India’s just energy transition is more than a coal story

Why in News?

The article emphasizes to develop a coherent domestic just energy transition (JET) strategy for India in order to negotiate a financing deal that addresses its unique set of socio-economic challenges.

 

Background of Just energy transition partnership

• The G7 countries recently announced a partnership with Indonesia at the G20 Leaders’ Summit in Bali to accelerate a just energy transition, away from fossil fuels and towards renewable energy.
  • The G-7 or ‘Group of Seven’ is an intergovernmental organisation comprising top economies like Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
• The G7 pledged an initial $20 billion in public and private finance in 3-5 years to help Indonesia phase out coal and hasten the clean energy transition, said to be the largest single country-specific climate investment ever.
  • This is second energy transition partnership following South Africa’s $8.5 billion agreement announced at 2021 UN climate summit in Glasgow. 

• Next in line, is likely to be India, which, along with other coal-dependent developing nations like Vietnam and Senegal that may sign a similar pact towards decarbonising energy systems and increasing energy efficiency.

 

What is Just energy transition partnership (JETP)?

• JETP is a mechanism for multilateral financing by developed countries to support an energy transition in developing countries.
  • It aims to reduce emissions in the energy sector and accelerate the coal phase-out process.
  • Transition’ describes the gradual movement towards lower carbon technologies, while ‘Just’ qualifies that this transition will not negatively impact society, jobs and livelihoods.
• This has taken on particular significance following the insertion of the phrase 'phase-down' of coal in the Glasgow Pact in 2021.
  • Here for the first time, nations are called upon to phase down unabated coal power and inefficient subsidies for fossil fuels.

 

What is the scenario of India’s energy transition?

• The Central Electricity Authority (CEA) projects a near doubling of electricity demand by 2030 stressing adequate supply from a diverse mix of sources, indicating that India cannot afford to put its development on hold while decarbonising.
• The installed electricity-generating capacity in India at present is 409 GW, including 173 GW from non-fossil fuel sources, which is about 42% of the total.
• Meeting India’s 2030 target for installing 500 GW RE, where cleaner fuel will comprise 50% of the installed capacity mix, requires accelerating non-fossil capacity addition from 16 GW a year in 2022 to 75 GW a year by 2030, a 22% year-on-year growth. 
• While RE deployment has outpaced coal in recent years, but in 2021-22, coal power served one-third of the new demand. 
• India also missed its 2022 target for 175 GW RE capacity owing to gaps in decentralised deployment.
• Thus, India’s significant growth in energy demand requires energy transition that involves addressing domestic developmental priorities, and justice and equity concerns. 

 

What are the concerns related to just energy transition in India?

• A just transition in India requires more attention to socioeconomic aspects as mine closures affect a large number of informal workers, upending lives and livelihoods that require support through reskilling and economic diversification.
• For example, Coal India alone employs more than a quarter million people and a few million more are directly or indirectly involved in its washeries, transport, and ancillary services.
• Hence India argues that coal cannot be singled out as a polluting fuel, and energy transition talks need to take place on equal terms.

 

What is the framework of JET strategy for India?

India could expedite its energy transition in accordance with its own domestic circumstances by the following set of actions:

• Accelerate renewable energy (RE) deployment: The RE deployment rates should match the pace of India’s demand growth and energy demand patterns need to be shifted to enable faster RE capacity addition.  
  • This could be enabled by solarisation of agricultural electricity demand, electrification of diesel-powered Micro, Small and Medium Enterprises (MSMEs) and decentralised RE for residential cooking and heating. 
  • Also, stimulation of energy demand through rural productivity enhancement will further aid RE acceleration.
  • It will also help to address the rural-urban economic divide, create rural jobs, and thereby address inter-generational and spatial inequities.
• Boost domestic manufacturing of RE components: It is critical to sustain a JET, build energy self-sufficiency, and tap the green jobs promise of 21st century energy. 
  • However, the challenge lies for India in achieving cost competitiveness in domestic manufacturing as Indian components are 20% costlier than Chinese components that may slow down the pace of RE deployment. 
  • This could be addressed by negotiating access to markets outside India as part of a JET-Partnership, to reduce the cost gap through economies of scale.

• Re-aligning the current use of coal resources: It should be aimed to enhance efficiencies until the period of phase-down of coal. 
  • The use of coal-fired power plants closer to where coal is mined should be optimized rather than based on energy demand in States.
  • This will enable coal to be used more efficiently as transportation of coal is more energy-intensive than transmission of electricity, and also lead to fewer emissions. 
  • It would also lead to cheaper power, as transportation accounts for one-third of the cost of coal for power plants and resultant savings could help finance the emission control retrofits.
  • An efficient coal use policy hence could open the door to India considering a future cap on coal-powered generation capacity 
  • The low-capacity utilisation factor (58% in 2022) further allows the possibility of greater use of existing plants to match future demand while addressing energy security concerns.

 

How can India move forward with its JET strategy?

• Credible severance packages and insurance cushions to workers in coal sector would help make the clean energy transition easier to navigate. 
• Policymakers also must earmark special “transition funds” to help coal-dependent regions to remodel their economies and develop new industries.
• Energy subsidies should also be rationalized and directed towards most needy and fiscal resources freed up through subsidy reform should then be invested in clean energy solutions, especially in underdeveloped regions and marginalised communities.

 

Conclusion

• The investment requirements for just energy transition are beyond the means of domestic mobilisation for developing countries. Hence any future JETP deal must consider the broader framework for financing and supporting an energy transition. 
• Emerging and developing economies are starting from different baselines than advanced economies and they must tailor their pathways to ensure their transitions are inclusive.
• With India holding the G-20 presidency, it has an opportunity at hand to negotiate a deal for itself while also shaping international cooperation on just energy transitions. 
• To achieve the trifecta of jobs, growth and sustainability, India must strive to put people at the centre of its energy transformation.
• It should also ensure that JET take into consideration all socioeconomic aspects based on the principles of common but differentiated responsibility and different national circumstances.

 

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Q1) List major coal exporters to India.

India being world's second largest coal consumer imports two-thirds of its coal requirement from Indonesia followed by other nations like Australia, Russia South Africa and United States. 

 

Q2) What is the role of Central Electricity Regulatory Authority of India?

It promotes competition, efficiency and economy in bulk power markets; improves the quality of supply, promotes investments and advises government on the removal of institutional barriers to bridge the demand supply gap.

 

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Source: India’s just energy transition is more than a coal story  |  TERI

Video: https://www.youtube.com/watch?v=AO1hJ8KBvU0&t=370s