Daily Update: India's Unique Energy Transition To Harness Coal, Other Natural Resources
Today is Wednesday, April 17, 2024, and here’s your curated selection of essential intelligence on financial markets and the global economy from S&P Global. Subscribe to be notified of each new Daily Update.
India is uniquely positioned to capitalize on the global push to decarbonize. While the country's growing energy demands have seen green aspirations take a back seat to economic growth, a recently released interim budget for 2024–25 suggests that those priorities may be shifting. New initiatives in the budget show how India plans to leverage technology and its natural resources to manage the energy transition.
In January, the government funded an 85 billion-rupee initiative to promote coal gasification projects. With the release of its new interim budget, the government intends to have 100 million metric tons of coal gasification and liquefaction capacity established by 2030, according to Finance Minister Nirmala Sitharaman. Though not inherently environmentally friendly, coal gasification would give India more energy independence and allow the country to reduce imports of natural gas, methanol and ammonia, according to Sitharaman. It would also afford the opportunity to employ carbon capture, utilization and storage (CCUS) technologies, which is easier during gasification than when burning coal.
CCUS development was not specifically funded in the interim budget, but India's abundant coal reserves make it likely that the government will find ways to tap into this resource as part of the transition to renewable energy. Speaking with S&P Global, New Era Cleantech Solution Managing Director Balasaheb Darade likened India's coal reserves to the Middle East's oil supply and said the country is "bound to use it" while it works to adopt clean energy. Darade believes that the government could encourage CCUS by removing a tax of 400 rupees per metric ton on coal projects that use the technology. Developing CCUS expertise would also benefit other hard-to-decarbonize industries, such as cement and iron, which contribute significantly to the Indian economy.
The interim budget also seeks to make fuller use of waste from India's agricultural sector. The country produces 500 million metric tons of agricultural residue annually, and 200 million metric tons go unused, according to Ashvin Patil, founder and director of Biofuels Junction. This waste could be converted into valuable biofuels. In presenting the interim budget, Sitharaman outlined a plan to increase demand for agricultural residue via a phased mandatory blending of biogas in piped and compressed natural gas. The government will support the supply side through financial assistance for the equipment necessary to collect the raw materials used in biogas production.
India is also exploring green hydrogen production, which could be the linchpin in a strategy to decarbonize the country's industrial sector. Speaking at India Energy Week in February, Prime Minister Narendra Modi highlighted India's National Green Hydrogen Mission, which aims to make the country a center for hydrogen production and exports. Green hydrogen could also be used by India's iron industry to produce direct-reduced iron or as an energy source in other industrial sectors.
While such initiatives reflect a commitment to a clean energy future, India must strike a delicate balance between economic growth and net-zero goals as the country's energy demand is set to double by 2045. Proposals in the new interim budget — such as a rooftop solarization plan that would provide savings for households while decarbonizing the electric sector — show how the Indian government intends to square these seemingly competing priorities.
Today is Wednesday, April 17, 2024, and here is today’s essential intelligence.
- Written by Adam Rihner.
Economy
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—Read the article from S&P Global Market Intelligence
Capital Markets
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—Read the article from S&P Global Ratings
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—Read the article from S&P Global Commodity Insights
Sustainability
Listen: How Plastic Impacts Companies, Investors, Public Health And The Environment
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—Listen and subscribe to ESG Insider, a podcast from S&P Global Sustainable1
Energy & Commodities
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—Read the article from S&P Global Ratings
Technology & Media
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—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence
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