India – Gas Policy Brief

India faces an enormous challenge to transition to a low carbon energy future. The world’s second most populous country and third largest economy is still dependent on fossil fuels for more than 90% of its primary energy needs. Energy demand is projected to triple between 2012 and 2040.  The steep growth curve reflects a continued rise in energy needs per capita as wealth grows with development. Currently, India’s per capita energy needs are less than one third of the global average.

The country has the world’s fourth largest reserves of coal which continues to dominate the country’s primary energy mix (56%), mainly used for power generation. Oil provides 30%, which is mostly imported and used principally for transport and industry. Natural gas at 6% is primarily used for power generation and by industry. Half the gas volumes come from rapidly growing imports of LNG and the rest from domestic production. Biomass is used for residential heating and cooking in villages.

The country stepped up its climate ambitions at COP26 when Prime Minister Narendra Modi announced a Five Point Action Plan that went beyond the current National Energy Plan (NEP) which will require revision with further policy reform and structural change. He announced India will achieve net zero emissions by 2070 and set four goals to be met by 2030:

  • Increase its non-fossil capacity to 500 GW. This is a 50 GW increase from the target of 450 GW by 2030 in the
  • Half its energy requirements will be met by renewable energy.[1] In the current NEP it is estimated 13% of primary energy demand will come from renewables by 2040 despite the country being one of the world’s fasted adopters of renewables.
  • Cut another 1 billion tonnes of carbon emissions from the current total projected emissions by 2030.
  • Cut carbon intensity to less than 45% of 2005. At the time, commitments under the Paris Agreement were for 33-35% reduction over the same period.

The transition to a lower carbon future will involve building a gas-based economy, with natural gas playing a critical role in powering industry and supplying gas to 70% of India’s homes, while increasing the share of renewable energy and non-fossil energy (nuclear) which in turn will reduce dependence on imports.

Under the current NEP, the government aimed to increase the share of natural gas in the country’s energy mix to 15% by 2030. Renewable energy would supply 14-18% of primary energy demand by 2040 compared to 4.65% in 2020. These targets will need to be revised following Modi’s commitments.

The National Energy Policy announced in 2017 is regarded as thorough, though critics maintain it does not adequately acknowledge implementation challenges and other risk and has overly optimistic objectives without a clear roadmap for delivery.

The government is prioritising natural gas first for the city gas sector, followed by the fertiliser sector, power generation and other sectors.

India has set an ambitious target delivering 175 GW of renewable energy capacity by 2022, as part of the Paris Agreement, and 450GW by 2030. This includes 100 GW of solar capacity and 60 GW of wind power.

[1] There is a lack of clarity on whether energy refers to only electricity or primary energy mix. This confusion will be clarified once India officially submits its next update to its Nationally Determined Contributions. If it only means electricity, then this target is achievable, according to the analysis by the Delhi based non-profit, Centre for Science and Environment.