India’s energy sector is undergoing a major transition in its fuel mix, driven by the need to reduce both its carbon footprint and its import dependency. In mobility and domestic consumption, the move is towards natural gas, which is less “dirty” than liquid fossil fuels.
Many other options are also being explored. These include biofuels like ethanol mixes, biodiesel, green hydrogen and compressed biogas (CBG). These fuels have varying carbon footprints, but they can all be produced domestically.
Green hydrogen and CBG are still far from commercial viability. The technologies must stabilise, with costs reducing considerably before deployment at scale. While this requires policy support, it can happen, going by the example of solar, where policy support led to dramatic cost reductions.
CBG has properties similar to compressed natural gas (CNG) and can be easily integrated into the CNG value chain. Most of the necessary equipment can be manufactured domestically. However, feedstock management and aggregation are tricky problems. Equipment must accept multiple types of feedstock, and the logistics of aggregating feedstock from various sources must be worked out. Financing is another barrier, along with variable yields and biogas being priced at discounts to CNG. As technology matures, yields will become more predictable, offering comfort to investors.
Green hydrogen (and associated green ammonia and methanol) face different challenges. Hydrogen has many applications, but storage is a challlenge. In areas like mobility and power, hydrogen usage needs technologies that differ from those used for other fuels.
One advantage is that green hydrogen is a zero-emission fuel. There is a big project pipeline. But the scale and the economics do not quite work yet. Projects are in the planning and implementation stages across the chain, from the production of green hydrogen, green ammonia and methanol, to pilot mobility projects, refinery-linked applications and electrolyser manufacturing. Most projected capacity is under bidding or construction. Operational capacity is limited. However, corporates like Reliance Industries and NTPC Limited do have large green hydrogen production projects.
Policy support, as seen in the National Green Hydrogen Mission, aims to turn India into a green hydrogen hub. The Strategic Interventions for Green Hydrogen Transition Programme provides incentives for production and electrolyser manufacturing. Many pilot mobility projects are centred around hydrogen-powered trains, buses and ships.
In biofuels, ethanol blending into petrol is mandatory. Ethanol content will grow, though there has been a controversy about the impact of E20 on older engines. Biodiesel, methanol and sustainable aviation fuels are also being deployed in pilot projects.
Among more conventional initiatives, liquefied petroleum gas is entrenched in the domestic sector, and CNG penetration is rising, as the city gas distribution roll-out gathers momentum. While gas (both forms) is cleaner than petrol or diesel and cheaper, the Iran conflict has led to concerns about supply disruption.
Local upstream players like ONGC and Oil India Limited are now focused on gas discovery. A larger share of India’s gas consumption could come from domestic production. Both upstream PSUs are also developing midstream and downstream capabilities, from refining to petrochemicals.
Across the chain, in every fuel, there is another common thread – the upgrade of technology and digitalisation. From robotic exploration to smart metering of retail consumption, better technology, greater automation and AI-driven analytics can lead to vast improvements in processes with less waste, lower carbon footprints and better economics.
Given supportive policy and the arrival of new types of fuels, there are many exciting opportunities across the sector. If things work out as policy envisages, the energy industry will become cleaner, more resilient and price-competitive as the transition continues.