What should India’s near-term strategy for energy resilience look like? Here’s a climate-friendly outline

India’s large import dependence makes adaptive responses to economic and social impacts of the war enormously challenging, especially in the immediate time-frame of two years. Approaches to re-evaluating and strengthening energy security in time periods beyond that would have greater degrees of freedom.

At an aggregate level, the government has managed to limit price increases for most petroleum products by getting state-owned oil companies to absorb a good part of the crude-oil cost rise, while cushioning the rest of the impact on its own fiscal account.

But last week’s steep price increases for commercial LPG have revealed the unsustainability of this approach. Projections by global experts of the years needed to revert to ‘normalcy’ do not portend well for the country, highlighting an urgent need for strategic interventions that could have a large impact.

Here is a quick recap of our most significant vulnerabilities. India imports about 90% of its crude oil, even if imports from West Asia are roughly half of this. Also, India exports over 25% of the major refinery products it produces (such as naphtha, diesel and petrol), indicating that the country’s import vulnerability is not as severe as it prima facie seems.

The exception here is LPG and the ‘heavy ends’ (fuel oil, bitumen, etc) from the petroleum refining barrel. LPG is, by far, the most sensitive product in the mix; India imports over 60% of its consumption, most of it typically from West Asia.

India also imports nearly half of its natural gas requirement. A large part of this is used for non-energy applications, such as fertilizer and petrochemical production, but its consumption as a fuel for mobility and source of energy in other processes is also very significant.

Supply-chain disruptions to fertilizer imports (although the potential for diversification exists) have combined with natural-gas scarcity to threaten food production in India with a double whammy.

Reducing vulnerabilities around energy in India in the immediate term would mean addressing demand-supply gaps for various end-uses, in particular for LPG and natural gas, while insulating India’s economically vulnerable populations from price increases, their indirect impact included. An unusually hot summer this year as a likely consequence of the El Niño effect also calls for special attention to the poor.

Over 85% of LPG in India is consumed by household consumers, but there are large disparities between regions and income classes. Higher income classes consume more than double the quantity of LPG consumed by lower income classes, while populations in many states have very poor access to cooking gas.

The experience of recent weeks has reinforced the reality that in times of shortage, it is the poor that are deprived first, whereas higher income consumers in urban areas tend to suffer little disruption; many of them have back-up LPG cylinders. A much more nuanced approach is therefore needed to build LPG resilience in the immediate term.

Richer segments of society must be nudged to move to electric hobs right away, with their supply of LPG constrained to maybe a cylinder every two months for special uses.

Also, LPG pricing should differ by usage location and cylinder size, so that better-off consumers pay more. Within the commercial-use category, small enterprises could be given cheaper access. The use of LPG for automobiles could be entirely discouraged.

Overall, sharp demand management could shift richer users to electricity while relieving the rest.

Mobility fuels in India are already heavily taxed. Price increases can be cushioned through adjustments of the tax structure if the government so chooses. At the same time, India has several years of experience with electric vehicles (EVs), charging stations and battery storage. The multiple challenges that have been identified for an accelerated uptake of EVs could largely be addressed through regulatory changes and government orders.

A significant reduction in vulnerability may be possible to achieve if we combine this with demand-management measures such as work-from-home and the use of large-capacity carriers by corporates, public institutions and industry.

India could achieve cleaner electricity generation by using more natural gas and renewables as its basic sources of energy, but given our vulnerabilities around agriculture and food production, we now have all the more reason to prioritize renewable power generation—particularly since this has already proven to be economically attractive—while we use natural gas for urea production.

The renewables sector in India is robust, the bottlenecks are well known and India has the capacity to address them.

In essence, India should focus on the immediate solutions that are available to enhance its energy resilience in these times of stress, while ensuring that these are aligned with longer term objectives and climate commitments. An empowered committee to design and implement such a near-term energy resilience strategy is the need of the hour.

The author is an independent expert on climate change and clean energy.