, India needs to promote energy efficiency in homes, offices, factories, shops, and transport. The Central and State governments already have various energy efficiency schemes. But, in India, energy efficiency does not have the same standing and familiarity as, say, solar power. This is the case even though it is well-known that properly run energy efficiency schemes are more cost-effective than, say, solar power generation.

Since India’s governments have already made some headway in promoting energy efficiency, it is likely unrealistic to expect much more from them. Hence, the burden falls on motivated non-profit groups to promote energy efficiency harder in India.

In short, apart from government schemes, India needs action by non-profit groups to provide India with the secure, affordable, and low-emissions energy that it needs in the future.

About the Author

Subodh Mathur, an economist (Ph. D. MIT), has worked in many countries. He is the author of the book called ‘India's Path to Prosperity 2022-2047: A Workable Agenda for the Next 10-15 Years’.