October 09, 2019 | Chemicals
India — with a population of over 1.3 billion — is expected to surpass China as the world’s most populous country by 2022. The country is currently on the lookout for ways to ensure its energy security meets its rising energy demand, to keep economic growth moving.1 India is already among the largest energy consumers in the world (along with China, Russia, and the United States) and will be the largest contributor to energy demand growth — almost 30% — by 2040. This rise in energy demand will require India to diversify its energy mix as the country intends to reduce coal dependency and minimize carbon emissions by 33% to 35% by 2030.2
A Fossil Fueled Economy
Fossil fuels are currently India’s major source of energy, constituting around 85% of the global primary energy mix. As a global commodity in heavy demand, the trade of fossil fuels (coal, crude oil, and natural gas) are influenced by factors such as supply-demand dynamics, price, alternative fuels, regulations, and geopolitics.
Natural gas can be a major option for a smoot transition from high carbon-intensive energy sources such as coal to a newer mix of cleaner energy sources. Since it is more environmentally sustainable, as well as available in abundance, governments in several countries are promoting the use of natural gas to gain both environmental and economic benefits. In addition to global factors, domestic factors such as energy policy, upstream policy, taxes, subsidies and government stability affect the development of natural gas in any country, especially in emerging economies like India.
Economic Growth With Fewer Emissions
India is also facing a challenge with carbon emissions, sending over 20.5 billion tons of CO2 equivalent into the atmosphere between 2005 and 2013, with emissions growing at a rate of 5.6% annually. The energy sector accounted for 68% of the country’s emissions during this period, more than three times to the second largest source of carbon emissions, the transportation sector.4 India registered a 7% increase in greenhouse gas emissions in 20183, about 794 million tons — 63% of the total — of which were CO2 (carbon dioxide), while 33% of the total emissions were CH4 (methane) while the remaining 4% was N2O (nitrous oxide). The CO2 emissions were mainly caused by fuel combustion in energy transformation activities (changing energy from chemical to electricity), road transport, cement, and steel production. However, India’s greenhouse gas emissions per capita are still well below that of G20 nations and even the global average.
India witnessed a 6.9% surge in natural gas consumption on an annual basis, reaching 54.2 billion cubic metres of natural gas in 2017. Currently, the share of natural gas in the country’s energy mix is 6.2%. Aligning with its climate goals, the Indian government plans to boost the share of natural gas in the nation’s energy mix to 15% by 2022.5 However, even this projected target is very low compared to the global standard, where natural gas makes up 24% of the global energy mix.6
India’s per capita natural gas consumption is 40 cubic meters per person, in comparison to the global average of 487 cubic meters. India ranks amongst the lowest per capita consumers of natural gas in the world. There are multiple reasons to promote the use of natural gas and increase its share in India’s energy mix but a lack of infrastructure and limited accessibility to natural gas act as major barriers. If these obstacles can be overcome, there are numerous opportunities that a higher share of of natural gas in the energy mix would present the Indian economy and it could be the fuel that keeps India’s economic growth story powered while the nation shifts to an economy entirely fueled through clean energy sources.
1 IEA. “Global Shifts in the Energy System”, 2017
2 Ratner M. “India’s Natural Gas: A Small Part of the Energy Mix”, Washington: Congressional Research Service, 2017
3 Gedich T. “Gas Market of China: Barriers and Prospects for Russian Pipeline Gas”, The European Proceedings of Social & Behavioural Sciences, pp. 421-429, 2018
4 Chakrabarty S. “By the Numbers: New Emissions Data Quantify India’s Climate Challenge”, 2018
5 Bureau P. I. “Shri Dharmendra Pradhan Invites Investors to Participate and Make the Most of India”, 2018
6 BP. “Statistical Review of World Energy”, 2018