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Confusing Energy Policy of Government of India

The promotion of electric vehicle schemes  is facing several hurdles, which make it doubtful as to what extent   the targets can be achieved in India.

by N.S.Venkataraman

India presently imports more than 220 million tonne per annum of crude oil while Indian production of crude oil is only around 30 million tonne per annum. India imports around 35 billion cubic metre of natural gas per annum while Indian production is  only around 30 billion cubic metre  per annum. The domestic production of  crude oil and natural gas is almost stagnant at present, with no feasibility of increasing the production  in significant quantities  in the foreseeable future.



Excessive dependence on  import of crude oil and natural gas :

With the use of crude oil and natural gas as energy source and feedstock , the demand is steadily increasing at around 7% per annum.   In such  a scenario, it is likely that the import of crude oil will be around 300  million tonne per annum and that of natural gas would be around 50 billion cubic metre per annum by 2025-26.

The present outflow of foreign exchange due to import of crude oil and natural gas is  reported to be  around   28 to 30% and it is likely to go upto unacceptable levels  by 2025-26 , which may cost severe stress on Indian foreign exchange reserves. Considering the fact that the price of crude oil and natural gas  in the world   would be  fluctuating from time to time based on several factors  beyond India’s control, any   larger import dependence on crude oil and natural gas is a matter of high concern.

Plans for increasing consumption of crude oil and natural gas :

In such circumstances, it is surprising to read  the Prime Minister’s statement  that India will double oil refining capacity in the next five years and would raise the share of natural gas in energy consumption by upto four times, which will substantially increase the import dependence on crude oil  and natural gas. Given the  already heavy import dependence on crude oil and natural gas and stagnant production scenario in India, one wonders as to whether this would be an appropriate energy policy.

Plans to boost coal production :

Even as the Prime Minister is speaking about increasing the  petroleum  refining capacity ( which mean more crude oil consumption and import ) and increasing share of natural gas ( which means increasing import of natural gas),  repeated announcements  by the central ministers that the production of coal  would be substantially increased , knowing well that greater coal  consumption would mean greater emission of   carbon dioxide , sulphur dioxide  and nitrous oxide that would cause global warming , create doubt  as to whether the energy policy approach   of Government of India is appropriate.

Renewable energy initiative :

Of course, India is significantly and laudably increasing the production of renewable energy and  may fulfill the promise made  by the Prime Minister during  the Paris Climate Conference  to increase renewable energy capacity to 175 GW.  But, such measures   like increasing the consumption of crude oil, natural gas and coal would undo the  positive impact of developing renewable energy  at  a great pace  to reduce emissions.  Use of crude oil and coal result in harmful emissions and the  use of natural gas would increase the fugitive emission of methane gas. As it is known,  emission of methane gas is environmentally even more  hazardous than the emission of carbon dioxide, sulphur dioxide and nitrous oxide.

Promotion of ethanol blending with petrol and electric vehicles :

A few significant steps have been  initiated  by  the Government of India in energy management such as blending of ethanol with petrol, promotion of electric vehicles etc. Even here, there are many problems.

 Most ethanol produced in India today goes for human consumption which is increasing at  an alarmingly disturbing level. Due to non availability of ethanol for blending, the target for blending ethanol with petrol have been missed several times in the past. The target of   blending 20%  ethanol with petrol is unlikely to be met in the near future.

Hurdles facing electric vehicle project :

The promotion of electric vehicle schemes  is facing several hurdles, which make it doubtful as to what extent   the targets can be achieved in India.

Electric vehicles require charging of power at periodic intervals and it would be counterproductive to use power produced from emission causing coal based thermal power plants for charging the battery.  Renewable energy  is not available and will not be available at the required  scale for supplying power to the battery in electric vehicles.

The important component of electric vehicles is lithium ion battery cells , whose production at present in India is at negligible level.  If 2% of the existing automobile units  were to be replaced by electric vehicles by 2025-26,  then  India would need lithium ion battery cell capacity of around 27 GWH.  There is no feasibility of domestically producing lithium ion battery cells  to this level by 2025-26, considering the present pace of building capacity for lithium ion battery cells in India .  Therefore, India will become heavily import dependent for the  requirement of lithium ion battery cells which has to come from China , as China has huge capacity for making lithium ion battery cells  more than any other country in the world.

Further, for production of lithium ion cells, several speciality chemicals   and components are required , apart from minerals such as lithium , cobalt and nickel.  India has no deposits of cobalt, nickel and lithium and only some preliminary  understanding has been reached with some overseas countries with regard to sourcing supply of nickel and lithium.  In the case of cobalt , there is  a worldwide shortage and more than 70% of the global requirement of cobalt is supplied from Democratic Republic of Congo .  China has already firmly tied up  a arge share of it’s requirement of cobalt from  the leading cobalt mining company in Congo. 

Tibet region in China has large deposits of lithium , whereas India has no lithium deposits.

Apart from these, several speciality chemicals and components for use in the production of lithium ion battery cells such  as cathode actives, anode actives , electrolyte   and separators are required  for lithium ion battery cell production . There is no production in India of these speciality chemicals and components  at present.

If India were to produce  a large number of electric vehicles, lithium ion  battery cells are required  in large  numbers  . No projects have been announced for the production of speciality  chemicals   and components  required for production of lithium ion  battery cells in India  so far.

With regard to electric vehicles,   is India building castles without firming up the foundation ?   Is India  putting the cart before the horse ?

Feasible suggestions from experts :

Some feasible alternate options to overcome the impending energy crisis in India , without  excessive dependence on crude oil and natural gas import , have been   suggested  by  experts and  one is not sure  as to  whether the voice of these experts have been adequately heard by the policy planners in Delhi . 

The Government of India has taken some steps to set up a project for methanol from coal,  ( which is presently produced in India from natural gas and present import of methanol is around 2 million tonne per annum and the import is steadily increasing from year to year )  with the object of using methanol as fuel. This project proposal  is in the preliminary  stage now and even a pre feasibility report is yet to be prepared convincingly.   There are problems  in producing methanol from high ash Indian coal at  a competitive  cost of production.

Methanol can be the feedstock  for the production of several petro chemicals such as ethylene , propylene, which are presently produced from natural gas and crude oil. Experts have suggested that India should put up methanol plant abroad in countries where natural gas is available at very low price in joint venture and then bring this methanol to India  to produce several petrochemicals such as ethylene, propylene and derivative products, which will significantly boost the industrial growth and reduce dependence on  import of several petrochemicals.

Experts have also suggested production of algae biofuel from  algae crop , which contains around 25 to 30% oil.  Algae   crop requires only sunshine and carbon dioxide as inputs   and need water which can be even unclean  water.  Many algae based biofuel projects are now successfully operating abroad. India is a tropical country particularly well  suited  to produce algae crop and biofuel from it , which will help both the agricultural sector as well as industrial sector  and pave way for reducing import dependence on crude oil and natural gas. Has  the Government of India paid adequate attention to this opportunity ?

Need to review energy policy :

Taking the overall look at the energy policy in India, it appears that  the Government of India has to reexamine it’s energy policy with great sense of urgency.

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