-
Analysis: Where is India spending more, fossil fuels or renewables?
Is India embracing renewables or fossil fuels? On the one hand, there are the commitments India has made to decarbonise its economy in the face of climate change that is already impacting the country grievously. Then there are the planners who are convinced that fossil fuels are imperative to provide the electricity needed for India’s development. With this, we have seen announcements of huge investments in solar and wind energy, but also in coal, oil and gas.
In the last two years alone, the union government has announced forthcoming public and private investment in coal of 4000 billion Indian rupees (around USD 50 billion). The Ministry of Petroleum and Natural Gas has said that in 2021-22 the country will invest 4800 billion rupees (USD 60 billion) in setting up gas infrastructure. The country is also hiking its investments in overseas oilfields – like Russia’s Sakhalin 1 and Sakhalin 2 and Brazil’s BM-Seal-11 – apart from stepping up domestic exploration for gas and oil.
These announcements coincide with reports about the 1160 billion rupees (USD 14.5 billion) India invested in renewables in the last fiscal year; the 2020 billion rupees (USD 25.3 billion) of capital expenditure (or capex, money spent on building fresh assets like factories or power plants) which is expected to flow into the country’s EV market by 2030; Reliance’s mammoth 5950 billion rupee (USD 74.6 billion) investment in renewable energy and technology; an investment of 4800 billion rupees (USD 60 billion) in renewables from the Adani Group; and India’s push for indigenous manufacturing of solar panels and storage batteries.
So, is India putting more money into renewables or fossil fuels?
The question comes at a time when India is facing serious impacts from climate change. This year saw sustained heatwaves over northern India even as the northeast faced heavy rains, floods and landslides: experts say these unusual monsoon patterns are a sign of climate change.
India is the world’s the third largest emitter of carbon dioxide (or fourth if the EU is considered as one). The country has committed to aggressive decarbonisation. The union cabinet of ministers has approved a suite of decisions to get about 50% of the country’s electricity from non-fossil fuel-based energy sources by 2030, and to reduce the emissions intensity of its GDP by 45% by 2030 (compared to a 2005 baseline).
Where is India putting its money?
Is India on track to meet these commitments? Comparing the country’s investments in new fossil fuel projects with those in renewables is an obvious place to start exploring this question.
This, however, is easier said than done. India’s energy sector comprises scores of public and private companies which straddle value chains in both fossil fuels and renewables. Most companies do not report capex numbers separately. Nor is there is a consolidated database of all investments by all energy firms.Take gas, for example. Even as India pushes piped natural gas and sets up compressed natural gas (CNG) stations, quantifying total investment to date is very difficult. “Annual reports and earnings call statements by companies don’t tell you enough about the ongoing investments going into city gas distribution,” Swati D’Souza, energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), a think tank, told The Third Pole. “[For example] you don’t know how much of the planned capex on CGD [city gas distribution] has been utilised and how much is remaining.”
An alternative approach – to look only at assets that have been commissioned – does not work either. India is currently building new projects in oil, gas, coal and renewables. Skip these, and the sense of the energy infrastructure taking shape will be outdated. You have to include projects that are in the planning stage to get the whole picture.
In response, The Third Pole tried a different tack. We started with a simple map of India’s energy sector, spanning exploration, extraction and generation, and looked at capex announcements by both the government and the largest firms in each form of energy. Apart from these, there is the planned Rs 2200 billion (USD 2.7 billion) investment in electric vehicles by 2030.
Needless to say, these numbers have to be taken with a pinch of salt. Capex plans are vulnerable to exaggeration. The Indian government has repeatedly made large infrastructure promises but subsequently under-delivered. India is about to miss its target of adding 175 GW of renewable capacity by 2022, for instance. With private companies too, memorandums of understanding do not always translate into investment.
Share This
