Fossil fuels: Energy security is balancing the green thrust, fossil fuels | Whuff News

With the German manufacturing giant facing a recession, the cause is not far off. The long-term gas supply agreement from Russia has become a victim of geopolitics. Energy availability has tightened, forcing prices up and therefore absorbing competition from production.

This weakness is the result of the country’s twenty-year-long policy on ‘green’ energy; reduce dependence on coal, lignite and nuclear while increasing funding for wind and solar, and more supplies of cheap Russian gas. The lack of diversity in other commodities such as LNG has added to the problem.

This template, to varying degrees, holds for many European countries. The US, on the other hand, has been largely saved by the shale revolution, because coal now produces less than a quarter of its electricity, compared to a decade and a half ago, when it was close to half.

How does India’s energy sector stack up against this global energy boom? While it doesn’t have a shale-like magic rabbit to pull out of its hat, the country’s energy policy framework has served its citizens well. The green trust has been promoted but not at the expense of the practicality of the time-tested formula – robust grids that draw power from cheap sources such as hydel turbines and pit-head-based thermal plants. A nuclear power system is also on the way.

A key factor in this approach has been the acceleration of the coal sector’s growth in recent years. If the 204 coal mines canceled by the Supreme Court had been operating without interruption, India would have achieved energy (mainly electricity) security earlier. However, several reforms adopted by the coal sector after the blackout have kept the lights on in India and not only support the government’s 100% electrification agenda but also provide momentum to achieve a coal-fired surplus for the power sector by FY24.

Some of the measures that have done this include the granting of permission to captive mines to sell residual coal, the introduction of commercial mining, facilitating the entry of small businesses into coal auction rounds and investor-friendly bidding conditions.

These measures received a ‘thumbs up’ from businessmen. For example, the five rounds of auctions since 2020 have seen the private sector take 8 to 10 blocks each time. High global coal prices have provided the necessary impetus to accelerate production. As a result, from 90 mt of coal in FY22, the owners of the occupied blocks are likely to produce 130 mt this year.

CIL has also shown good performance in accepting reforms and engaging with the private sector and aided by the ease of supply and mining developer and user contracts, production is expected to increase from 622 mt last year to 700 mt this year.

Overall, the strong increase in coal availability helped the nation register a near 12.8% growth in thermal power supply in the first half of this year while curbing imports of expensive coal. With global coal prices recording a three-fold increase in the past two years, India has averted a major energy challenge that could have caused economic disruption.

This policy objective also needs to be seen in the larger context of the country’s pride in being a manufacturing hub. The 70s and 80s saw public sector giants set up factories, while the reforms of the 90s led to the emergence of the private sector as a major player in the industry. The renewable energy push requires cheap, reliable electricity that can be provided by domestic coal.

The home consumer will be able to afford renewables that last, which will become attractive when cheap storage batteries hit the electric highways.

That said, the challenges are many. The first is to deal with ‘hard-to-extract’ steelmaking and aluminum smelting. Second, solar modules are not cheap and some Chinese have a near monopoly on the supply of polysilicon, which is important.

In short, we are now seeing a measured power change.

Part of it lies in realizing that coal markets are not about pumping more carbon into the atmosphere at any price. The introduction of the carbon credit market will help to reduce inefficiencies in energy consumption in large enterprises, just as renewable purchase credits have gone, leading to better policy reforms to provide incentives for renewables on the one hand, and demand-driven investment on the other. coal-fired power plants on the other. Furthermore, carbon sequestration, carbon liquefaction tech can emerge from financial markets supported by global clean energy initiatives.

A power shift is inevitable. But the approach so far by many countries in achieving carbon neutrality has been one-size-fits-all. And, it has failed – for example, banking only on supporting renewables on the one hand and fossil fuels and nuclear on the other.

India is fairly consistent in its use of coal which commands a share of more than 70% in electricity generation and makes up more than half of the primary energy supply mix.

Recent geopolitical tensions have highlighted that the accepted policy goals of energy security – availability, affordability, and sustainability – are in order, and availability will now come first. And there seems to be a consensus on this between the developed and the developing world.

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