Anil Trigunayat
In India, which faces a fundamentally different economic and energy reality as compared to the developed nations, natural gas and LNG are a nascent force.
There is a burgeoning consensus that natural gas and liquefied natural gas (LNG) are crucial components in the global energy mix and will serve a vital purpose in the quest to achieve net-zero emissions. While a carbon-free energy sector remains the ultimate goal, the journey to this destination necessitates the adoption of efficient low-carbon fuels which can ensure greater sustainability across key industries — while providing the stability needed for continued economic growth and development.
In developed economies such as the United States, examples of gas’ positive impact are evident. Since the country’s pivot to exporting natural gas and LNG in 2016, driven largely by significant private and public sector investments, the United States has rocketed from selling a negligible amount of gas overseas to becoming the world’s number one supplier, a remarkable shift that enabled unprecedented growth in the energy sector and created millions of jobs for Americans across the country. Meanwhile, the expansion of natural gas and LNG has also facilitated a departure from coal and oil, offering an affordable and stable path to reducing emissions and bridging the gap with renewables.
Meanwhile, in emerging markets like India, which faces a fundamentally different economic and energy reality, natural gas and LNG are a nascent force. However, India is taking exceptional steps to transition her energy mix towards renewable and alternate sources including solar, hydro, nuclear, wind and hydrogen and other sustainable fuels along with several international initiatives like International Solar Alliance and Global Biofuels Alliance and is setting examples and standards herself. India is also aiming at even advancing her Net Zero target from 2070.
Rapid Urbanisation and Energy Need
Currently, over 80% of India’s energy needs are met by coal, oil, and solid biomass. As one of the largest countries in the world, it’s rapid urbanisation and industrialisation ensure that energy demand will only continue to escalate. However, given ambitious net zero targets, it has acknowledged the urgent need to diversify its energy sources to create a more sustainable mix in the longer term.
It’s no surprise therefore that India is rapidly ascending the ranks of LNG importers in Asia, reaping immediate benefits. Although imports to Asia were expected to dip in June, it remains the fourth-largest importer in the region, with a significant portion of LNG coming from the United States. This shift is largely due to Europe’s fluctuating appetite, which has allowed the US to find a consistent and burgeoning market in India.
India’s current need for LNG is critical. Amidst a major heatwave and strong economic performance, increasing imports has become a necessity. Traditionally, it’s electricity generation has relied heavily on coal power, which supplies around 75% of the country’s grid. However, gas power, while currently a smaller portion of electricity generation, continues to grow steadily year on year. Indeed, a significant portion of India’s LNG is used in the fertiliser industry, followed by gas distribution and the power sector, with demands in these industries only expected to rise.
The Role of LNG
Despite high imports, India has a flourishing LNG industry of its own. The role of LNG extends beyond achieving self-sufficiency in the Indian energy sector: India has ambitious net-zero plans, but achieving the energy transition these targets demand is no small feat. Fortunately, many signs point in the right direction: India is home to the world’s largest solar energy plant, boasts the fourth-largest installed wind power capacity, and the government pledged $4.3 billion in green technology investments just last year.
These developments should be encouraged as they ultimately speak to the future of India’s energy sector, not just its present. As a developing nation, India continues to grow rapidly, bringing with it an ever-increasing energy demand. India’s energy transition will require profound changes, and as the third-largest emitter of greenhouse gases globally, it faces greater hurdles than most. There is no magic bullet to guarantee this country’s green future, but LNG certainly has a major role in bridging the gap.
LNG, while still a hydrocarbon fuel, produces 40% less carbon dioxide than coal and 30% less than oil. With an economy and industries deeply reliant on coal, LNG can significantly reduce the ‘green gap’ and decrease dependence on India’s traditional energy mix.
India can learn valuable lessons from the United States on building and encouraging a domestic LNG and natural gas sector. The US has become a global leader in LNG production and export through strategic investments in infrastructure, supportive regulatory frameworks, and technological innovation.
Infrastructure Building
The US invested heavily in LNG export terminals, pipelines, and storage facilities before exports began. India should similarly focus on expanding its infrastructure to ensure that it can meet growing demand efficiently. But regulation is a key lynchpin in making this possible — the Inflation Reduction Act in the United States was central to unlocking this industry. India could therefore benefit from streamlining its regulatory processes, offering incentives for domestic and foreign investments, and ensuring stable policies that encourage long-term investments in LNG.
We must build the foundations on which this industry can thrive. Drawing lessons from the US’s successful model, India’s government and industry stakeholders must focus on long-term investments and policies that foster a robust domestic LNG sector. While such critical components may be difficult to properly identify and predict in the ever-evolving global energy landscape, key industry gatherings, such as the upcoming Gastech 2024 in Houston, can provide a platform business leaders and energy ministers, from India and abroad, to establish clear and supportive frameworks for growth and decarbonisation in the natural gas sector.
Conclusion
India will never be fully independent of imports due to reserve capacity, but by building this industry, we can simultaneously unlock economic growth and chart a course for net zero. LNG represents a pivotal component in India’s journey towards a greener future: offering a transitional solution that significantly reduces carbon emissions while meeting the country’s burgeoning energy demands.
Embracing LNG as a bridge fuel, coupled with continued advancements in renewable energy sources, will enable India to navigate the complex path towards a brighter and greener future.
Anil Trigunayat, is a former Indian Ambassador to Jordan, Libya and Malta, and currently heads the West Asia Experts Group at Vivekananda International Foundation.
The article was first published in CNBC TV18 as Net-zero emissions — how LNG can supercharge India’s green growth on August 2, 2024.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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Acknowledgment: This article was posted by Aashnaa Mehta, a research intern at IMPRI.
