Hardeep S Puri
As the world’s fastest-growing major economy with rising energy needs, India will account for approximately 25 per cent of the global energy demand growth between 2020-2040, as per BP energy outlook and IEA estimates. Ensuring energy access, availability and affordability for our large population is imperative. This makes our case sui generis and has driven our energy strategy, now acknowledged the world over as being pragmatic and balanced.
How has India managed to do this?
When petrol and diesel prices went up by 35-40 per cent in the US, Canada, Spain and the UK, and despite importing over 85 per cent of its crude oil requirements and 55 per cent of its natural gas requirements, prices of diesel in India have actually gone down in the last 1 year. When several countries in our neighbourhood have had dry outs and power cuts to manage demand, there has been no shortage of fuel anywhere in India, even during floods and natural calamity situations.
This was made possible due to the vision of Prime Minister Narendra Modi for ensuring energy justice. The Centre and many BJP-ruled states announced massive cuts in excise duty and VAT rates, twice. Oil PSUs, being good corporate citizens, absorbed huge losses to ensure that the massive hikes in the prices of crude oil and natural gas in the international market were not passed on to Indian consumers.
When petrol and diesel prices went up by 35-40 per cent in the US, Canada, Spain and the UK, and despite importing over 85 per cent of its crude oil requirements and 55 per cent of its natural gas requirements, prices of diesel in India have actually gone down in the last 1 year
Subsidised APM gas for the city gas distribution sector was drastically increased even at the cost of cutting down the captive use of domestic gas by our own PSUs. We even imposed an export cess on petrol, diesel and ATF, and a windfall tax on domestically produced petroleum products to prevent refiners and producers from profiteering at the cost of domestic consumers.
Over the years, India has expanded its network of crude oil suppliers from 27 nations to 39 nations. India has also further strengthened ties with countries like the US (energy trade has gone up 13 times in the last four years) and Russia to ensure a reliable supply of crude oil. This strategic market card, as the world’s third-largest importer, not only ensured affordable energy for Indian consumers but also had a calming effect on global petroleum markets.
What is inescapable is that India’s purchase of petroleum products from certain nations has actually kept the global demand and supply of around 98-100 million barrels/day balanced, thereby keeping oil prices in check for the global value chain. Had this not been done, global prices would have shot up to $300/barrel.
We are working on both traditional fuel exploration as well as energy transition. Our reforms in making India an attractive energy and power destination are reflected in the consulting firm Wood Mackenzie noting that India could be the licencing wildcard of 2023. By 2025, India wants to boost its net geographic area under exploration from 8 per cent (0.25 million sq km) to 15 per cent (0.5 million sq km). It has reduced the prohibited/no-go areas in our exclusive economic zone (EEZ) by 99 per cent, releasing nearly 1 million sq km for exploration.
However, as demonstrated by PM Modi at Glasgow, we remain steadfast in our climate change commitments – becoming net-zero in emissions by 2070 and cutting down emissions by 1 billion tonnes by the end of 2030.
We are also rapidly expanding our petrochemical production, in line with the massive increase in living standards and rapid urbanisation. India is a global exporter of petroleum products and its refining capacity is the fourth-largest in the world after the US, China, and Russia. Efforts are underway to further enhance this capacity to 450 MMT by 2040. The refining capacity expansion was also one of the major factors in ensuring fuel price stability during the international oil price volatilities of last year.
India is also accelerating its efforts to move towards a gas-based economy by increasing the share of gas from the current 6.3 per cent to 15 per cent by 2030. India has connected more than 9.5 crore families with clean cooking fuel in the past nine years. PNG connections have increased from 22.28 lakh in 2014 to over 1 crore in 2023. The number of CNG stations in India has gone up from 938 in 2014 to 4,900 in 2023. Since 2014, India has increased the length of its gas pipeline network from 14,700 km to 22,000 km in 2023.
At the recently-concluded India Energy Week 2023, India took a giant stride in its biofuel revolution by launching E20 – 20 per cent ethanol-blended gasoline, which will be rolled out in 15 cities across the country in the next two years. India’s ethanol blending gasoline has grown from just 1.53 per cent in 2013-14 to 10.17 per cent in 2023, and now India is also setting up five second-generation ethanol plants that can convert agricultural waste into biofuel, further reducing pollution due to stubble burning, and generating income for farmers.
The National Green Hydrogen Mission has been launched with an outlay of Rs 19,744 crore to develop the country’s green hydrogen ecosystem in the country and accelerate India’s efforts towards 4 MT of annual green hydrogen production. It will save Rs 1 lakh crore in cumulative fossil fuel import savings by 2030. India is poised to realise its full potential to create a green hydrogen ecosystem by 2030.
Just like our energy strategy, we are also taking an integrated path for transitioning India’s future mobility pathways. Therefore, along with green hydrogen and biofuels, India is also supporting electric vehicles through a production-linked incentive scheme to make advanced fuel cells of 50 gigawatt hours. Customs duty exemptions have also been announced for the sector. We are targeting the installation of alternative fuel stations (EV charging/ CNG/ LPG/ LNG/ CBG) at 22,000 retail outlets by May 2024.
As we implement our Amrit Kaal plan to become a $ 26 trillion economy by 2047, ensuring energy security and achieving energy independence remains our key goal.
(The writer is Union Minister for Petroleum & Natural Gas and Housing & Urban)