Towards a Just and Effective Energy Transition
Baroruchi Mishra, Group CEO, Nauvata Energy Transition (NET) Enterprise Pvt. Ltd, 0
Let me begin by saying that the line of thinking on Energy Transition has shifted in the last five decades. In the seventies and eighties, Energy Transition was considered a necessity to deal with the limited supply of fossil fuels, which was projected to last 50 to 70 years. Today, it is used to mean a transition away from fossil fuels even when they are not in short supply. And yet, we cannot amputate fossil fuels from the energy mix. We need to reduce it to a level that it does not contribute to global warming any more than what it has already done by “de-carbonizing” its use through CCUS.
For developing countries like India, where the Human Development Index is in the mid to low range of the global benchmarks, and energy consumption is one-third of the global average (and 1/17th that of the US), all forms of energy supply will be needed. The energy transition must be at a pace with the social and economic affordability of the transition. Just Transition must be the North Star for energy transition.
That said, it is pertinent to mention that there is a significant cost involved in getting to Net Zero by 2050. To stay within the 2 deg C temperature rise, IEA estimates a $5trn annual investment by 2030 globally, from the current $2 trillion every year in clean energy. Various models used by different entities come out with different numbers, but within this range. UNEP pegs this number at $3tr every year by 2030.
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For India, the hard-to-abate sectors like Cement, Coal-fired Power plants and Steel produce more than 60 percent of the total CO2 emissions of ~ 3 gigatons per year. These sectors are highly labour-intensive – direct and indirect employment in these sectors would be in the range of 10-12 million. Add to this roughly 5 million jobs in the coal mining sector.
The sheer numbers mean that there cannot be a credible case where the assets in these sectors would be allowed to become stranded. The social cost of stopping them would be enormous – it would unleash all round misery; loss of livelihood would further sink the Human Development Index. If coal mining is shutdown , the economic loss to the exchequer would also be very high.
Coal mining contributes approx. $8-10b every year by way of royalties, corporate taxes, GST, cess and other levies.
The pathway for these sectors to continue to produce is with carbon capture and storage, efficiency improvements and through conversion to low emissions technologies.
The monetary costs for India to meet its Net Zero target by 2070 is daunting; $7 to $10 trillion is the range of estimates that are often cited - cumulatively up to 2050. For renewable electricity generation alone, India’s commitment to get to 500 GW by 2030 would mean an investment of approximately $200-$225 billion in capacity addition, and approximately $200 billion in upgrading the grid and other transmission infrastructure. Policy reforms to help the private sector come forward would be key to success.
Improving efficiency can reduce demand and at the same time improve availability of energy. A study done by RMI in 2019 found that roughly 2/3rd of the energy produced from fossil fuels is wasted - in extraction inefficiencies, transmission losses and in inefficient use by the end user. Out of the 609 exajoules produced in 2019, only ~200 exajoules was effectively used by the end user! The wastage is much less for renewable energy.
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Just to state an example, Bangalore burns anywhere between $500 million to $600 million worth of additional fuel due to traffic congestion, broken roads and poor infrastructure. Add to it, productivity losses and the total loss to the state comes to over $2 billion every year – almost 1.5 percent of the energy import bill of India. The belching of CO2 in the atmosphere by the slow/ stranded traffic only adds insult to injury!
Improving efficiency starts with awareness of the loss - setting the thermostat of the air conditioning units at 1 deg C higher set point - from 23 deg C to 24 deg C would reduce electricity consumption by approximately 3 percent over a 24-hour period.
Training and re-skilling is a necessary mitigation to reduce the socio-economic pain of energy transition. A lot of the skills are fungible. A planned approach is needed. Participatory energy transition is possible when the workers feel they have a say in the transition, and are able to cope with it through acquisition of new skills which will ensure that they can continue to work albeit on a new scope which is less carbon intensive.
Globally, approximately 30 percent of the carbon abatement can come from efficiency improvement through digitalization, technological improvements and improvement/upgrade of transmission and transportation infrastructure. Digitalization and AI/ML can all help with improving energy efficiency. The solutions are available as we speak. The rub lies in their deployment!
The pathway for these sectors to continue to produce is with carbon capture and storage, efficiency improvements and through conversion to low emissions technologies.
Digitalization and AI/ML can all help with improving energy efficiency
The monetary costs for India to meet its Net Zero target by 2070 is daunting; $7 to $10 trillion is the range of estimates that are often cited - cumulatively up to 2050. For renewable electricity generation alone, India’s commitment to get to 500 GW by 2030 would mean an investment of approximately $200-$225 billion in capacity addition, and approximately $200 billion in upgrading the grid and other transmission infrastructure. Policy reforms to help the private sector come forward would be key to success.
Improving efficiency can reduce demand and at the same time improve availability of energy. A study done by RMI in 2019 found that roughly 2/3rd of the energy produced from fossil fuels is wasted - in extraction inefficiencies, transmission losses and in inefficient use by the end user. Out of the 609 exajoules produced in 2019, only ~200 exajoules was effectively used by the end user! The wastage is much less for renewable energy.
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Just to state an example, Bangalore burns anywhere between $500 million to $600 million worth of additional fuel due to traffic congestion, broken roads and poor infrastructure. Add to it, productivity losses and the total loss to the state comes to over $2 billion every year – almost 1.5 percent of the energy import bill of India. The belching of CO2 in the atmosphere by the slow/ stranded traffic only adds insult to injury!
Improving efficiency starts with awareness of the loss - setting the thermostat of the air conditioning units at 1 deg C higher set point - from 23 deg C to 24 deg C would reduce electricity consumption by approximately 3 percent over a 24-hour period.
Training and re-skilling is a necessary mitigation to reduce the socio-economic pain of energy transition. A lot of the skills are fungible. A planned approach is needed. Participatory energy transition is possible when the workers feel they have a say in the transition, and are able to cope with it through acquisition of new skills which will ensure that they can continue to work albeit on a new scope which is less carbon intensive.
Globally, approximately 30 percent of the carbon abatement can come from efficiency improvement through digitalization, technological improvements and improvement/upgrade of transmission and transportation infrastructure. Digitalization and AI/ML can all help with improving energy efficiency. The solutions are available as we speak. The rub lies in their deployment!