India’s clean energy transition objectives are becoming coherent to the stakeholders.
The industry leaders are clear about their roles and responsibilities. During my recent interactions with the Indian energy leaders, I understood that the conventional energy industry is willing to adopt transformative practices to fast-track energy transition. Even the conventional refiners are getting themselves ready for meeting the clean energy requirements through cleaner production. The refiners are sensing the enormous opportunities emerging out of the clean energy transition process. During a discussion with industry leaders, one of the largest refiners recently indicated gradual shift from conventional product portfolio to green product basket. The refiner currently produces roughly 50-60% of diesel and petrol, which means the refiners' revenue basket is heavily driven by liquid fuel. The leader of the refinery division acknowledged that the current product mix is bound to change soon. Over-dependence on liquid fuel demands a diversified product mix. Essentially, the refiner is putting its best foot forward to optimize the production of green hydrogen harnessed through renewable electricity production by utilizing available resources within the refinery and beyond. The land-locked refineries have created artificial water bodies to meet their water requirements in the refineries. Now such water bodies or ponds are used for floating photovoltaic facilities for solar electricity generation. The green electricity produced through the floating terminals is used for meeting a part of refineries captive requirements. In time to come, vacant space in the refineries could be used to produce more electricity, which could be used for clean hydrogen production.
Indian refineries identified the opportunities for expanding the petrochemical business to reduce India's over-dependence on the import of specialty chemicals or building blocks for petrochemicals. Globally, refineries are working on improving the share of petrochemicals in their product mix. So, they are investing in technology development. Despite India’s renewed interest in reducing foreign dependence on technology, the domestic giants are still heavily dependent on technology imports. Technology import is easier than indigenous technology development.
So, domestic technology development is handicapped by the short-term goals of the local industries. The government wants a faster indigenous technology development, but the industries need commercial-scale technologies ready for immediate applications. Therefore, logically, there is an imbalance between the objectives of the government and the activities of various industries. India’s R&D spending is low (0.7 % of GDP) compared to China (2.23%), United States (3.06%), Australia (3.12%), Germany (3.11%) and South Korea (4.64%). Technology development in India remains as an issue of orientation rather than capability. The technology developers such as R&D institutions, academic institutions, and research laboratories are constrained by substantial fund availability and accessibility. Funding agencies are more concerned about the commercial applicability of the concepts, which is genuine. India's technology development life cycle is somewhat different from the developed countries. Many industries face technology myopia; therefore, organizations are concerned about long-term investment in risky technological innovations. Many of them prefer to take the shortest route to achieve near-term goals through technology import rather than developing and owning technology. Such a mindset delimits them to explore the less-traveled path of “par- excellence”. Many of these domestic corporate giants could very much compete with the global leaders in their business domain. Unfortunately, they are more concerned about protecting their domestic turf. Recently, Raghuram Rajan highlighted the shortcomings of India’s approach to becoming a manufacturing hub. Probably, India can emerge as a manufacturing hub but its emergence as the technology hub is a serious challenge.
For India to emerge as a technology hub several concerns including indigenous technology development, technology transfer, technology affordability, and technology diffusion must be addressed. Scientists in Technology Information Forecasting and Assessment Council will set the agenda for India’s greater indigenous technology development, technology readiness and diffusion. Technology assessment for commercial applications is far more than patenting. Probably, the metrics for technology assessment require better realignment across the technology value chain.
In the context of the energy transition, technology development and diffusion will continue to dominate the transition possibilities. In many places, the successful energy transition will depend on the commercial availability of affordable technology that can broadly address energy and social equity issues.
India’s energy transition is a new phenomenon – therefore it is less researched and debated. India needs a broader debate, deliberation, and consensus on its energy transition paths. A few challenges that could hinder India’s energy progress include the readiness of a skilled workforce to implement clean technology projects, financing clean technology, and clean technology value chain development. Creation of pan-India domestic green infrastructure including renewable electricity transmission infrastructure, the pipeline for hydrogen transport or hydrogen-natural gas mixture transport, hydrogen liquefaction & storage facilities. If the energy transition is planned well by the corporations, they can convert challenges into opportunities. Energy transition brings a plethora of opportunities with immense scope for asset creation, employment generation, and entrepreneurial ventures. Increased demand for capital will create new financing institutions or existing institutions setting up clean financing verticals. Government to bring clean financing mechanisms to address the bottlenecks, therefore offering environmentally responsible investment options for retail investors.
India’s clean energy value chain has attracted private investors like Reliance, Adani Group, British Petroleum, Tata, etc. Now clean energy investors are incentivized through production-linked schemes of the government. However, Raghuram Rajan (Former Governor of Reserve Bank of India) reckons that the small & medium scale enterprises (SMEs) are somehow lagging the giants. How will the SMEs contribute more to the Atmanirbhar Bharat, more specifically for Clean and Green Bharat? SMEs should play a complementary role in clean energy production, storage, transmission, and diffusion. Bringing the SMEs into the competitive clean energy market is a daunting task that requires substantial groundwork. I am sure the ecosystem will enable the SMEs to complement the big players. I strongly feel that the co-existence of the SMEs and big players is critical to the growth and development of the clean energy value chain in India.
Sanjay Kumar Kar holds a Doctorate in Management. He is an Associate Professor at Rajiv Gandhi Institute of Petroleum Technology (RGIPT) and Head, Department of Management Studies. Prior to joining RGIPT, he worked at School of Petroleum Management, Gandhi Nagar and IIM Ahmedabad. As a visiting faculty, he is associated with the Chonnam National University (South Korea), National Institute of Fashion Technology, India NTPC School of Business, Noida and other national level management institutes. He has two books namely ‘Natural Gas Markets in India', 2017, Springer and 'Energy Sustainability Through Green Energy', 2015 to his credit. He has written and published several case studies, research papers, book chapters, and conference papers.