Vijay Jayaraj: India’s energy priorities are a major roadblock for Net Zero and COP26
This November, political leaders from the West will attempt to formalise a more radical emission reduction strategy at the COP26 meeting in Glasgow. However, with the growing opposition to Net Zero plans and other extreme emission reduction policies like the Green New Deal, the UN climate summit is unlikely to witness any significant or legally binding commitments from the world’s biggest CO2 emitters.
Two nations that are likely to determine the success of the COP26 are India and China. Though under-represented in previous COPs, their presence is becoming increasingly important due to their unsatiable demand for cheap fossil fuels. China’s and India’s unwillingness to change the Paris Agreement and its emission reduction targets and the growing demand for fossil fuels from their respective domestic economies will make them less yielding to the Net Zero climate targets that the US, the UK and the EU is demanding.
Here are the main reasons why India’s energy priorities — of keeping coal as a cornerstone for its ambitious USD $5trillion GDP target — will force them to resist enforcement of stricter emission reduction policies.
Follow the data, not empty narratives
Mainstream media often promotes India as a global leader in renewable energy, claiming that it is leading the way in making the Paris agreement a success. But none of the popular news media tend to inform readers and viewers about India’s massive fossil fuel ambitions.
For example, in 2021, India’s home minister called for more investments in the country’s massive coal sector. He noted that coal is central to India’s future growth and that it will play a “significant role” in achieving the country’s USD $5 Trillion GDP target. This explicit remark, explaining the future of coal in the country’s economy, is hardly highlighted by the media which often tends to focus on the growing renewable installations in the country.
For an average news consumer who is never exposed to such stark reality of fossil fuel dependency, it would seem that India is reducing its fossil fuel consumption and switching to renewables. But that has not been the case, and the country’s fossil ambitions will pose a major hurdle for any global climate pact, including the outcome of the COP26.
India’s fossil fuel acceleration
Global energy experts know that India’s appetite for economic growth will drive the demand for fossil fuels, not just regionally but globally. The country’s recent investment decisions and policies are a testament to that. Coal account for more than 70% of all electricity generated in the country and India is confident that the coal sector will survive even if international funding for coal plants dries up. India has adopted an auction process to sell mining rights for the new coal fields in the country. As per recent government data, the demand for coal mining fields have gone up. 35.5 million tonnes worth of coal were auctioned during April-July 2021, a 28.6 per cent increase over the same period in 2020. This helped India’s state-owned Coal India Limited (CIL) to register a 87% increase in sales of coal mines (year-on-year).
CIL is eyeing one billion tonnes of coal production by 2023-24. CIL said that it is “expecting an improvement in cash flow with rising demand for coal and higher realisation from e-auction sales.” CIL has also “revised its capital expenditure budget to Rupees 13,115 crore for the 2020-21 fiscal (year) from its initial estimate of Rupees 10,000 crore.” A part of reason for CIL’s continued expansion and increased imports is the forecast for coal demand in the country.
The country’s steel industry alone demands a significant proportion of coal supply and drives the import of high-grade coking coal from countries like Australia. The Energy and Resources Institute says that “India’s steel demand is likely to more than quadruple in the next 30 years,” from around 111 million tonnes to 489 million tonnes. The state-run Steel Authority of India Limited–the country’s largest steel producer–has issued a global tender this month, inviting partnership for a long-term supply of coking coal.
Besides earmarking many coal mining fields for future production, the country is also keen in securing oil assets and trade deals to meet future demand. Energy reporter Rajshekhar points out that “India’s oil demand will double from 5.05 million barrels/day in 2020 to 10 million barrels/day by 2030. In the same period, gas demand will treble from the current 150 million standard cubic metres per day (mmscmd) to 500 mmscmd……The country will also double its refining capacity from 250 million tons to 450-500 million tons by 2030.”
In response to these forecasts, India’s State-owned Oil and Natural Gas Corp (ONGC) is privatizing operations. This month it announced privatisation of 43 oil and gas fields in order to boost production and cut reliance on imported oil and gas.
India likely to safeguard its energy future at COP26
Given the inescapable reality of fossil fuel dependency, India has already expressed its displeasure towards the proposed carbon border tax plans by Western countries.
In June 2021, India’s then Environment Minister and key cabinet minister Prakash Javadekar said that India won’t give into carbon pressure. Speaking on the Carbon taxation plans, Javadekar said, “It is the most regressive proposal with no principle of equity adhered to…..This is unfair taxation, nobody will accept it.” He noted that not only have countries not paid the promised climate funds but also failed in their own emission reduction targets.
It is also likely that India will raise the issue of per capita emissions at the COP26 meeting. India’s per capita emissions are much lower than the global average and it is believed that the country will use it as a moral pedestal to resist the enforcement of extreme carbon taxation policies on its struggling economy.
Most likely, COP26 will be another climate summit where empty promises on CO2 emission reduction and climate funds will be proposed in principle but will never be adopted or honored by the participating countries. India, especially, will be steadfast in guarding its rights to access affordable and abundant fossil fuel sources that play a quintessential part in running the country’s economic engine.