‘Developed countries’ emphasis on phasing out coal without adequate attention to country context ‘ignores important differences in energy transition between industrialized and emerging economies’. Photo Credit: AP
The Just Energy Transition Partnership (JET-P) is emerging as the leading mechanism for multilateral financing by developed countries to support energy transition in developing countries. This has assumed special significance after the inclusion of the phrase ‘phase-down’ of coal in the Glasgow Pact. After South Africa, Indonesia and Vietnam, India is being considered as the next candidate for jet-sharing. India’s G-20 presidency could potentially be an opportune moment to strike a deal. However, India must develop a coherent domestic Equitable Energy Transition (JET) strategy to negotiate a financial deal that addresses its unique set of socio-economic challenges. So, what will Jet’s strategy for India look like? What can India offer and what can it demand from a multilateral jet-partnership?
issues related to infection
The energy transition can give rise to intra-generational, intergenerational and spatial equity concerns. The changes affect near-term fossil-dependent jobs, constrain future forms of energy access, reduce the state’s ability to spend on welfare programs, and thus exacerbate existing economic disparities between coal and other sectors. let’s increase
Existing JET-P deals pay limited attention to inter-generational inequality, such as job losses as a result of coal phase-downs. However, of the three Jet-P deals signed so far, only the South African deal mentions an ‘equitable’ component – funding reskilling and alternative employment opportunities in coal mining areas – as part of an initial $8.5 billion mobilization To be done. The other two JET-Ps (Indonesia and Vietnam) focus on mitigation finance for region-specific changes.
Initial Jet-P talks for India last year have reportedly stalled over whether India should consider a ‘phase-down’ from coal and how India’s equitable transition should be driven. The emphasis on coal phase-down by developed countries, without adequate attention to country context, ignores the important differences in energy transition between industrialized and emerging economies. The energy transition in the industrialized world involves the natural reduction of energy consumption as well as fuel switching to cleaner energy sources; India’s transformation requires a significant simultaneous increase in energy demand. The Central Electricity Authority estimates the demand for electricity to almost double by 2030. A country that can multiply its energy demand requires adequate supply from various sources. India cannot afford to put its growth on hold while decarbonising.
path to clean energy discovery
India has signaled a commitment to clean energy with ambitious targets such as 450 GW of renewable energy (RE) capacity addition and 500GW non-fossil by 2030, including a 43% RE purchase obligation. These goals are supported through complementary policy and legislative mandates (energy conservation). (Amendment) Act), Mission (National Green Hydrogen Mission), Fiscal Incentives (Production Linked Incentives) and Market Mechanism (Upcoming National Carbon Market). These interventions reflect India’s serious efforts on energy transition, but a coherent JET strategy requires additional complementary measures.
Here are three sets of actions that can further accelerate India’s energy transition while addressing domestic development priorities, and justice and equity concerns.
First, accelerating RE deployment rates is critical for India’s JET to match the pace of demand growth. While RE deployment has overtaken coal in recent years, in 2021-22, coal electricity will meet one-third of new demand. Meeting India’s 2030 target requires non-fossil capacity addition to increase from 16 GW per year in 2022 to 75 GW per year by 2030, a 22% year-on-year increase. India missed its 2022 target for 175 GW RE capacity despite sustained efforts. The difference is largely in decentralized deployments, which are more promising for acceleration.
We suggest two complementary pathways to accelerate RE deployment that may have important developmental co-benefits. The low hanging options are shifting energy demand patterns in ways that enable rapid RE capacity growth: solarization of agricultural electricity demand; electrification of diesel-powered micro, small and medium enterprises (MSMEs); and decentralized RE for residential cooking and heating. Boosting energy demand through rural productivity growth will help in RE acceleration as well as bridge the rural-urban economic divide, create rural jobs, and thereby address inter-generational and spatial disparities Will be able to go
Second, domestic manufacturing of clean energy components is critical to maintaining a jet, building energy self-sufficiency, and delivering on the green jobs promise of 21st century energy. While India has acknowledged the importance of domestic manufacturing, the challenge lies in achieving cost competitiveness – Indian components are 20% costlier than Chinese components. Preference to domestic components without addressing cost competitiveness may slow down deployment. The solution is to negotiate access to markets outside India as part of the JET-partnership, to narrow the cost differential through economies of scale.
on the use of coal
Third, there is a case for realigning the current use of coal resources to increase efficiency till the phase-down period. One option is to optimize the use of coal-fired power plants based on energy demand in states where coal is mined. This would allow coal to be used more efficiently because the transport of coal is more energy-intensive than the transmission of electrons, and also reduce emissions. It would also provide cheaper electricity, as a third of the cost of coal for power plants is for transportation; The resulting savings could also help finance much-needed emissions control retrofits. Lastly, and not least, it would indirectly reduce emissions due to more efficient use of coal.
Furthermore, by using coal more efficiently, this policy change opens the door for India to take into account future limits on coal-powered generation capacity. The current production capacity plus plants in the pipeline are sufficient to meet India’s projected requirement in 2030. The low capacity utilization factor (58% in 2022) allows more potential for over-utilisation of existing plants to match future demand. By leading to cheaper and more efficient electricity, the coal realignment proposed here helps address energy security concerns, making it even possible to consider future coal-based electricity capacity caps.
These measures will not only address equity concerns in various dimensions but will also create new employment opportunities, achieve emission reduction and prepare the country for decarbonisation through coal phase-down in future. However, as has been emphasized by many, the investment requirements for this transformation go well beyond the means for developing countries to mobilize domestically. Any future JET-P deal should consider this broad framework for financing and supporting the energy transition. With India holding the presidency of the G-20, it has just the opportunity to negotiate a deal for itself while simultaneously shaping international cooperation on the energy transition.
Easwaran J. Narasimhan, Ashwini K. Swain and Navroz K. Dubash is at the Center for Policy Research in New Delhi. Views expressed are personal