India's energy transition centered on diversification of fuel sources: oil secretary

India's roadmap for energy transition comprises the use of multiple fuels from a wider source base to ensure availability and affordability, Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas said Feb. 8 at the India Energy Week.

The Indian economy is expected to continue driving up the country's energy demand, and market participants have generally been of the view that a multi-fuel energy transition strategy suits large economies better than absolute fuel switching from conventional to new energies.

The Feb. 6-9 India Energy Week in Goa, India, brought together policymakers and industry heads for deliberations on the way forward for the energy sector facing rising demand and the pressure of decarbonization.

"... coal will continue to matter, oil will continue to matter and so will gas," Jain said at a session titled 'A blueprint of energy transition for emerging economies.'

"We have to start learning to operate and work with additional fuels whether it is ethanol, CBG [compressed bio gas], renewables, biodiesel . . . at the end, the movement from one fuel to another has to be as least disruptive as possible."

He said energy transition should not mean unnecessary investments into new technology when the old ones still have economic life left and can play a role in ensuring costs remain in control.

At the same time, he said, there must not be excessive dependence on any one energy source, as India may not be able to ensure enough supply domestically and will continue to depend on imported fuels.

As far as affordability of energy supplies is concerned, India now has a mix of administered and market-based prices, he said, adding that government policies intend to prevent monopolies from getting created.

"Competition alone within the domestic market and a wider basket of sourcing is what will support affordability," he added.

India's energy demand is set to double from current levels by 2045, making it imperative for the country to push for supply capacity growth in both fossil fuels and clean energy to achieve affordable energy objectives and lower carbon footprint, Prime Minister Narendra Modi said Feb. 6 at the India Energy Week.

India is the world's third-largest emitter of carbon dioxide after China and the US and has a net zero target by 2070. By 2030, it aims to have half of its power capacity mix to come from non-fossil fuels.

Gas deals

Jain said the importance of natural gas in the energy supply mix is set to rise and there is scope for gas-based assets to grow with existing contracts that did not work out earlier, to be renegotiated.

"For a verity of reasons, gas got a bad name in India, but we are past that now," Jain said.

"With the kind of LNG terminal infrastructure and the pipeline network we have, and the kind of new discoveries being reported and coming into production, some of the unmet demand for gas in India, which has also been a function of price, could over the next three to four years start becoming much more visible."

Jain said there were assets that were built around the use of gas, and it needs to be seen if there is a way by which these assets become productive. This would mean the contracting arrangements around gas have to be redone.

"Maybe the sharing mechanism around price fluctuation have to be renegotiated, restructured or reimagined between suppliers of gas and industrial users," Jain said.

"Plants were built in the areas where gas is not simply a fuel, but gas is actually glued to the whole production process, and you cannot produce. For example, you cannot produce fertilizer without producing gas."

"Those are the areas where we have to get the pricing right. And in mobility as well as in getting piped gas to households -- those are going to be some of the big demand drivers for gas," he said.

India's domestic gas output is rising due to the government's reforms, and the country is making efforts to take the percentage of gas in the primary energy mix from the current 6% to 15%, Modi said Feb. 6 at the event.

Biofuels growth

Jain said traditionally the biofuels debate was a "food versus fuel" one, but India sidestepped the debate as seen by the way of its adoption of ethanol for blending into gasoline.

"Our ethanol was never coming from sugar, rather it was coming from what was left after making sugar," he said. "Our ethanol comes from waste, such as paddy stock."

Jain said ethanol production for blending did not cause any disruption in agricultural prices, and this was also an example of how the industry has new ways of dealing with higher prices.

"There are ways of dealing with higher price because there is a learning curve involved in terms of bringing costs down," he said. "What we're trying to do is pay remunerative prices to somebody who is giving us feedstock, yet at the same time keeping prices of the end product at reasonable level."

India is the world's third-largest producer and consumer of ethanol, as domestic production has tripled over the last five years. Supported by the country's abundant feedstocks, political support and effective policy implementation, its ethanol blending rate of around 12% is amongst the world's highest.

India has advanced by five years its deadline for doubling nationwide ethanol blending in gasoline to 20% by the fourth quarter of 2026.