The prices of oil and natural gas are going up globally. The supply disruption is not ruled out
A prolonged Russia-Ukraine war is likely to have the collateral effect of stressing India’s progress in achieving renewable energy and climate change targets.
The prices of oil and natural gas are going up globally. The supply disruption is not ruled out.
Natural gas has a growing role as a transition fuel from fossil-based fuels to renewables like solar and wind, which are weather-dependent and intermittent sources at the present, as India targets to increase its renewables capacity to 500 GW to meet 50% of its energy consumption by 2030.
India is also committed to slash the carbon intensity of its economy to below 45% by 2030. The net-zero target is to be achieved by 2070.
Commonly used as a bridge fuel the world over, natural gas is the greenest fossil fuel. It is not as clean as renewables, but does not pollute as much as fossil fuels.
Compared to a diesel truck, for example, an LNG truck emits 30% less CO2, 90% less NO2 and PM, and no SO2, according to American Petroleum Institute. India’s draft LNG (Liquefied Natural Gas) policy seeks to make 10% of long-haul trucks LNG compatible in the country.
Natural gas comprises 6.5% of India’s energy mix at the present, but the plan is to have 15% of natural gas in its primary energy basket by 2030.
Natural gas fuels 10% of the total installed capacity of power plants in India. Besides, it is used in industries like fertilizer manufacturing factories and as piped natural gas (PNG) for cooking fuel and compressed natural gas (CNG) for transportation fuel.
The global spike in natural gas prices can affect India since Russia has not only one of the largest natural gas reserves in the world, but is also one of the biggest exporters. India produces only half of its natural gas requirements in the country and imports the balance from Qatar, Australia and the US.
India imports from Russia annually only 2.5 million tonnes of LNG, which is cheaper than that from some other countries. Gail and Gazprom, which is the world’s largest gas producer, have a 20-year-agreement, beginning 2018. India has shown interest in importing more Russian natural gas.
To enable the use of more natural gas, the draft LNG policy has also set a target of regassification of 42.5 million tonnes per annum (mtpa) of 70 mtpa by 2030 and 100 mtpa by 2040. Regassification is converting LNG to natural gas. It helps in overcoming the challenges of storage and transportation of natural gas. LNG takes 600 times lesser storage space than natural gas and can be transported in the absence of gas pipelines.
Of late, a strong case has been building for increasing the use of natural gas as a transition fuel to lead to the production of hydrogen after the recent unveiling of the Green Hydrogen Policy, which has set a target of producing 5 million tonnes of green hydrogen by 2030 and promoting associated renewable energy generation as the basic input for its production.
Green hydrogen is produced by electrolyzing water — splitting it into hydrogen and oxygen— with the help of renewable energy.
Given the intermittent nature of renewables and the status of battery storage technology, which is expected to mature and become less expensive in the future, particularly on the back of the Union Budget granting infrastructure status to grid-scale battery systems to enable credit facilities, natural gas has a role here to fulfill till renewables step up fully. Now there may be a temporary pause in accelerating the use of natural gas as a transition fuel in the country if the Russia-Ukraine war drags on for long.