Walking India’s Energy Tightrope In Shifting Political Landscape – Analysis

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Prime Minister Narendra Modi wants India to lead the way in addressing climate change and adopting clean technology, even though his Bharatiya Janata Party (BJP) did not win a majority by itself in the recently held General Elections, 2024.

He aims to make India a role model in fighting climate change and using eco-friendly technologies. To succeed, he will need to balance his green goals with the need to keep the economy growing and meet the fast-rising demand for electricity. This is tough because India’s old power system still depends a lot on coal.

Modi, who has positioned himself as a leader in addressing climate change, will face increased expectations to achieve existing environmental goals. These goals include reaching net-zero emissions by 2070, installing a massive 500 gigawatts (GW) of clean energy by the end of the decade and forming a global coalition for solar power to attract $1 trillion in investments.

However, despite the considerable growth in renewable energy during Modi’s tenure, with India increasing its renewable capacity by over 100 GW in the past decade, it has not been sufficient to meet the soaring demand or overcome the challenges posed by the country’s transmission and distribution networks.

Despite the focus on energy security, coal remains the dominant source of energy in India, contributing to around 75% of the country’s output currently and its usage is still increasing. In fact, India has plans to add nearly 90 GW of coal projects by 2032, which is approximately 63% more than what was initially planned in May 2023.

The government in New Delhi has ramped up coalmining operations, allowing for more coal to be extracted than ever before. This increased mining activity has been aimed at meeting the growing demand for coal in the country’s energy sector.

In addition to expanding coalmining, the government has made the decision to extend the lifespan of power plants. By doing so, they are ensuring that these plants continue to rely on coal as their primary source of fuel for an extended period. This decision has been made to maintain a stable and reliable power supply, given the current limitations and challenges in transitioning to alternative energy sources.

The government has also been pushing for softer discussions on fossil fuels during global climate talks. By advocating for a more lenient approach, they seek to downplay the negative impacts associated with fossil fuel usage. This could involve using less critical language, or presenting alternative perspectives that mitigate the environmental concerns related to fossil fuels.

Surprisingly, even Coal India Limited, a state-owned company that previously had intentions to shift towards solar energy, has altered its priorities. Instead of pursuing a renewable energy transition, the company is now directing significant financial resources towards expanding fossil fuel production. This indicates a change in focus and a renewed commitment to the growth and utilization of coal and other fossil fuels.

It is unlikely that this situation will improve under the new government.

Ashwini Swain, a fellow at Sustainable Futures Collaborative, a research organization in New Delhi, has suggested in an interview with Bloomberg that, in a potentially more unstable political coalition, there may be a push for projects that distribute benefits and gain political backing. This may lead to a focus on protecting the existing fossil fuel industry, as it could be seen as beneficial to their objectives.

India is, indeed, committed to its green goals, considering that it is one of the countries most vulnerable to the impacts of climate change. The nation has been witnessing more frequent occurrences of extreme heatwaves and droughts, which further highlight the urgency of taking action to address climate change.

Independent power analyst Alexander Rutter, who is based in Bengaluru, has reportedly told Bloomberg that a pro-poor, pro-growth agenda does not necessarily have to rely on coal. Rutter emphasizes that coal is costlier and less reliable compared to cleaner alternatives. He suggests that the new government has a real chance to reconsider its strategy and focus more on renewable energy and energy storage rather than investing in new coal plants, which are economically unsustainable and unreliable.

However, making the necessary infrastructure changes to support a transition to renewable energy comes with significant financial requirements. These changes include revamping transportation systems in large cities and upgrading power networks. In 2022, India’s electricity planners estimated that just the cost of laying new cables for the renewable energy goals would amount to around Rs 2.4 trillion ($29 billion).

Renewable energy projects are frequently constructed in remote and barren areas, far away from the urban centres and industrial hubs that they cater to. At the same time, the financial stability of distribution companies responsible for delivering electricity to homes and factories is precarious, resulting in inconsistent and unreliable power supply. To address this issue, a project worth Rs 3 trillion rupees, led by the power ministry, aims to improve the profitability of these companies through such initiatives as smart metering. However, progress in this area has been slow.

According to climate analysts and researchers, there is a possibility of local parties playing a bigger role in the coming five years. This could result in decentralization of power and a stronger focus on regional interests. As a result, there may be a greater emphasis on promoting green manufacturing and ensuring the fair distribution of benefits from clean energy initiatives.

Reports from Bloomberg further support the statement made by Rohit Chandra, an assistant professor at IIT Delhi School of Public Policy. These reports highlight that, in the previous decade, the majority of green economic activity was concentrated in a select few states, such as Gujarat and Rajasthan. With the formation of a coalition government, there is an opportunity for more states in India to actively participate in—and benefit from—the growing green economy. This inclusive approach can promote equitable development and distribution of green initiatives across the country.

Gujarat and Rajasthan, which are not only strongholds of support for Prime Minister Modi’s party, but also benefit from low energy generation costs, have been the primary recipients of investments in the green economy. However, with increased political influence of poorer regions in the coalition government, there is a possibility that investments and opportunities for green initiatives will be directed towards less affluent areas. This shift aims to promote more equitable development and ensure that the benefits of the green economy are spread across different regions.

Shayak Sengupta, an energy and climate fellow with the Climate Program at the Observer Research Foundation America, told Bloomberg that, if there is more decentralization and states have greater control over their own development, the policies related to transitioning to a greener economy can be connected to such other important economic goals as healthcare and education. This means efforts to promote sustainability can be aligned with the general well-being and progress of the population.

Girish Linganna

Girish Linganna is a Defence, Aerospace & Political Analyst based in Bengaluru. He is also Director of ADD Engineering Components, India, Pvt. Ltd, a subsidiary of ADD Engineering GmbH, Germany. You can reach him at: [email protected]

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