Natural Gas, Indian Economy, Effects of Climate Change on Economy

Natural gas is one of the major steps and the cheap alternative to oil for transition towards the cleaner solutions and fuels. India’s natural gas intake got reduced to 6% in FY23 concerning FY22. This is a matter of concern for India’s vision of a gas-based economy. A gas-based economy means the dominance of natural gas in India’s total energy mix. India aims to enhance the share of gas in the energy mix from 6 per cent to 15 per cent in 2030.

Natural Gas

Natural Gas

Natural Gas is an odourless, gaseous mixture of light hydrocarbons. It is mainly made up of methane (CH4) followed by ethane, propane, butanes, and pentanes. Hydrogen Sulfide, Helium, Carbon dioxide and nitrogen are the other components that are found in natural gas. It is non-corrosive and non-toxic. Also, it has a lower inflammability range.

Types of natural gas are as follows:

  1. Conventional Natural Gas – It is found in cracks and spaces between the overlying rock.
  2. Unconventional Natural Gas – It occurs in tiny pores of the rock with the formation of shale, sandstone and other types of sedimentary rocks. It is also called shale gas.
  3. Associated Natural Gas – It occurs with the deposits of crude oil.
  4. Coalbed Methane – It is found in the coalbeds.

Merits of Natural Gas

  1. CO2 release per unit of energy produced by gas is 40% lower than coal and 20% lower than crude oil.
    It also is better in terms of the release of the main air pollutants, including fine particulate matter (PM2.5), sulfur oxides, mainly sulfur dioxide (SO2), and nitrogen oxides (NOX).
  2. Natural gas power plants are better at energy efficiency than coal plants. Also, Natural gas production is much less expensive than other fossil fuels like coal or oil because of its cheaper price in the international market and its availability in India.
  3. If we cool the natural gas to −161.5 °C, then it is translated into liquid natural gas(LNG), It occupies only 1/600th of its total volume. Thus, making it gas easier to store and transport long distances.
  4. Natural Gas is one of the most versatile sources of energy thus making it more efficient to fulfill the energy requirements. It powers a range of items like electrical grids, heating systems, home cooking appliances, and some vehicles.
  5. solar and wind power are not perpetual or 247 sources of energy. Their intake depends upon the photoperiod and the speed of wind causing instability in the power grid. Natural gas generators could be used as an extensive backup power alternative as they are a clean source of power and have a very short start-up time.
  6. 247 electricity is still a major concern in India. Leaving aside the metro cities, 247 electricity is still a dream for many places. Natural gas can bridge this give and help government deliver its promises. Also, piped natural gas fulfils the requirements of cooking, heating, and cooling needs of both commercial and residential entities.

Concerns regarding the Natural Gas

  1. India has been consistent in its stand for the share of natural gas in the total energy mix. There have been a lot of variations concerning the share of natural gas in India’s energy mix. The targets were moved from 20% by 2025 to 11% by 2032 and then to 15% by 2030. Thus, a clear and precise strategy is required by the GOI for the share of natural gas in the energy mix.
  2. 50% per cent of total natural gas demand is fulfilled through the import of Liquefied Natural Gas (LNG) from the exporting countries. This would lead to higher import bills and a deficit in the current account combined with geopolitical dependence.
  3. The production of natural lacks a competitive edge in the energy market of India. For example, the GST on coal is 5% whereas Gas is outside the purview of the GST and taxed at higher rates. This makes natural gas less market-competitive.
  4. Though Natural Gas produces less GHG emission than crude oil it is still an emitter. Thus, it is not a viable long-term asset for the decarbonisation strategy. Investment in the gas infrastructure might become obsolete after some time causing huge losses.
  5. The infrastructure of gas is vital for the transport and affordability of natural gas. However, India is still lagging in infrastructure for natural gas distribution, including pipelines and storage facilities.

Solutions

  1. Kirit Parekh Panel was appointed by the GOI to rationalise the pricing of the hydrocarbons in India. Its recommendations included free and market-determined pricing for natural gas extracted from legacy fields and the inclusion of natural gas in the GST regime. The recommendations of this panel must be included while formulating the Gas Policies in India.
  2. The use of natural gas must be introduced across various sectors, including hard-to-abate sectors like power generation, industry, transportation, and residential sectors through policy incentives, such as tax benefits, subsidies, and targeted schemes. This would lead to the adoption of gas as fuel and a reduction in carbon footprint consequently.
  3. The economies of scale are vital for the reduction in the cost of the product and the increased efficiency of the delivery of the same. Hence, the central, state, and private sectors should be in collaboration to enhance the use of gas-based plants.
  4. India is currently diversifying its defence and oil import sources to ensure a smooth supply chain network. Similarly, India must try to diversify import sources of natural gas while enlargening the bilateral energy partnerships.
  5. India should aim to pump up domestic production not only for India but also for the world because the peak of natural gas is going to be next few years only. After a few decades, natural gas might become obsolete. This could be only done through rampant and rigorous investment in research and Development of Natural Gas.
  6. Initiatives like one nation one grid must be encouraged so that the entire country can produce and distribute natural gas through a single grid system.

Also Read –

Indian Space Policy 2023-

India-US Summit-

Liberalised Remittances Scheme (LRS)

United Nations – Reforms and UNSC

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