DMPQ-Discuss the significance of natural gas in India’s road to mission clean energy.

Policy makers, climate negotiators, academicians, corporates and NGOs are currently fixated on the concept of “net zero carbon emissions” and the appropriate target year for achieving it. Supported by economic analysis and moral logic and drawing on the concept of “common but differentiated responsibility”, their arguments swirl around its meaning and whether the date should be 2050, 2060, sooner, or not at all. I am personally supportive of the nature and direction of this debate. The world does need a well-defined, timebound objective. “Net Zero” offers everyone a tangible metric against which to measure progress. My concern is that in the effort to secure a global consensus around this target, the discussants are losing sight of the immediate. They are not spending enough time and effort to lay out the stepping stones. They are forgetting the advice given by parents to impatient children. One step at a time but best take a short first step in the right direction than strive for a longer but unsteady stride.

To illustrate the granularity of the responses, here are four key policy suggestions.

  • The authorities must prioritise natural gas. They must recognise its versatility. It is a competitive fuel; it is abundantly available in and within the Asian/ME subcontinent; it has multiple uses and it is the “greenest” of all fossil fuels.
  • The authorities must correct the current disincentivising policy distortions. The pricing of natural gas is, for instance, a potpourri of complexity. There are multiple price formulae. One for gas produced from domestic fields by the public sector companies; one for gas produced by private companies; one for production from deep waters offshore under high temperature etc. The taxation system is also comparably regressive. It is a cascading structure so that the tax rates increase as the gas flows from one zone to another. This means that customers located at a distance from the source of gas pay a higher price than those closer to the source. The result is the dampening of demand. Also, gas is not under GST.
  • The authorities should revamp the structure of the industry. The Gas Authority of India Ltd (GAIL) is currently engaged in the production, transportation and marketing of gas. This allows GAIL to leverage its ownership of the bulk of the gas pipelines to deny its competitors access to the market.

 

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