The Growth and Future of LNG in India & Government's approach

ROLE OF NATURAL GAS IN INDIA : In absolute terms, the 15% goal share of natural gas in the energy mix would imply a fivefold increase. This forecast is based on an underlying economy-driven increase in global energy consumption, which is expected to double by 2030. Any mainstream fuel would find a five-fold increase in around a dozen years difficult. Gas would have to replace alternatives in this scenario, in addition to the organic expansion that comes with an expanding economy.

In India, space-heating requirements are minimal. The electricity of water heating is tremendous. Because of two factors, industrial demand for natural gas has been low thus far. On the one hand, total industrial demand is low, while on the other hand, industries that use natural gas suffer access issues due to insufficient infrastructure. Although this industry has considerable development potential, it is insufficient to assist meet the 15% objective.

Gas for transportation is likewise subjected to two types of competition. Electric vehicles are becoming cost-competitive for smaller customers. CNG hasn't proved appealing to huge consumers, especially over long distances. This leaves LNG trucking or, in the future term, hydrogen as a viable option for mass intercity transportation. Scaling these, on the other hand, is a difficult task that needs massive infrastructure.

Electric vehicles (EVs), like CNG, are more appealing than liquid fuels because of their lower per-kilometer running costs. In reality, electric vehicles outperform CNG. Some states have created EV-specific power pricing. The operational cost of an EV can be many times lower than that of a CNG car, depending on the price of electricity. An EV's battery, on the other hand, still has a hefty upfront cost. Even CNG, however, requires a one-time expense for the gas infrastructure. The relevance of batteries in India's energy transformation was demonstrated in the previous section. Vehicles are more likely to drive battery technology worldwide since, in mobility, their netback value is generally contrasted to more expensive liquid fuels rather than coal or even natural gas used in the power industry (which is cheap in the US and parts of the world).

THE GROWTH AND FUTURE OF NATURAL GAS IN INDIA

India's total emissions per capita are currently half that of the rest of the world. They account for around 7% of world emissions. Let's assume India has a 10% share of world emissions by 2030 (which is highly doubtful), with no increase in global emissions. Assume that all of this gas is produced without the use of coal. The ten percent increase in gas's future share of energy at the expense of coal isn't entirely a carbon reduction. Even gas emits half the CO2 that coal does. As a result, we're talking about a shift in worldwide emissions of half of 10% (coal mix displacement) of 10% (global share), or a rough estimate of a 0.5 percent shift at most.

In theory, by 2030, India is unlikely to account for 10% of world emissions. Furthermore, some natural gas consumption may displace other energy sources, such as LPG (cooking) and petrol/diesel (transportation). When you consider the impossibility of natural gas accounting for 15% of India's future energy mix, it's easy to see how even increasing natural gas consumption might have a worldwide impact of just 0.1-0.2 percent for a country with barely a sixth of the world's population. While such a movement should not be overlooked, it is not the game-changer many had hoped for.

The National Hydrogen Mission was launched in Budget 2021, but the role of gas in coordinating it has yet to be determined. Given the massive gas infrastructure projects now ongoing, how much of this infrastructure can be repurposed for hydrogen delivery? At best, current technology allows for a hydrogen mix of about 20%. Can India invent a way to offer infrastructure a dual-purpose capability at a low cost? This wouldn't make sense for individual households or cooking, but it may make sense for large-scale customers.

Government’s Approach and Methodology

The 'Plan Document' was used as the major reference for demand projections from 2012-13 to 2029-30. The Plan Document's projections of potential demand for different consumer categories from 2012-13 to 2021-22 have been analyzed and, where necessary, refined (based on current and planned investment in the user segments) to project the most likely demand scenario until the end of the 13th five-year plan. With the use of assumptions generated from diverse industry sources, these improved forecasts were then utilized to project demand from 2022-23 through 2029-30. The natural gas demand forecast for the period 2012-13 to 2029-30 represents 'Realistic Demand,' which accounts for constraints posed by limiting factors such as delayed commissioning of end-use infrastructures such as power and fertilizer plants, a lack of policy directives in end-user segments, a slow pace of regulatory reforms in the natural gas sector as well as consumer segments, and unviable economics of end-use projects.

Shri Rameswar Teli, Minister of State for Petroleum and Natural Gas, said in a written response to a question in the Lok Sabha today that the government has set a target of increasing natural gas's participation in the energy mix to 15% by 2030, up from approximately 6.7 percent presently. The following initiatives have been done to meet the goal: -

i) Expansion of the National Gas Grid from its present 20,000 km to around 35,000 km.

ii) CGD network expansion -11th CGD round began on 17.09.2021. After the 11th city gas distribution (CGD) cycle is completed, the CGD network will cover 96 percent of India's population and 86 percent of its geographic area.

iii) Establishment of LNG terminals. Govt directed Gas companies to set up 100 LNG station by end of 2022.

iv) Domestic gas allocation to CNG (T) / PNG (D) under the no-cut category.

v) Allowing gas generated in high pressure/high-temperature locations, deep water, ultra-deepwater, and coal seams to be sold and priced freely.

vi) SATAT activities to promote Bio-CNG.