This thesis attempts to assess the likely role of natural gas in India’s energy mix. Apart from examining the factors influencing the role of natural gas and analyzing the scope at sectoral levels, we attempt to estimate the range of natural gas demand in High and Low demand scenarios in 2030, via historical growth rates and application of a number of levers. In light of the fact that despite an ambition to encourage natural gas, this fuel has been unable to achieve an appreciable growth in India, this thesis goes into structural and fuelspecific factors related to India’s energy mix as a whole, and natural gas, respectively. The methodology adopted is a mixed one – exploratory to start with, and descriptive later to explain the existing situation. A detailed enquiry was taken up to analyse the growth trends in natural gas in other large energy consuming countries over the last 35 years (1980-2015). The common and unique trends in different countries were identified, and the same were then applied to India. On the basis of factors related to structural and fuel-specific drivers, the likely growth of natural gas has been anticipated.
This study is supported on three pillars. The first one is an analysis of energy mix of India and six other large energy consuming countries via the Shannon Wiener Diversity Index. This revealed that while the energy mix of all countries underwent an evolution, Indian energy mix has been rather ‘inflexible’. Not only did natural gas share not grow appreciably, even other fuels registered only minor changes. The second pillar is a study of supply and demand side factors that impinged on growth of natural gas, in the same set of major energy consuming countries (same period). On the supply side, India’s case was consistent with others. Local availability of natural gas was found to be essential for this fuel to play an important role. However, neither does India have large natural gas reserves, nor is it connected with a trans-national gas pipeline. On demand side, India does have a supportive environment for natural gas. The third and final pillar is a detailed demand analysis for natural gas in the four main consuming sectors – City Gas Distribution (CGD), power generation, urea manufacture and Industries/others. While CGD holds the largest promise, Industries follow next and the other two do not have much scope for this fuel.
Overall, it is found that natural gas may register a modest growth in the next decade, which could even be higher if a supportive regime was erected. The last chapter offers policy recommendations.
The study makes a break with similar earlier studies by looking beyond the natural gas sector, and connecting it with ‘outside’ factors. It has been found that India’s energy mix has trended towards the other two fossil fuels (coal and oil), and the Government has only recently encouraged ‘new renewables’ such as solar and wind in a significant manner. With rising energy demand especially for transportation fuels, and need for transitioning towards clean sources of energy for various end-uses in urban areas including industries, natural gas seems to be a good option for India. This thesis hopes to enhance the understanding of why natural gas continues to fall short of expectations, and also offers a strategy for it to play a bigger role in the future.