Bharat needs “One Energy” management.

The mantra (sound form) of energy security, energy efficiency and green energy requires an energy transformation that is possible when Economy, Ecology and Energy are fully connected in balance. At the same time, the governance of a “just transition” must go hand in hand, shifting economic and political power from an extractive economy to a regenerative economy.

The energy sector poses the biggest challenge for Bharat, as it will see the largest increase in energy demand of any country in the world over the next three decades. By 2050, Bharat’s total energy consumption is likely to increase to almost 100% as heatwaves become more frequent, longer-lasting and intense. The energy sector accounts for about three-fourths of global greenhouse gas (GHG) emissions. However, energy efficiency can reduce Bharat’s GHG emissions by up to 50% through advanced technologies. For now, Bharat is overwhelmingly dependent on coal for power generation.

In addition, our fossil fuel requirements are heavily dependent on imports: 87 percent for oil, 53 percent for gas, and 24 percent for coal. Energy security and green energy mean diversifying energy supplies, expanding oil and gas exploration, moving to a gas-based economy, smart air conditioning, thermal protection, electric vehicles, and the inevitable transition to clean renewable fuels including green hydrogen, solar and nuclear power, etc.

Bharat has made a “net zero emissions” commitment, setting 2070 as its target year (net zero emissions, or carbon neutrality, means that the amount of CO2 a country produces is equal to the amount it removes from the atmosphere). It has also made tangible commitments to reduce its carbon dioxide emissions by a billion tonnes projected by 2030 and increase its non-fossil fuel power generation capacity to 500 GW by the same year (requiring an investment of $360 billion), which would also meet 50 per cent of its energy needs from renewable sources.

With Bharat’s commitment to national contribution (NDC) to reduce carbon intensity, coal is in the crosshairs. The viable options would be: mining in an environmentally friendly manner, reducing imports, coal washing and gasification, etc. With the need to increase the regasification capacity of the terminal and expand the use of E20 fuel, etc., Bharat is trying to invest large amounts in the development of the gas sector. Power on the rooftops has the potential to change the dynamics of electricity access and the country’s commitment to fighting climate change once structural issues are addressed. Bharat has been hesitant to locate its oil reserves for decades, but its Exclusive Economic Zone (EEZ), a vast area of ​​2.36 million square kilometers, likely has reserves much higher than those discovered so far.

State-owned distribution companies (DISCOMs) are in a fragile financial condition due to high levels of Total Technical and Commercial (AT&C) losses, imposition of insufficient tariffs compared to power costs and insufficient subsidy support from state governments. Every unit of power sold results in a loss of 60 paise for DISCOMs, and if Bharat needs to increase its non-fossil generation capacity, the financial health of DISCOMs has to improve phenomenally, which requires addressing serious systemic issues, including the separation of political goals from the power system.

Renewable energy sources (including large hydropower plants) account for almost one fifth of the country’s generation. Solar energy accounts for almost half of this production, followed by large hydropower and wind power. There have been several wind and solar policy reforms, and local production is promoted through a combination of production incentives and import disincentives. But we need out-of-the-box thinking beyond tariffs, non-tariff barriers and incentives tied to capital expenditure. Similarly, the key to integrating renewable energy with 24/7 energy availability to cope with demand cycles is battery energy storage systems (BESS). Energy storage may only become an interim technology if commercial nuclear fusion takes off. For the change to be sustainable and significantly reduce carbon emissions, many new technologies will need to be developed and stabilized. This is intended to intensify research and development work on clean energy technologies – battery storage, carbon capture and storage (CCUS), green hydrogen, coal gasification, modular nuclear reactors, etc.

Green hydrogen is the future of energy. The National Hydrogen Mission aims to make Bharat a global hub for green hydrogen production and export. It promises to enable dimensional changes in industry, energy and mobility; and, of course, achieving the country’s decarbonization goals. It is estimated that the amount of energy produced per unit of hydrogen is three times greater than the equivalent mass of gasoline and seven times greater than the mass of coal.

Policy support will continue to be necessary, and a huge R&D investment will need to be made to develop the technology to produce low-cost green hydrogen and synthetic gasoline, and to develop and stabilize key supply chain elements such as storage solutions, electrolytes, improved recycling of industrial metals (recycling is much less energy-intensive than producing from virgin raw materials), etc. For example, the US government is targeting $1/kg of green hydrogen production by 2030, compared to $3-8/kg in various locations. With our single, unified grid and large renewable capacity, Bharat can produce the cheapest green hydrogen in the world.

The share of nuclear energy in India’s generation mix (3%) is lower than in other large economies. This percentage is 20 percent for the US and EU. Nuclear energy has zero emissions. It does not contain greenhouse gases or air pollutants. According to U.S. government data, a typical 1,000-MW wind farm requires 360 times more land than a nuclear facility of similar capacity and 75 times more solar power plants. Bharat cannot achieve developed country status unless nuclear energy plays its due role through thorium-HALEU (high-grade, low-enriched uranium fuel) in pressurized heavy water reactors (PHWRs) and small modular reactors (SMRs). Scaling up nuclear energy will require investment and further evolution of policies and regulations.

China has a near monopoly on global supplies of materials necessary to produce green energy. Bharat needs a strategic framework similar to the US CHIPS and Science Act that aims to reduce costs, create jobs, strengthen supply chains, counter China, invest in research and development, science and technology and the future workforce. Policy changes may be needed to attract large players mining and exploring key minerals needed to meet India’s energy transition goals. There is a need for a domestic market for carbon dioxide emission allowances. Trading for a greener tomorrow is the path towards a well-regulated national emissions trading mechanism.

The energy transition will be the greatest thematic governance opportunity of our lifetimes. According to estimates, Bharat will need $20 trillion in capital expenditure to achieve its net zero emissions target by 2070. Bharat needs a ONE Energy enterprise, balancing carbon and carbon-free fuels and promoting coherence between Bharat’s power system and the energy transition instruments of the outside world. The current individual ministries of energy, coal, petroleum, mines, minerals, atomic energy and renewable energy etc. must be part of ‘ONE Energy’. Well-designed energy management is needed. An integrated energy policy, combining the currently listed ‘energy’ items of the Seventh Schedule of the Constitution in the ‘Union List’, excluding ‘electricity’ remaining on the ‘current list’, will usher in a redesign of the energy architecture. Key “energy governance” will include policy and finance, clean energy research and development, proportionate regulation, and a communications strategy to raise public awareness and navigate a green and “just transition.”

The global green agenda will be implemented along three axes – supply chain resilience, domestic investment and national security. Decarbonizing the energy system by 2050 will save the world $12 trillion and 55% more energy services. Net zero for Bharat must mean net positive for the economy, ecology and people, which is in line with the Viksit Bharat target of 2047. Hence the management of “ONE Energy”!

Arun Agarwal is an author, columnist, teacher and former CEO. He is currently a Professor of Practice at Rizvi Institute of Management Studies and Research, Mumbai.