Budget 2023-24 came on the back of the recently enacted Energy Conservation (Amendment) Bill, 2022, which in itself was a key milestone. By creating a carbon trading market, it has the potential to integrate several discreet initiatives like the renewable energy certificates, the Perform, Achieve and Trade scheme. Overall, it will accelerate the clean energy transition by galvanising cleaner alternatives such as natural gas, pumped storage, and hydrogen.

Given India’s large geography, heterogeneity of energy demands and logistical constraints, the transition will require multiple technologies and energy sources to provide coordinated and complementary support.

Among other options, natural gas is well placed to play a key role in the energy transition, consistent with the government’s ambition of developing a gas-based economy. Natural gas offers several advantages that make it attractive, particularly for the medium term, till viable alternatives emerge.

First, because it is a relatively cleaner fuel with an established supply chain and mature global market. While 2022 was a difficult year for natural gas consumers, India can still aim for the stated medium-term goal of 15 per cent share through a combination of strategic supply agreements and by expanding domestic exploration and production. International gas prices are expected to soften, given an unusually mild winter in Europe and the possibility of an economic downturn in 2023.

Complements renewables

Second, natural gas-based power plants are well placed to complement renewables as they offer flexibility to quickly ramp-up the generation as the solar wind downs in the evening. They can also support seasonal variations, for example, low wind generation during winter.

Third, as a relatively cleaner fuel, natural gas significantly reduces urban air pollution. This is relevant given that 21 out of 30 most polluted cities are in India. While EVs are becoming competitive, widespread adoption remains distant. Investments exceeding $60 billion are underway in the natural gas infrastructure, including expansion of the city gas distribution (CGD) network. By 2030, a well developed CGD network will be available in more than 550 districts. Therefore, natural gas will play a key role in decarbonizing the transport sector and emerge as the preferred option for personal and commercial vehicles. It will also extend the life of vehicles, thereby contributing to circular economy.

The government has been actively driving and supporting the natural gas industry through calibrated policy reforms and programmatic initiatives. Some of the key ones include enabling development of “One Nation, One Gas Grid”, marketing reforms and the launch of the first Gas Exchange in 2020. In addition, the government recently announced a hydrogen policy and a National Green Hydrogen Mission. Hydrogen is expected to play a key role in the long-term energy transition and therefore this move reaffirms India’s leadership in clean energy transition.

The economics of green hydrogen however needs to improve significantly to enable widespread adoption as transport and industrial fuel. The current cost-benefit equation is financially unviable for most consumers.

Overall, India’s commitment to clean energy transition requires deployment of multiple technologies and fuel options. Continuing to use natural gas as a bridge to cleaner future will support climate mitigation.

Kumar is the Managing Director, Indraprastha Gas Ltd, and Bhatiani is Director – Energy and Environment at RTI International India. Views are personal