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Reducing fossil fuel imports in India



1 Introduction

2 Electricity in India

3 Transportation sector in India

4 Conclusions


List of Figures

Indias GDP and Total energy consumption . . .

Primary energy mix in India . . . . . . . . . . . .
Indias fossil fuel consumption . . . . . . . . . . .
Sectoral composition of Indias commercial energy
Installed power capacity in India . . . . . . . . .
The concept of Methanol Economy . . . . . . . .

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India is the fourth biggest energy consumer after China, USA and Russia [1]. India is the
third-largest economy on a purchasing power parity basis and has the worlds second-largest
population, according to World Bank data [2]. The countrys energy demand continues to
increase as a result of its dynamic economic growth and modernization. The relationship
between Gross Domestic Product (GDP) and energy demand is clearly shown in Fig. 1 [3].
With the Indian governments new Make in India campaign, an aggressive push to revive an
ailing manufacturing sector, the energy demand is predicted to grow exponentially.

Figure 1: Indias GDP and Total energy consumption

Indias largest energy source is coal, followed by petroleum and traditional biomass and
waste. The primary energy mix for India in 2012 is shown in Fig. 2 [4].
Despite having large coal reserves and a healthy growth in natural gas production over the
past two decades, India is increasingly dependent on imported fossil fuels. In 2005, India was
around 90 per cent self-sufficient in coal supply. By 2013, Indias coal self-sufficiency had
declined to around 75 per cent [5].

Figure 2: Primary energy mix in India

In 2013, India was the fourth-largest consumer and net importer of crude oil and petroleum
products in the world after the United States, China, and Japan. Net oil import dependency
rose from 43 % in 1990 to an estimated 71 % in 2012. Indian fossil fuel consumption is illustrated
in Fig. 3 [6].

Figure 3: Indias fossil fuel consumption

To find a solution to the fossil fuel import woes, it is necessary to understand the overall
energy consumption based on sectors which is shown in Fig. 4 [7].

Figure 4: Sectoral composition of Indias commercial energy consumption

From the above figure, it is evident that in order to reduce the import of fossil fuels, concentrating on the two most energy demanding sectors namely industry and transport will be
a tangible solution. Energy consumption in industries is mainly electricity and in transportation sector, it is petroleum fuel. So, in the forthcoming sections, the issues of electricity and
transportation fuels will be addressed.

Electricity in India

India had 249 gigawatts of installed electricity generation capacity connected to the national
network in early 2014, mostly coal-powered plants (shown in Fig. 5). Because of insufficient
fuel supply and power generation and transmission capacity, the country suffers from a severe
electricity shortage, leading to scheduled load shedding [4]. In order to establish energy security
in the power production sector, Indian government plans to attract investments in the renewable
energy sector. However, this is not sufficient to answer the electricity shortage conundrum in
India. Hence, Energy Minister Mr. Piyush Goyal has announced a target to double coal
production to 1 billion (bn) tonnes in the six years [8]. Coal reserves of 301.56 billion tonnes
have been estimated by the Geological Survey of India. With the energy ministrys assertive
approach, the actual production was 426.7 million tonnes during the period April to December,
2014 compared to 391.08 million tonnes (MT) during the corresponding period of 2013-14,
showing a growth of 9.1 % [9]. This is a positive sign in order to reduce coal imports.

Figure 5: Installed power capacity in India

On the other hand, there are considerable investments made in renewable energy sector. According to Institute for Energy Economics and Financial Analysis (IEEFA) reports, in February
2015, 293 companies pledged to build a combined 266GW of renewable-energy projects in India
by 2021/22 as part of the major Government of India summit, RE-Invest [10]. Added to this,
The Reserve Bank of India has cut official interest rates three times in 2015 and in an attempt
to align itself with the policy priorities of the Indian government, it has accorded priority sector
lending status for renewable energy. In the renewable energy sector, construction capital and
financing cost is the key hurdle. Providing loans at low rate of interest is a huge boost for this
sector [11]
India has an estimated renewable energy potential of about 900 GW from commercially exploitable sources viz. Wind - 100 GW (at 80 metre mast height); Small Hydro - 20 GW;
Bio-energy - 25 GW; and 750 GW solar power, assuming 3 % wasteland is made available.
In addition, there exists significant potential from decentralized distributed applications for
meeting hot water requirement for residential, commercial and industrial sector through solar
energy and also for meeting cooking energy needs in the rural areas through biogas [12].
The gross installed capacity of grid interactive renewable power in the country stood at about
33.8 GW as on 31st December 2014. India occupies the fifth position in the world with a
wind power installed capacity of 22.5 GW. During the year 1,333 MW wind power projects
were commissioned. The generation from wind power projects during the year was around

30 billion units. The Ministry of New and Renewable Energy (MNRE) has taken up a new
initiative for implementation of wind resource assessment in uncovered / new areas with an
aim to assess the realistic potential at 100 m level in 500 new stations across the country under
the National Clean Energy Fund (NCEF). An MoU was signed in October 2014 for setting
up a joint venture company towards undertaking the first demonstration offshore wind energy
project. Wind energy generators of unit sizes between 250kW and 2.50 MW have been deployed across the country. Biomass power projects including through baggasse cogeneration
with an aggregate surplus power generation capacity of about 152 MW have been successfully
commissioned. Biomass gasifier based 1 MW power plant has been commissioned in Haryana
to meet the captive power needs and installation of 50 biomass gasifier and combustion based
power projects with cumulative installed capacity of 6.20 MW, to meet the captive demand
for electricity and thermal applications are under installation in different States. Small hydro
projects with a capacity of 187.22 MW have been commissioned during the year. Solar power
projects installations grown by 431 MW capacity solar power plants using solar photovoltaics
and solar thermal technologies being commissioned during the year [12].
With the prospects of the electricity generation sector looking benign, India has to address
another quandary in the transportation sector to reduce fossil fuel imports. This issue will be
considered in the next section.

Transportation sector in India

India was the fourth-largest consumer of oil and petroleum products after the United States,
China, and Japan in 2013, and it was also the fourth-largest net importer of crude oil and
petroleum product [4]. The high degree of dependence on imported crude oil has led Indian
energy companies to diversify their supply sources. To this end, Indian national oil companies
(NOCs) have purchased equity stakes in overseas oil and gas fields in South America, Africa,
Southeast Asia, and the Caspian Sea region to acquire reserves and production capability. However, the majority of imports continue to come from the Middle East, where Indian companies
have little direct access to investment.
An All India Study conducted by Nielsen (India) Pvt Ltd for Petroleum Planning and Analysis
Cell (PPAC) of Petroleum Ministry has thrown up interesting data about use of diesel and
petrol sold across various states. As per the All India study report submitted to PPAC, 70
% of diesel and 99.6 % petrol is consumed in the transport sector alone [13]. Hence, tackling
this issue in transportation sector appears to ameliorate the situation. Domestically produced
alternative fuels should supplant the imported petroleum fuels. In a country like India, the

main drivers for greater penetration of alternative fuels will be energy and economic security.
Climate change is also another important aspect. According to MIT Energy Initiative Symposium report, the following conditions provides a conducive environment for deep penetration of
alternative fuels [14]:
1. The price of alternative fuel should be lower than the price of conventional fuels on energy
equivalent basis and this price spread has to be reliably sustained over time.
2. There should be fuel distribution infrastructure.
3. There must be enough feedstock available to develop and sustain market in the long term
while maintaining a competitive fuel price.
It appears that second generation biofuels will suit these three requirements without threatening
food supplies and biodiversity. In this article, methanol is proposed as a solution to reduce fossil
fuel imports.

Methanol is a colorless, water soluble liquid with a mild alcoholic odour. Containing only one
carbon atom, methanol is the simplest of all alcohols. During the world war era, synthetic
methanol produced from coal was blended with gasoline as a fuel. Methanol gasoline blends
were used by Volkswagen and had shown significant improvement in cars performance [15].
During 1990s, different technological advances were achieved and this reduced the emission
problems and at the same time, decreased interest in methanol based fuels. Today, methanol
is mainly used as a primary feedstock for the chemical industry with an approximate 70 million ton market per year. This clearly shows it has all the necessary infrastructure in place.
Methanol, being the simplest, safest and easiest to store and transport liquid oxygenated hydrocarbon shows promise in decarbonising the economy as methanol offers an advantage of having
the lowest carbon to hydrogen ratio for liquid fuel under ambient conditions. In addition, it
holds the promise of closing the carbon cycle as it can be produced from renewable sources and
CO2 .
Methanol is a hydrocarbon which can be produced from numerous sources like syn-gas, oxidative conversion of methane and reductive hydrogenative conversion of carbon dioxide (CO2 ).
The chemical recycling of excess CO2 would also help to mitigate the climate changes caused
by use of fossil fuels [16]. Methanol storage and distribution can be similar to present day
fueling infrastructure reflecting very small changes to consumers habits. Transportation of
methanol through out the world can be carried out using dedicated methanol ocean tankers.
When transported in such large vessels, the cost of shipping methanol will be similar to that

of crude oil.
The only concern with methanol is that it is toxic to human body. Use of technologies like
spill free nozzles eliminates this hazard to a great extent. With the advancement in medical
domain, several treatments are available to combat methanol poisoning and these generally
lead to complete recovery if administered in a timely manner[17].
For more than a decade, Nobel laureate George Olah and coworkers have advocated the
Methanol Economy-replacing petroleum-based fuels and chemicals with methanol and methanolderivatives as a path to sustainable development. A first step to this vision appears to be
occurring in China. In the past five years, China has quickly built an industry of coal-based
methanol and dimethylether(DME) that is competitive in price with petroleum-based fuels.
The idea of Methanol Economy is shown in Fig. 6 [16].

Figure 6: The concept of Methanol Economy

According to a recent article by NITI Aayog, a governmental body directly under the office of the Prime Minister, Mr. Narendra Modi, the government may soon make methanol
production a high policy priority, much on the lines of solar energy to reduce dependence on
imported fuel [18]. This aims to replicate Chinas model. The main policy driver in case of
China was abundance of coal as feedstock. According to Olahs vision, the Methanol Economy could contribute to a sustainable future where carbon-neutral methanol is produced from

biomass and recycled carbon dioxide (CO2 ). Turning biomass into methanol is a relatively
mature technology and is likely cheaper and easier to produce than cellulosic ethanol. Added
to this, methanol can be produced from wastes which can help solve another massive Indian
problem. Methanol Economy looks a feasible alternative as it provides affordable alternative
fuels using domestic resources. However, methanol from coal is not clean and will increase
net green house gas emissions. India has to look beyond coal and concentrate on biomass for
methanol production.
Firstly, a policy on Open Fuel Standard, which has been proposed in US Congress is required
for implementation of methanol [19]. Secondly, incentives for sustainable fuels like biomass
methanol should be provided. The first policy encourages production of Flexi-Fuel Vehicles
(FFVs) and the other advocates investments in second generation biofuels.


This article provides an overview on reducing fossil fuel imports in India. The government
policies to encourage domestic resources look promising in the field of power production. In
the transportation domain, methanol is proposed as the future fuel which has the potential to
supplant petroleum fuels. It can be concluded that methanol production has to be carried out
in a sustainable way and over-dependence on coal based methanol may only exacerbate the
problems further.


2. World Bank Data
4. EIA,
5. Cully, Mark. Coal in India.
7. Data from Ministry of Environment, Forest and Climate Change, Government of India
8. Article in The Hindu, dated March 9th, 2015
9. Annual Report 2014-15, Ministry of Coal, Government of India
10. Indian Electricity Sector Transformation, IEEFA Report
11. RBI Notification
12. MNRE Annual Report 2014-15
13. Ministry of Petroleum and Natural Gas, Government of India Data
14. MIT Energy Initiative Report 2012
15. Bernton, H., Kovarik, B., & Sklar, S. (1982). The Forbidden Fuel: A History of Power
Alcohol. University of Nebraska Press.
16. Olah, G. A., Goeppert, A., & Prakash, G. S. (2011). Beyond oil and gas: the methanol
economy. John Wiley & Sons.
17. McNicol, B. D., Rand, D. A. J., & Williams, K. R. (2001). Fuel cells for road transportation purposes Journal of Power Sources, 100(1), 47-59
18. Article on The Economic Times dated Nov 20, 2015
19. Open Fuel Standard Act of 2013, US Congress