INTERVIEW: India sees CCUS policy launch by end 2024, says planning body advisor

India's heavy dependency on coal will need large scale decarbonization which can be addressed via carbon capture, utilization and storage (CCUS) and this is prompting the government to roll out a policy this year, Rajnath Ram, Advisor (Energy and Climate Change) at planning body NITI Aayog, told S&P Global Commodity Insights Feb. 2.

NITI Aayog is the brains behind India's decarbonization and energy security plans and is pushing small modular nuclear reactor-based power, coal gasification, renewable hydrogen, EVs and carbon markets, in addition to CCUS, according to Ram.

"CCUS is really required because we are a coal-rich country and we can't wish it away. The demand for electricity is also rising and in one particular month last year, demand was up 16% from the previous year," Ram said ahead of the Feb. 6-9 India Energy Week in Goa, where he will be on a panel discussing "Building consortiums of stakeholders to drive energy innovation."

"We are giving this priority [and] we are expecting that by the end of this year we can bring out the CCUS policy," Ram said.

NITI Aayog has created an inter-ministerial technical committee for different aspects of CCUS namely, standards, capture, transportation, storage and utilization which are in the process of finalizing recommendations, according to Ram.

Ram also said that for renewable hydrogen, the government is leaving it to the industry to arrive at their own consumption goals rather than imposing mandatory targets, as an export market is seen gaining more prominence with some developers signing MOUs for overseas offtake.

India is the world's third largest carbon dioxide emitter behind China and the US, with emissions seen peaking only in the 2040s as new thermal power capacities get added.

Its Nationally Determined Contributions states it will reach net zero by 2070, and by 2030 it will have non fossil fuels form half of its power capacity.

In a reference scenario, S&P Global Commodity Insights forecasts India's carbon emissions rising from 2.48 billion mt/year in 2023 to 2.9 billion mt/year in 2030, and further to 3.37 billion mt/year in 2045.

Energy mix

Ram said India's primary energy mix would tilt towards renewables by 2030, but fossil fuels, mainly comprising coal, would continue to be dominant in the benchmark year for energy transition.

Energy transition "is a question of investment and the price of capital, because very few of the technologies, barring solar, have matured. So, it is costly," Ram said. "If the investment comes as desired, then definitely we can advance our net zero target."

For instance, renewable power is cheap in India at around Rupee 4.86/kWh (6 cents/kWh), but to improve the variability factor with storage added, the price shoots up to Rupee 12-13/kWh, Ram said.

Fossil fuels currently account for 84% of the primary energy mix, and would fall to the range of 70%-80% by 2030 with the various energy transition programs kicking off, he added.

In the primary energy mix, coal's current share at around 48% may come down to 37%-38% by 2030, he said.

India would need $250-$300 billion/year investment for its energy transition, and that would add up to $15-$20 trillion, according to Ram.

Just Energy Transition Partnership

While India has been advocating funding and technology to come from the developed nations to help developing nations' energy transition, it has not joined the Just Energy Transition Partnership (JETP) proposed at the UN Conference of the Parties COP26 in Glasgow in 2021.

Ram said the door was still open while India evaluated its own priorities for a just transition.

"Just energy transition is not only related to coal. It is also related to ensuring the livelihood and other economic activities," he said.

"India has not said 'no' to this, but such a thing should always be the country's own perspective. We have abundant coal and we have to ensure the access of electricity to people. Energy security is our concern."

JETP is a mechanism where developed nations help fund developing nations' energy transition, focusing on reducing the use of coal. France, Germany, the UK, the US and the EU partnered with South Africa for the first JETP.

"We have to do this energy transition in our own way," Ram said, adding, it required detailed study to ensure displaced people find livelihood.

CCUS pilots

India has seven CCUS pilots running with indigenous technology, including one from power generator NTPC at its Vindhyachal plant in Madhya Pradesh, Ram said.

"The only hitch is the cost of capital is coming a little bit higher [compared to expectations]," he said, adding, "We have to work on it."

In a November 2022 report, NITI Aayog envisaged a policy of helping to build clusters with a business model and financial incentives for CCUS to work at commercial scale, with the potential to reach 750 million mt/year of CO2 capture capacity by 2050.

Ram said the financial incentive for CCUS would likely be larger than the $2.37 billion announced for renewable hydrogen last year, as CCUS has the capacity to reduce emissions by 15%-16% compared with 10%-12% for renewable hydrogen.

Further, "if coal gasification is achieved, it will replace a part of our imports, particularly LNG used in the fertilizer sector, by replacing it with SNG gas," he said. "Here also, we will promote CCUS to lessen emissions."