FACTBOX: Diesel vehicles phase out, coal gasification among recommendations by India panel

India will need to take a much harder stance on diesel vehicles, look for ways to gasify coal, and boost share of biofuels and solar in its energy mix to align with the changing global energy landscape and meet decarbonization goals, according to a government panel report.

The report titled "The Green Shift - The Low Carbon Transition of India's Oil & Gas Sector" highlights that the oil and gas sectors would need to play an important role in the energy transition journey and fulfil net-zero ambitions. The sectors' understanding of energy systems, stakeholder expectations, low-carbon innovation and investment-making ability would be key to unlocking the doors of a greener and cleaner future.

"Fossil fuels have been the bedrock of fueling India's growth story. India cannot continue to depend on large-scale energy imports and must develop its own resources," the report quoted Tarun Kapoor, chairman of the Energy Transition Advisory Committee, as saying.

The following are some of the key recommendations of the committee, formed under the direction of India's ministry of petroleum and natural gas. The recommendations of the panel are not binding on the government to implement.

Energy flows

• Increased diesel blending may be mandated to ensure a higher proportion of green fuels in the energy mix and diesel replacement. Research on appropriate additives and technology development will be needed in the short term to improve efficiency.
• Currently, only about 18% of India's energy needs are met through power flowing from the grid. This must increase to about 40% by 2035.
• The industrial sector is already shifting to electricity or natural gas. However, some hard-to-abate sectors such as steel and cement still use a large quantity of coal. Industries shifting to electricity wherever possible has to be ensured in the next three years. Natural gas can be the transition fuel for the next 15-20 years.
• LPG must be blended with compressed biogas made from urban waste and other sources available around cities. The blending percentage can gradually increase.
• India has abundance of coal and it may not be possible to discontinue coal totally for the next 15 to 20 years. Cleaner pathways of coal usage have to be invented and encouraged. Gasification of coal is advantageous in this regard, as carbon capture becomes easier and several derivatives like methanol can be used as transition fuels.
• There is need to promote LNG-based transport in light as well as commercial vehicle segments. LNG will be a promising alternative fuel with lower emissions and a higher calorific value than diesel.

Infrastructure

• Four-wheelers, including passenger cars and taxis, need to partially shift to electric vehicle mode and partially to ethanol-blended petrol, with almost 50% share in each category.
• Diesel-driven four-wheelers may be eliminated as soon as possible. Therefore, a ban on diesel-powered four-wheelers in all million-plus cities and all towns with high pollution has to be enforced by 2027. The long-term focus should be to transition to EVs, with CNG as a transition fuel over the next 10-15 years.
• There is a need to strengthen the Gas Exchange for a faster transition toward natural gas. This also provides an opportunity for the country to develop its own index.
• Compressed bio gas needs to be promoted in a big way. About 10% blending of the CBG in natural gas should be targeted by 2030. CBG transportation through pipelines laid for natural gas should be allowed free of cost for 10 years as an incentive for the sector.
• There is a need to incentivize green hydrogen usage for all new and upcoming facilities through policies. Green hydrogen use by bulk users such as refineries, fertilizer and hard-to-abate sectors could be focus areas. India's state-run oil and gas companies can produce 38,130 mt/year of renewable hydrogen by 2024-25 using 279 MW of electrolyzer capacity to reduce oil imports and progress decarbonization.
• Popularize green hydrogen derivatives for ships, such as ammonia and methanol, while simultaneously developing ports for bunkering. Export of hydrogen derivatives needs to be encouraged.
• Direct usage of hydrogen in industrial applications may be undertaken. Efforts must be made to study and explore increasing hydrogen percentage in natural gas in energy applications.
• Electric and solar cooking needs to be promoted through campaigns. The target should be to have 25% of households using electricity for cooking by 2030.
• The industrial and power sectors account for most of India's emissions of 2.7 GtCO2e. Decarbonizing these sectors and shifting to renewable power generation, electrification of heating in industries, clean fuels, better energy efficiency and circularity in plastics will be the way forward.
• For grid transition from largely coal-based to renewable power -- for utilizing 500 GW RE power by 2030 -- there will be a need to maintain a healthy ratio of wind, solar and hydro power.
• India needs to promote widespread adoption of sustainable aviation fuel, with the HEFA (hydro processed esters and fatty acids) and ATJ (alcohol-to-jet) routes being the most cost competitive pathways. Ethanol blending in the short and medium term may also be explored.

Prices

• Until all key petroleum-based fuel products are not part of the goods and services tax, or GST, regime, a mechanism and accounting framework is needed to help abate the impact of stranded credit and dual taxation on biofuels, like ethanol and CBG.
• A simple and cost-effective supply and demand-based mechanism need to be created for carbon credits. This includes registration and validation of carbon credits by a third party to create a supply of credits, implementation of a continuous monitoring system for creating demand domestically and allowing foreign investors as buyers of carbon credits.
• Standardization of carbon credits is needed to ensure that registered credits are of the highest quality and tradable at the international level.
• India must also utilize the provisions of clause 6.2 of the Paris Convention to have arrangements with some other countries that on their own do not have good renewable energy potential. Emission trading schemes should serve as the carbon pricing methodology of India. Accordingly, a carbon exchange needs to be formulated.
• India should keep offshore wind, green hydrogen, solar thermal, CBG, ethanol, SAF, carbon capture, tidal wave energy and other technologies for harnessing ocean energy outside nationally determined contributions.