06 Feb 2023: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: ECONOMY

1. India’s Just Energy Transition

Syllabus: Infrastructure-Energy

Mains: Pathway to India’s Clean Energy Transition

Context: The first G20 Energy Transition Working Group (ETWG) Meeting under India’s Presidency is taking place in Bengaluru. 

Introduction:

• The first G20 Energy Transition Working Group (ETWG) Meeting under India’s Presidency is taking place in Bengaluru. from Feb 5-7, 2023. 
• About 150 participants including G20 member countries, nine special invitee guest countries – Bangladesh, Egypt, Mauritius, Netherlands, Nigeria, Oman, Singapore, UAE and Spain are participating in the meeting.
• Leading international organisations such as The World Bank, Asian Development Bank, United Nations Development Program (UNDP), International Energy Agency (IEA), Clean Energy Ministerial (CEM), United Nations Environment Program (UNEP), International Solar Alliance (ISA) etc are also attending the Meeting. 
• The first ETWG meeting will focus on six priority areas. These include: (i) Energy transition through addressing technology gaps (ii) Low-cost financing for energy transition (iii) Energy security and diversified supply chains (iv) Energy efficiency, industrial low carbon transitions and responsible consumption, (v) Fuels for Future (3F) and (vi) Universal access to clean energy and just, affordable, and inclusive energy transition pathway. 
• The Union Ministry of Power is the nodal Ministry for ETWG and will lead the discussions and negotiations on focused priority areas.

Just Energy Transition Partnership (JET-P):

• JET-Ps are an emerging financing cooperation mechanism, which aims to help a selection of heavily coal-dependent emerging economies make a just energy transition. 
• The goal is to support these countries’ self-defined pathways as they move away from coal production and consumption while doing so in a way that addresses the social consequences involved, such as by ensuring training and alternative job creation for affected workers and new economic opportunities for affected communities.
• This has taken on particular significance following the insertion of the phrase ‘phase-down’ of coal in the Glasgow Pact.
• The first such JETP emerged from UNFCCC COP 26 in Glasgow, when South Africa was promised USD 8.5 billion in financing by France, Germany, the United Kingdom, the United States, and the European Union.
• The donor pool has since been expanded to include multilateral development banks, national development banks, and development finance agencies. 
• As they involve a relatively small group of actors, JETPs can potentially make much faster progress on the energy transition than what would be possible in the UN climate talks themselves, where large oil and gas-producing countries could veto agreements.

JET-P and India:

• After South Africa, Indonesia, and Vietnam, India is considered the next candidate for a JET-Partnership.
• India is working towards clean energy with ambitious targets like 500GW of non-fossil, including 450 GW renewable energy (RE) capacity addition and 43% Renewable Energy (RE) purchase obligation by 2030. 
• These targets are supported by various policies such as (Energy Conservation (Amendment) Act), missions (National Green Hydrogen Mission), fiscal incentives (production-linked incentives) and market mechanisms (upcoming national carbon market). 
• Initial JET-P negotiations for India are said to have stalled over whether and how India should consider coal “phase-down,” as well as how to operationalize India’s just transition.
• The Central Electricity Authority projects a near doubling of electricity demand by 2030 which requires adequate supply from a diverse mix of sources. 
• As India cannot afford to halt its development while decarbonising, it must develop a coherent domestic just energy transition (JET) strategy in order to negotiate a financing deal that addresses its unique set of socio-economic challenges. 
• India’s JET-P deal must consider a broader framework for financing and supporting an energy transition. 
• With India holding the G-20 presidency, it has an opportunity at hand to negotiate a deal for itself while also shaping international cooperation on just energy transitions.

Concerns with JET-Ps:

• Energy transitions could give rise to intra-generational, intergenerational, and spatial equity concerns. 
• Transitions have an impact on jobs that are currently dependent on fossil fuels, disrupt potential future energy access, reduce the state’s ability to fund welfare programmes, and worsen already existing economic disparities between coal and other regions.
• Existing JET-P agreements give little consideration to intra-generational inequity, such as job losses brought on by a phase-down of coal.
• However, among the three JET-P deals signed so far, only South Africa’s deal mentions a ‘just’ component — funding reskilling and alternative employment opportunities in the coal mining regions — to be financed as part of the initial $8.5 billion mobilisation. 
  • The other two JET-Ps ( Indonesia and Vietnam) are focused on mitigation finance for sector-specific transitions.
• Without paying enough attention to national context, developed countries’ emphasis on the phase-down of coal ignores the significant distinction in the energy transition between industrialised and emerging economies.

Road Ahead Towards Clean Energy:

• These sets of actions could further expedite India’s energy transition while also addressing domestic developmental priorities, and justice and equity concerns.
• First, acceleration in RE deployment rates to match the pace of demand growth is critical to India’s JET. 
  • Solarisation of agricultural electricity demand, electrification of diesel-powered Micro, Small and Medium Enterprises (MSMEs) and decentralised RE for residential cooking and heating can shift energy demand patterns along with significant developmental co-benefits.
  • In addition to accelerating RE, stimulating energy demand through increased rural output will also assist to close the rural-urban economic gap, create rural jobs, thereby address intergenerational and spatial imbalances.
• Second, domestic manufacturing of clean energy components is critical to sustain a JET, build energy self-sufficiency. 
  • While India must recognise the importance of achieving cost competitiveness — (Indian components are 20% costlier than Chinese components) to improve the  pace of deployment. 
• Third, the current use of coal resources must be optimised to enhance efficiencies until the period of phase-down. 
  • Coal-fired power plants must be placed closer to coal mines rather than based on energy demand in States for efficient transportation which leads to fewer emissions and cheaper power, as transportation accounts for one-third of the cost of coal for power plants.
  • The resultant savings could also help finance much needed emission control retrofits. 
• These measures will create new job opportunities, achieve emissions reduction and prepare the country for deeper decarbonisation through a future coal phase-down. 

Nut Graf: Under India’s Presidency, four ETWG meetings, various side events and a Ministerial Meeting have been planned. With India holding the G-20 presidency, it has an opportunity at hand to negotiate a deal for itself while also shaping international cooperation on just energy transitions.