New Delhi: By the year 2050, natural gas is projected to be the only fossil fuel that will experience an increase in the energy mix of the United States, China, and India, even as coal and oil see a global decline, according to a sector update from Nuvama Institutional Equities, referencing S&P Global Commodity Insights.
'By 2050, gas will be the sole fossil fuel with the potential for growth in the energy mix for the US, China, and India,' the report stated.
The report indicated that despite a significant increase in renewable energy capacity around the globe, fossil fuels are expected to remain the dominant source of energy in major economies. Renewables are anticipated to grow from the current 4 percent to approximately 20 percent by 2050, while fossil fuels will still represent over 50 percent of the energy mix.
'In 2024, India's energy mix is heavily reliant on fossil fuels (77 percent), with renewables contributing only 2 percent; however, by 2050, fossil fuels are expected to decrease to 66 percent, and renewables are projected to increase to 16 percent,' the report noted.
Nevertheless, the report emphasized that gas will play a role as a 'transition fuel,' providing flexibility and cleaner alternatives to coal.
'In the US, Europe, and Southeast Asia, the shift from coal to gas has been a successful transition, while India has fallen behind in utilizing gas within the power sector,' the report highlighted.
The study also pointed out that scalability and commercial obstacles hinder a direct transition from coal to renewables, making natural gas an essential bridge on the journey to achieving net zero.
The report emphasized that various government initiatives, including targeted LPG subsidies and PAHAL, are facilitating the shift towards using gas for cooking.
"The segment labeled 'other energy sources', primarily traditional biomass for cooking, is experiencing a significant decline, being supplanted by LPG. Government programs like 'PAHAL' and targeted LPG subsidies have been pivotal in this transition, resulting in a drop from 38 percent to 19 percent, with further reductions anticipated," the report stated.
India's structural goals, such as the National Hydrogen Mission and recent GST cuts aimed at promoting renewable energy adoption, demonstrate a clear intent. However, without systemic flexibility, reforms in the gas market, and enhanced storage capacity, the risk of not meeting emission reduction targets remains considerable.
The report indicated that gas, recognized as the cleanest fossil fuel, could serve a crucial balancing function if accompanied by tax and pricing reforms. In the absence of these initiatives, India may fall short of achieving both its immediate and long-term climate objectives, even as it strives for the 2070 net-zero goal.
