Why India must shift to a sustainable energy future

As per the BP Statistics Report 2017, India consumed 724 million tons of oil equivalent in 2016 — the third largest consumer of primary energy in the world. During 2005-15, India registered 5.7% growth of primary energy compared to leading global economies like China’s (5.3%), Russian Federation (0.5%), Japan (1.6%) and US (-0.3%). Keeping pace with economic development, India is poised to continue as one of the fastest energy consumers in the world. Industrial growth and productivity is largely depend on energy. The transition from a developing nation to a developed nation demands rapid expansion of energy consumption and India’s current per capita primary energy consumption of 505 kg of oil equivalent is poised to increase manifold to reach closer to China (2,237 kg of oil equivalent). Both at industry and consumer level; energy consumption would grow exponentially to sustain economic growth above 7% . 

Currently, the energy sector faces multiple challenges at various stages of the energy value chain. Let me highlight few areas:  availability, accessibility, affordability and sustainability, which need a considerable amount of thoughts and actions related to energy demand, supply and consumption. 

Availability: Natural resources like oil, gas, and coal have uneven distribution; therefore, availability remains central concern for energy resource deficient economies. On the contrary, uneven distribution of energy sources opens up ample opportunities for global energy trade. 

Accessibility: As the number of energy resource rich nations are less than energy resource deficient nations, accessibility remains critical to energy resource deficient countries including India. Most of the Asian nations like India, China, Japan, and South Korea are energy resource deficient. Over the year’s coal, crude oil, liquid fuels, and natural gas trade prospered, which addressed accessibility issues to a greater extent. 

Affordability: Economic development of a nation and purchasing power of its citizens and industries are strongly linked with affordability. Ability to purchase energy at a certain price point; essentially affordable price point is a subject of debate.  In the context of scarce energy resources constrained by limited availability; affordability assumes paramount importance. For example, Asian crude buyers paying ‘Asian Premium’ charged by OPEC is a clear cut case of ‘Availability’ and ‘Accessibility’ impacting ‘Affordability’.  

In the recent times, owing to growing concern for global warming and climate change; researchers and policy makers have added the Sustainability component to 3As (Availability, Accessibility, and Affordability). Therefore, dynamics of energy industries are fast changing with the addition of ‘Sustainability’ component to energy security framework. Today, clean energy like solar and wind has achieved grid parity and higher social acceptability. 
Energy ‘sustainability’ component is the ‘Game Changer’. Sustainable, reliable, environment friendly, affordable, and clean energy is a challenge for many nations. Energy access, human development, and environmental sustainability are co-related. Therefore, current energy policies across the globe are driven by making clean energy available, accessible, and affordable to all citizens. 

Growing industrialisation leading to greater urbanization and environmental pollution creates detrimental effect on climate, human health, and natural environment. Therefore, India is striving hard to find a better path to: lower carbon emission, increase economic growth, push green manufacturing, transport and mobility and it aims to achieve sustainable development by 2035. 

Growing affinity for sustainable energy offers multiple opportunities including diversification into petrochemical business, battery manufacturing, electricity charging, and many other ancillary activities. Green field refinery projects are clearly aiming for petrochemical product maximisation—a fundamental change in approach. 

Companies like Indian Oil and NTPC are setting up charging stations—which only proves sustainability expanded the scope of business for conventional energy companies. As per NITI Aayog, India would need EV batteries cumulative capacity of 3,500 GWh by 2030, which means the battery market would be $300 billion worth. It is projected that India’s annual battery requirements would touch 800 GWh by 2030 -- equivalent to 23 gigafactories of Tesla. Further, looking at the massive opportunities India’s conventional energy companies may get into battery business soon. 

There are plenty of risk takers in the energy industry and beyond to convert challenges into opportunities. India’s intellectual capital and industry captains will be fully aware of the challenges highlighted and objectively assessing the emerging business opportunities.  

The author is Associate Professor  & Head, Department of Management Studies, Rajiv Gandhi Institute of Petroleum Technology, Jais. Views are personal