India To Form ‘Energy Alliance’ With Japan, South Korea

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Energy-hungry India plans to form an alliance with Japan and South Korea in order to secure a steady supply of Liquefied Natural Gas (LNG) from the two Asia-Pacific nations.

Indian Petroleum and Natural Gas Minister Dharmendra Pradhan has confirmed the news, saying that New Delhi started holding talks on a LNG purchasing alliance with Tokyo and Seoul. The minister hinted that China might also join the alliance in the coming days.

Pradhan believes that Asian countries have no other option, but to join hands, as demand for the fuel grows in the continent. “For the next two to three decades, gas is going to be a major part of the energy basket for Asian energy consumers. We want to bring together the countries and form a network which can together source reasonable, rational and affordable LNG,” he stressed while speaking at an event in Mumbai on Wednesday.

With natural gas accounting for just about 8% of its overall energy mix, India is trying hard to increase domestic production. The minister admitted that it becomes really difficult for the South Asian country to increase the production of LNG. In the last decade, domestic natural gas production has grown by just 10%, while imports of LNG have risen by 335%.

Pradhan further said that the volume of gas import would grow further, as India shifted to a gas-based economy. Currently, the country’s gas demand stands at 120 million standard cubic meters per day (mscmd), while the volume of domestic supply is 80 mscmd. After considering the scenario, the Narendra Modi government in New Delhi has decided to form the alliance with Japan and South Korea. The minister expressed hope that India would successfully create the alliance of LNG consumers with Japan, South Korea and other Asian countries in order to demand better terms from producing nations.

Meanwhile, the government has asked Gas Authority of India Limited (GAIL), the state-run company that processes and distributes natural gas, to take the talks forward. In future, GAIL may also plan the pipeline requirements for facilitating the creation of such an alliance.

In its ‘New Energy Outlook Report 2016’, Bloomberg has said that global fossil fuel electricity use is expected to peak in 2025 and decline thereafter, but not rapidly enough to forestall two degrees of global warming. Interestingly, India (and not China) is becoming the key to decarbonisation. According to the report, most big emitters are on track to phase out coal. Even China has a post-2020 moratorium on new coal plants.

However, India is a different story. India’s economy is growing quickly, and with it the electricity demand. It means even with Prime Minister Modi’s audacious renewable energy goals, coal consumption will triple by 2040 in the South Asian country. The Bloomberg report further said that coal would dominate India’s power mix through 2040, though a growing share of new capacity (29%) would be solar.

Bloomberg, which prepared the report after conducting a comparative study, has predicted that 258GW of India’s new coal capacity will come online by 2040 and this new coal power sector’s emissions will offset the progress made in the European Union (EU), the US and China. As far as China is concerned, the coal capacity will peak in 2020 and coal generation in 2025. Through 2040, 73% of new energy will be renewables in the Asian country. In the US, the use of coal to generate electricity will drop and renewables will be 50% total generating capacity by 2040. America will also generate electricity by using gas, wind, solar and nuclear energy. Europe, too, is on the track to drive coal and gas out of the power sector. In European countries, renewables will be 70% of all electricity generation by 2040. So, global power sector greenhouse gas emissions will hold steady in the coming years and the volume of global investment through 2040 in new power generation (mostly in renewables) will be USD 11.4 trillion.

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