Let’s delve into the fascinating realm of India’s power sector and its pivotal role in the grand symphony of a Just Transition. Imagine it as a superhero saga where our power sector is the protagonist, battling challenges and emerging victorious for a sustainable future.
Meaning and the need for a Just Transition: Striking the right chords
Transition, in its essence, signifies a shift from one state to another. India, at this very moment, is juggling multiple economic transitions — urbanisation, digitalisation and the crucial shift to zero carbon. Then what’s this Just Transition everyone is talking about? Well, it’s like upgrading your favourite app without losing any of your cherished data. In the context of energy and climate change, it means transitioning to cleaner, more sustainable energy sources without leaving communities or workers stranded.
Just Transition has its roots in the US Labour Movement of the 1980s and 1990s, where workers demanded justice — compensation, training, education — when faced with displacement due to energy transition activities such as shutting down of coal mines. Fast forward to 2015, and the Paris Agreement embraced the idea of a Just Transition in its preamble. The recent COP-26 in Glasgow further solidified this commitment by signing a Just Transition Declaration. Now, let’s zoom in on why this transition is crucial for India’s power sector.
A poorly planned transition can disrupt the social and political order, and here’s where the concept of a Just Transition becomes the North Star guiding us through choppy waters ensuring that these transitions align with the Sustainable Development Goals (SDGs), specifically targeting SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), SDG 1 (No Poverty), and SDG 10 (Reduced Inequalities).
Global practices: A glimpse into the transition champions
What can India learn from the trailblazers in the Just Transition movement? Many countries have taken legislative steps to achieve a Just Transition. Institutions such as the Just Transition Commission (JTC) provide expert advice and monitor the existing laws to align with the Just Transition goals. The European Union (EU) allocated a whopping 57 billion Euros to the Just Transition Fund in 2020, and Germany spent 40 billion euros to support coal regions.
Countries such as Scotland and Canada have established independent bodies such as the JTC to ensure distributive justice. The International Labour Organisation guidelines emphasise restorative justice, focusing on economic restructuring and the restoration of natural resources.
Significance of India’s electricity sector: A powerhouse of change
So, why is the power sector the poster child for this transformative journey? Simple. Power, in all its forms, fuels our lives. From charging our gadgets to lighting up our homes, it’s the unsung hero of our modern existence.
India’s electricity sector is the linchpin for the nation’s journey towards sustainable development and climate responsibility. Accounting for nearly 49 per cent of the country’s total CO2 emissions, the sector is at the forefront of our UNFCCC commitments.
Despite economic growth, India’s per capita electricity consumption remains significantly lower than that of energy-intensive nations such as the United States. With urbanisation expected to surge by 40 per cent by 2040 and industrialisation continuing, the demand for electricity is set to soar necessitating an ambitious 270 per cent expansion in installed capacity. Projections by the International Energy Agency point to a pivotal role for renewable energy. Its share in India’s installed power capacity is expected to increase to 77 per cent by 2040 from 42 per cent at present.
Needless to say, a Just Transition within India’s electricity sector is imperative. This sector contributes approximately 2.7 per cent to India’s GDP and is poised for remarkable growth, with the clean energy workforce expected to increase by one million over the next decade. Yet, over 0.7 million individuals currently depend on thermal power plants for their livelihoods.
As the sector shifts toward cleaner energy sources, the decommissioning of older, polluting thermal power plants will have profound implications on livelihoods and social well-being of people. It’s not just about transitioning from coal to renewables; it’s about ensuring that the workforce isn’t left stranded, caught in the crossfire of change.
Challenges: Navigating the change
First, let’s confront the biggest elephant in the room: financing. The IEA estimates an annual requirement of $200 billion for all sectors in India to make this transition happen. Further, it expects electricity supply costs to triple from 2020 to 2050.
The financial aspect takes centre stage once again when considering the substantial debt of discoms (currently around Rs 6.2 lakh crores), which highlights their financial challenges. After adjusting for purchasing power, average electricity prices in India are higher than the OECD average. Looking ahead, the rise of renewables is likely to add to the complexity of electricity tariffs because it is likely to lead to billing based on the time of use. These complex and varied tariffs may become a disadvantage for low income households.
A geographical perspective adds another layer to the challenge. The generation of solar energy predominantly occurs in the western areas, hydro-electricity in the northern, and wind in the south-eastern and Himalayan regions. This diversity complicates the task of phasing out coal (which is concentrated in the eastern part of India) while simultaneously creating job opportunities through the utilisation of renewable energy sources. Transmission of electricity from a region richly endowed with renewable energy to coal dependent regions could overcome the geographical challenges but only when transmission losses are less and efficient technology is available.
In the socio-economic landscape, the 120 districts that heavily depend on fossil fuels house approximately 20 million workers directly or indirectly engaged in these sectors. Shifting from traditional power plants to renewable sources can disrupt communities, necessitating careful planning to safeguard the well-being of stakeholders during this transition. Further, modernising the existing power grid follows closely with the need for efficient integration of renewable energy sources. The business model for utility-scale battery storage in India remains uncertain, in the absence of efficient price signals that would enable batteries to arbitrage between periods of power scarcity and abundant supply.
Charting a course to a sustainable future
Let’s explore some solutions for a Just Transition in the Indian electricity sector – because change is on the horizon, and it’s crucial to get it right.
First off, imagine a Just Transition Framework, as part of which experts from various government departments – power, coal, petroleum, labour, trade, etc. – come together to work solely with an agenda to ensure Just Transition. It is noteworthy to mention that the Ministry of Coal took a step in the right direction by organising a “Just Transition Roadmap” seminar on May 15, 2023.
Now, let’s talk about phasing out those old thermal plants. In the short term, we identify the power plants on their way out. Next, we figure out which economic sectors can absorb the jobs that might be lost. It’s like matchmaking for industries. Then comes the training – identifying the skill set needed, re-training, and re-skilling to ensure a smooth transition. Social and economic aspects of job losses? They’re not forgotten; they’re right there in the official guidelines for decommissioning power plants. Further, let’s repurpose those retiring coal plants. In some cases, it might make financial sense to build a renewable energy project right on that site, tapping into existing connections and minimising rehabilitation costs.
But it’s not just about saying goodbye to the old. We’re saying hello to renewable energy. Picture more wind turbines, more solar panels – a fresh, clean start. Our choices should make sure our energy value chain is environmentally friendly. Now, let’s ensure distributive justice. Everyone deserves 24/7 reliable power, and schemes such as Saubhagya can make energy access a reality. Grants to discoms for lower tariffs, micro-grids in remote areas, equitable infrastructure investments in decentralised renewable energy solutions such as solar rooftops with net metering, and community-owned renewable energy initiatives can ensure distributive justice.
But justice isn’t just a buzzword here. We’re talking procedural justice too. Engaging stakeholders, assessing environmental impacts, ensuring transparency with smart grids, and looking out for consumer rights – it’s all part of our roadmap. And don’t forget inclusivity, especially with renewable purchase obligations for hydro, solar and wind energy.
Last but not least, let’s add a dash of restorative justice. Assessing past damages, compensating where needed, restoring the environment – it’s about making things right. A local area development fund for hydropower projects as per the National Hydro Policy is an excellent policy tool that can ensure fair land compensation and rehabilitation.. And, of course, skilling and re-skilling will ensure no one is left behind. So, there you have it – a roadmap for a Just Transition, weaving together financial aspects, social considerations, and a dash of environmental stewardship. It’s not just about change; it’s about changing for the better.
The way forward
The way forward? Picture this: a landscape dotted with wind farms and solar parks, where energy flows like a gentle river, powering industries, homes, and dreams. India is charting a course towards energy democracy, where everyone has a say in how we power our future. Renewable energy is the backbone of this journey, but it’s not just about swapping coal for solar. It’s about empowering local communities, reskilling workers, and ensuring that no one gets left behind. Challenges may be aplenty, but so are opportunities. It’s time to rewrite the narrative, one kilowatt at a time.
So, here’s to India’s power sector — the unsung hero of our just transition tale. May it continue to light up our lives, both literally and figuratively, as we stride towards a greener, more equitable future.
The author is deputy director with the Ministry of Power. The views expressed are personal.
