Climate change and India's energy choices

Prime Minister Modi's announcement at Glasgow bring India's pledges for containing climate change in alignment with the international mainstream.

Barack Obama’s advice to the climate activists at Glasgow Conference to "stay angry" caught the mood of the young around the world. The issue draws a different response from the governments. They are agreed on the need for action to address the situation earlier described as a doomsday scenario by British PM Boris Johnson. However, they weigh it against the need for energy security for their countries. The Biden administration has issued calls to OPEC to step up oil production. Germany’s Angela Merkel decided to go ahead with the decision to import more gas from Russia through Nordstrom 2 despite the reservations of the US and protests by Ukraine. COP 26 is taking place against the background of twin crises that have affected electricity generation in Europe and Asia. Slowing down of wind speeds in the North Sea coupled with an upward trend in gas prices resulted in a sharp increase in electricity prices in Europe. In Asia, the increase in coal prices has impacted power generation first in China, and then in India.  

Prime Minister Narendra Modi announced that India will attain the Net Zero Emission target by 2070. This has brought the Indian position in alignment with the international mainstream, including that of a large number of developing countries. India has opted for a longer transition period. This is justified because we are at a low point in our development trajectory. India’s power consumption is 1/3rd of the world average. India will increase the non-fossil fuel capacity for electricity generation to 500 GW by 2030. India, China, US and Australia have refrained from joining the pledge to phase out coal.

The European model is based upon a preference for clean energy. Wind accounted for 24 % and 23.7 % in the electricity generation in UK and Germany respectively in 2020. Slowing down of wind speed and consequent fall in a renewable generation was the immediate trigger for rise in electricity prices. According to a report in the London Guardian, the average market price reached Pound 107.50 per MWhr in September beating the previous record of Pound 96 per MWhr before the 2008 global financial crisis. The average wholesale electricity prices in Germany reached Euro 128.3 per MWh. This represented a 55 percent increase over the previous month. 

The electricity crisis in Europe has called into question the assumptions underlying a suggestion by IEA to reach Net Zero Emission in 2050 with 90 percent of the electricity provided by renewables. The IEA Executive Director has denied the suggestion and blamed it on an increase in gas prices. The gas prices are indeed a factor. Gas accounts for 35.7 % and 16.1 % respectively of power generation in UK and Germany. But the effect is compounded by the fact that renewables need to be backed by a ‘balancing’ power when the sun is not shining and the wind is not blowing. This is provided by gas in Europe. Once the wind power generation dropped, more gas was needed. This coincided with a tight supply situation and an upward trend in gas prices. Going beyond the immediate context, the intermittency of renewables points to an enduring problem. The generating assets providing balancing power have to be kept idle or operated at sub-optimal capacity when renewables are available. This redundancy pushes up the cost. It is no coincidence that Germany has the highest tariff in the world.

An MIT study in 2018 pointed out that without nuclear as part of the energy mix, ‘the cost of achieving deep decarbonization targets increases significantly.’ This has significance for India. Nuclear power will remain a major part of the energy mix of the US (20 %), EU (20 %), and China (10%) in the future. Recently, Japan’s new Prime Minister Fumio Kishida stated:  ‘It’s crucial that we re-start nuclear power plants. Beijing plans to bring 150 new nuclear reactors online over the next 15 years. In India’s case, nuclear power accounts for less than 2 % of the generation currently. 

Nuclear tariff of Rs. 3.47 per unit in 2019 is already lower than the tariff of more than Rs 4 per unit for solar with a storage solution in contracts awarded to Renew Power and Greenco. India needs to enhance the share of nuclear in the generation mix to achieve lower emissions and ensure energy security. Bill Gates in his book 'How To Avert A Climate Disaster' says that nuclear fission is ‘the only carbon-free energy source that can reliably deliver power day and night..’ This will need government intervention to provide 'must-run' status and benefits to renewables and to nuclear power as well.. 

(The author is a former ambassador and co-ordinator of VIF Task Force on India’s Energy transition. The views expressed are personal.)