LPG subsidies, coal imports, and 'Bicycling with Butterflies' — Issue #7
The Big Picture
At two entirely different scales – as households; as a nation – India’s energy consumption is regressing.
As Bloomberg reported this week, as the country cuts LPG subsidies, a clutch of households are reverting to earthen stoves, wood and cow dung.
The newswire mentioned Laxmi Kumar, a home-maker in rural Uttar Pradesh. During last year’s Covid-19 lockdown, her husband lost his job, making a cooking cylinder unaffordable without a government subsidy. Another report last week, this time in the Economic Times, reported a similar trend from Nashik, Maharashtra. As many as 59% of Ujjwala users in the city have not bought LPG refills for eight months now.
The reasons are well-known. India’s economy has been hurt by the body blows of demonetisation, a botched rollout of GST, and the two covid lockdowns. Economic distress runs wide. As many as 79% of households in a survey by the Right To Food campaign reported food insecurity.
Now, as gas prices rise and the fiscal deficit widens, India has slashed its LPG subsidy. “Provisions for the LPG cooking fuel subsidies were halved in the budget for the fiscal year ending March 2022 to Rs 12,480 crore from Rs 25,500 crore a year earlier,” Bloomberg wrote.
As they regress in energy choice, India’s households have company. India’s policy-makers are moving in sync. A study this week by the International Institute of Sustainable Development and the Council on Energy, Environment and Water reported this week that the country’s renewable energy subsidies have fallen by 60% since 2017. Subsidies for coal have fallen as well in this period – but only by 17%.
As BloombergQuint reported, “Subsidies for renewable energy and electric vehicles remain nine times lesser than those given out for fossil fuels.
” It’s ironic. The country has ambitious RE targets for 2030 – but is directing most subsidies toward carbon-based fuels. The news website wrote that there is a large gap, the news website wrote, “between the current trend of government support and what is required for the country to meet its 2030 targets of installing 500 GW of renewable energy.”
We can see some of these results already. The cost of large solar projects is already rising.
And yet, given the conflict in Ukraine and the heatwave in India, the country is doubling down further. India’s oilcos are allocating more funds for exploration and acquiring overseas fields. The government is not just importing more coal; it is also opening new coal blocks.
No less than 58 new blocks are expected to start production this year.
PS: This newsletter completes seven weeks today. We started with ongoing chatter about coal shortage; moved on to India’s unnerving response to the heatwave (it doubled down on not just coal imports but also fresh coal mines); the ailing wind energy sector; what floods and landslides in the north-east told us about poor planning re: climate change; and why the government’s programme to replace diesel pumps with those running on solar power is going nowhere. One wonders what subsequent weeks will bring.
News of the Week
India's flip-flop over coal imports continued.
After weeks of telling gencos to import coal, the government changed gears and told Coal India to import 12 million tons of coal for utilities. It can now be safely said that the previous policy of replacing expensive imports with domestic coal – – which was yielding results-- is now in shambles.
In tandem, the power ministry said it will reduce power generation from at least 81 coal-fired utilities over the next four years – the country has 173 coal-fired projects. Instead of shuttering old, expensive powerplants, the ministry will operate them to "the technical minimum to accommodate cheaper renewable energy when it is available."
It makes one wonder about the outlook for the 58 new coal blocks starting production this year.
Coal Minister Prahlad Joshi, however, doesn't entertain such doubts. During a visit to Neyveli Lignite, he pegged India's coal requirement in 2040 at 1,500 million tons – it stands around 1,000 million tons right now – and said the country will produce 3000 BUs of power at the time.
These numbers are dicey. As pointed out on Twitter, India consumed 892 million tons to produce 2,518 BUs of power. Will the country need 600 million tons to produce 500 BUs of power?
That is not all. India has also committed to getting half its energy from renewables by 2030. And so, one wonders about the economic growth rate needed for the country to soak up all this coal. Another possibility, of course, is that the power and coal ministries are coordinating poorly. As Carbon Copy said in 2020: “Each energy ministry is bullish on its domain. The Ministry of Coal pushes coal. The one for Petroleum and Natural Gas pushes oil and gas.”
Reliance made headlines this week. As WSJ reported this week, shippers and refiners are bypassing Europe’s sanctions on Russian crude – by obscuring the origins of their cargo – and selling even to clients in the US. A part of these cargoes were re-routed through Indian refineries, said the paper.
“The country’s imports have skyrocketed to 800,000 barrels a day since the war began, compared with 30,000 barrels a day previously, according to commodity-markets data company Kpler,” said the paper. “A refinery owned by Indian energy giant Reliance Industries Ltd. bought seven times more Russian crude in May, compared with prewar levels, making up a fifth of its total intake, according to Kpler.”
Thereafter, said the WSJ, “Reliance chartered an oil tanker to carry a cargo of alkylate, a gasoline component, departing from the nearby Sikka port on April 21 without a planned destination. Three days later, it updated its records with a U.S. port and sailed over, discharging its cargo on May 22 in New York.”
Back home in India, the government’s plan to spin state oilcos’ pipelines into infrastructure investment trusts (InvITs) -- and sell stakes in those – has run into trouble. Oilcos have opposed the idea. In response, as Economic Times reported, “The government is debating whether the oil and gas pipelines of all companies can be managed by a third party or shared (between them).”
In other news. The Adani Group continued to grow at a quicksilver pace. Essar Power sold a transmission line to Adani Transmission. With the commissioning of its wind:solar hybrid plant in Jaisalmer, the group’s total renewable portfolio now stands at 20.4 GW. The company is on track to “meet its vision of 45 GW capacity by 2030”.
In tandem, the company bagged a Rs 6,000 crore coal import tender from NTPC.
From CarbonCopy
“To manage the risk perception of a developing economy and an under-developed financial market, India desperately needs a document that would standardise the definition of green and map the segment in its economy where green investments are possible.”
India’s finance ministry is working to develop a green taxonomy. This week, CarbonCopy takes a closer look at the experience of ‘green taxonomies’ elsewhere in the world.
Climate Watch
How the Sundarbans missed an opportunity in energy transition
Climate Long Reads
To start with, two reports about climate-induced ecological change.
The first on falling NTFP collections for forest dwellers of central India, as climate change affects the great central India forests.
Another tale of ecological scarcity pushing a fishing community into desperate measures:
‘We were all wrong’: how Germany got hooked on Russian energy.
Band-Aid Solutions Won't Staunch India's Power Crisis: On the heatwave and India’s responses thereafter.
Book of the Week
We just had World Bicycle Day (3 June). And a few weeks before that, Earth Day (22 April). And so, this week’s book recommendation will pivot around cycling and ecology.
After retiring as director of the Global Climate Observing System in Geneva, David Goodrich pedalled 4,200 kilometres from Delaware to Oregon, trying to see how ordinary folks in the country perceive climate change. Another book in this vein is
Bicycling with Butterflies: my 10,201-mile journey following the Monarch migration
, by Sara Dykman
.
Dykman is the first person to cycle along with the Monarchs during their epic annual migration. This journey starts from Mexico before moving north all the way to Canada before heading back again for the winter.
The tale she tells is an increasingly familiar one – there is wonderment that delicate butterflies can unerringly travel such distances, and there is fear that we might lose something so precious. As the weather changes in Mexico, the Monarchs are setting out faster than usual. “In places north of Oklahoma, monarchs were arriving before much of the milkweed had emerged from winter dormancy,” she writes.
What you get is a tale of the challenges facing Monarchs – and an account of those fighting to preserve them.
Dykman writes about her journey here.