Climate Change & Natural Gas Sector

ECONOMY/ GOVERNANCE

Topic:

• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• GS-3: Indian Economy and issues relating to planning, mobilization, of resources.

Climate Change & Natural Gas Sector

Context: Policy wonks, 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. 

Scholars have argued that rather than focus only on the endgame of decarbonisation, India must first “green” its fossil fuel energy basket via Natural Gas i.e. think of taking a short first step in the right direction than strive for a longer but unsteady stride.

Why increasing the Natural Gas share is significant?

• The increase will not generate the headwinds (challenges) that the alternative of shutting down coal mines might
• It will not require industries to invest heavily in retrofitting their systems 
• It will allow the government to meet its objective of providing secure and affordable energy to everyone without degrading the environment. 
• Furthermore, it can be achieved through executive ordinance and without the need for legislative approval

What Steps are needed to make natural gas the “next stop” in India’s energy journey?

1. Authorities must prioritise natural gas.

• Government must recognise its potential & versatility. 
• Natural Gas is Competitive fuel; abundantly available in Asian/ME subcontinent; multiple uses and  “greenest” of all fossil fuels.

2. Authorities must correct the current disincentivising policy distortions-  

• Pricing of Natural Gas is complex. There are multiple price formulae- one for gas produced domestically by PSUs, one for gas produced by private companies, one for production from deep waters etc
• Taxation is also comparably regressive – Cascading structure – Customers located at a distance from the source of gas pay a higher price than those closer to the source.

3. 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 dominance allows GAIL to misuse its gas pipelines network to deny its competitors access to the market. 
• Most countries have tackled this conflict-of-interest situation by separating the upstream (production/import) and downstream (marketing) interests from transportation.

4. Institutional mechanism should be created to enable better coordination between the central & state governments

• Centre-state differences have delayed the construction of import facilities and the creation of gas markets. 

• A way has to be found to take these issues off the political table and brought within the frame of an integrated decision-making process.

Connecting the dots:

• Paris Climate Deal