India’s Energy Push Resumes — Issue #42
A bizarre situation! The government needs to provide more power for people to stay cool in the summer, which may increase the country's use of coal—which is causing hotter weather in the first place
News of the week
Reviewing news headlines from last week, one point stood out — the country is embarking on a slew of new energy projects. A new nuclear plant is slated to come up in Haryana. The tender for a 4,000 MW offshore wind energy plant, off the coast of Tamil Nadu, will be published soon. The Ministry of Power has issued fresh guidelines for pumped hydro energy storage.
These announcements have to be seen in conjunction with another set of developments last week. With India, like much of the world, heating up faster this year than usual, power demand will rise steeply. And so, the country has invoked emergency powers, telling all power plants, regardless of their coal source or price, to run at maximum capacity between 16 March and 15 June. This fits into the mid-month announcement about the creation of a new power-selling segment (High Price Day Ahead Market) where expensive electricity — from imported coal/gas and energy storage systems — can be sold for as much as Rs. 50 per unit. At this time, the cost of power is capped at Rs. 12/unit on exchanges.
The announcement elicits a mixed reaction. On one hand, the government has to boost power supply before the summer so that people can keep themselves cool. On the other, the country’s coal imports and overall consumption are set to soar again — which has to qualify as an oddly counter-logical response to heatwaves worsened by global warming.
It leaves one wondering about the appropriate level of optimism. A year ago, when Russia invaded Ukraine, Europe got most of its electricity from oil and gas. A year later, it has tided over that crisis by buying up global natural gas supplies in the short-term – and by embarking on a large wind and solar push for the long-term. By the end of 2022, as Vox reported, wind and solar combined overtook natural gas in electricity generation.
“The latest data on Europe’s renewable transition tells a remarkably upbeat story about the hard things countries can accomplish on climate change with enough political will,” it wrote.
It isn’t that simple, of course. More affluent, Europe could spend on both gas supplies and renewables. In contrast, much of the third world, as Mia Amor Mottley said recently, is still struggling to meet its people’s basic requirements. Colonialism is one part of the reason. Another is the cold war. Not only did it prop up puppet regimes in much of the world, it also took a blowtorch to the idealistic third world movement.
Turning to India, we are now a bigger economy than most countries in Europe. Our capex on renewables has overtaken similar spends on fossil fuels. And yet, a bunch of factors, including the sheer weight of coal-based installed capacity, still keep us tied to fossil fuels. One sees too, however, the accumulation of costs — wheat yields might fall this year, public money being blown paying for expensive power — and pines for a faster energy transition.
There is a rising brusqueness to the country’s policy-making. It seems to choose one policy objective and barrel ahead discounting all other costs. We see that in the hills where, convinced about the need for more trains, roads and dams, the government has dismissed environmental concerns. This disregard for countervailing opinions is exacting local costs now. After Joshimath, a clutch of other settlements are reporting land subsidence. The latest is Ramban. Similar complaints have come from the adjacent Doda district in Jammu and Ganderbal in Kashmir. The reasons are yet to be established. All three districts, however, are seeing infrastructure pushes. Doda, as The Wire reported, is seeing “unabated dynamite blasts and hill cutting for building roads and power projects”.
With each such decision, however, the country’s environmental resilience weakens.
And then, there is the Adani Group. A week after it called off plans to acquire DB Power – the company’s shares spiked after the announcement – the group said it will review its Rs 10,000 crore capex plan for Adani Green and that it won’t bid for a stake in state-owned power trading corporation. It also offered to renegotiate the Godda power plant PPA. As we ready this week's newsletter, news is streaming in that the investment arm of global financial behemoth JP Morgan Chase and Co. has exited all Adani positions in its ESG portfolios. The search for fresh capital could force Adani to mortgage its North Queensland Export Terminal in Australia (which has gained infamy for its connection to the Carmicheal coal mine) to raise debt worth USD 400 million.
On the whole, it was another bad week for the group. Larry Summers likened the Adani crisis to that of Enron. Its bonds have inched up but are still expensive for the group. Its shares keep falling. Adani Enterprises started last week at 1629 and ended it at 1312.
“The fear that Adani Group companies are facing an acid test from global index providers, and most likely will be pushed out of some influential indices is the primary reason for the mad rush to exit from the shares in India,” reported Hindu Businessline.
Most global investors, it said, are watching what MSCI (Morgan Stanley Capital International), world’s largest index company with nearly $14 trillion linked to its indices, will do with the Adani Group. In the meantime, other investors are on tenterhooks.
Given this background, NSE’s decision to add Adani Group companies to 14 of its indices smells like an attempt to help the group – by putting investors money at risk. Such a move will result in a part of the Rs. 41 lakh crore invested in index-linked mutual funds flowing into Adani companies. If the group’s shares continue falling, investors will lose money – just like subscribers of LIC and Australian retirees are.
News also came that the group has been improperly editing its pages on wikipedia. Its misinformation campaign, of course, is not limited to Wikipedia alone. An online and offline campaign has been kicked off by supporters of the group as well. The only good news for the group last week? The wind power agreement Adani Green signed with Sri Lanka.
Finally. Remember the Lithium reserves India found in Jammu? Even though these are still at a preliminary exploration stage, the government is firming up plans to auction these by June.
Adani Reads Of The Week
Here is Wikipedia on Adani’s mis-editing.
The BBC asks if Gautam Adani’s wealth woes will hit India’s green energy dreams.
Andy Mukherjee uses Adani to explore India’s problems funding infrastructure projects.
Climate Long-Reads
As automakers move from internal combustion engines to electric, they need fewer people to make these vehicles. This has been known. The costs, however, are being felt now. From the FT, this report. “Though built in England, the petrol engine of a Mini is a map of Europe: engineered in Germany, containing an alternator from France, an ignition coil from Italy and a coolant pump from Austria. Each step in this process involves a person, if not several. Yet not one of them will be required in as little as seven years when the brand goes fully electric. The same is true of those who supply engines for Volvo Cars, Mercedes-Benz, Jaguar, Ford or any of the brands that have set end dates for engine-car sales in Europe. That electric vehicles take fewer people to make and design is well documented. What had remained abstract is the effect on the region’s workforce when the axe begins to swing. Ford this month announced plans to cut 40 per cent of its entire European engineering team.”
Also see this dispatch from Indonesia: Workers Are Dying in the EV Industry’s ‘Tainted’ City.The Wire critiques India’s plan to use sugar as fuel.
In western Rajasthan, the pastoralist way of life is under severe threat(Scroll.in).
The chequered history of a ‘dangerous dal’ eaten by the poor across India (Scroll.in)
Who is to Blame? The Climate Crisis and Amitav Ghosh. Author Shashank Kela writes for the Caravan. 6. How Big Oil Hijacked and Weaponised the Individual Carbon Calculator(The Wire)7. “US curbs on China’s access to advanced technology are killing its viability as a manufacturing base for exports, according to the head of Japan’s Kyocera, as one of the world’s largest makers of chip components shifts its production elsewhere and invests heavily in facilities at home,” reports the FT. 8. Climate migrants escaping to Dhaka find that their new home is also sinking(Scroll.in)9. ‘Burn Carbon, Get Taxed. Sequester Carbon, Get Paid.’ Sci-fi author Kim Stanley Robinson takes on the climate challenge (Noema).
Debt and Power in Pakistan. From the Phenomenal World newsletter.
Russia’s Grip on Nuclear-Power Trade Is Only Getting Stronger(Bloomberg).12. How India allowed RP-Sanjiv Goenka firms to beat coal auctions (Reporters Collective writes for Al Jazeera)
Video of the week
A New Trade War? Climate Change and Trade Protectionism
Book of the week
This week’s book is one that we are yet to read: Volt Rush: The Winners and Losers in the Race to Go Green, by Harry Sanderson.
We have discussed a couple of books on this ongoing moment – as countries/companies try to dominate the industries of the future – in the past. There was Chris Miller’s Chip War on microchip technology and manufacturing, for instance. Volt Rush is the next book to read in that direction. Here is a review.