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Key Findings

In the wake of the Indian government’s strong commitments to increase the share of gas in the country’s energy mix, vital questions emerge about the fiscal risks of such a move, as well as the fossil fuel’s place in the scheme.

Prioritising new gas infrastructure over the infrastructure cost advantage of distributed clean solar and wind, particularly in rural areas, may lead to stranded asset risks for the country.

Increasing electricity use provides economic and environmental benefits alike while reducing India’s dependence on energy imports. Going electric, whether generated or renewable, leverages existing infrastructure and avoids locking in a second energy distribution network.

Executive Summary

The government of India has made strong commitments to increase the share of gas in the Indian energy mix from the current 6% to 15% by 2030, with a particular focus on increasing its share in the cooking and mobility sectors.

Investments have started to flow in to increase the availability of this largely imported fossil fuel. Infrastructure for importation, transportation and distribution is being rapidly rallied up.

An increase in domestic gas production is anticipated on the back of new gas discoveries in the country but the domestic price cap reduces the incentive for domestic producers to take on this risk.

The penetration of piped natural gas (PNG) and natural gas vehicles (NGVs) continues to be low but is expected to take a major leap by 2030 once the planned new gas infrastructure comes on board.

The main reason for the government to push gas aggressively is to meet India’s goal of lowering carbon emissions. Though India will need to make a net zero carbon emissions commitment in the longer term, the government for now is viewing gas as a bridging measure, despite it being a high emitting fossil fuel.

The recently published IPCC report warns that the 1.5 degrees Celsius average surface temperature would be breached by 2040 and is a wake-up call for immediate action. If the world is to limit global warming, building new gas infrastructure is a contrary development. That is, gas and LNG cannot be a transition fuel.

So why is the Indian government prioritising new gas infrastructure over the infrastructure cost advantage of distributed clean solar and wind, particularly in rural areas?

India definitely has unmet energy requirements but creating dual connections of gas and electricity can lead to environmental and capital loss for the country. Optimally using the available gas and investing in greening the electricity grid can reap greater long term results for India. India is already committed to achieve 450GW of renewable energy by 2030 and that should be top priority.

Purva Jain

Purva Jain is an energy analyst and guest contributor at IEEFA. She has more than eight years’ experience in the energy and development sectors. Her areas of policy interest include renewable energy, climate change, energy subsidies, electric vehicles and sustainable development.

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