The 2024-2025 Economic Survey outlined key lessons India can learn from developed countries regarding energy transition. Presented by Finance Minister Nirmala Sitharaman a day before the union budget was set to be introduced, the 436-page survey, led by Chief Economic Advisor V Anantha Nageswaran, assessed the current state of India’s energy sector and proposed steps for improvement.
The survey opened by discussing the conditions under which Western nations transitioned from one energy source to another. It highlighted the United Kingdom’s shift from wood to coal, driven by concerns over rapid deforestation, and France’s move from oil to nuclear energy in the 1970s, prompted by the oil embargo imposed by oil-producing nations in 1973.
A key point emphasized in the survey was that energy transitions in several countries were often fueled by commercial interests rather than solely environmental considerations. It also noted that in 2022, the European Union launched the REPower EU plan, primarily to reduce reliance on Russia after imposing sanctions following its invasion of Ukraine.
“Actions speak louder than words, with the biggest beneficiaries of carbon-intensive growth over several centuries holding on to fossil fuels even as they would want the developing countries to take up the less efficient, costlier and riskier options,” the survey emphasized that developed countries continue to depend on fossil fuels to fulfill their energy needs.
Friction Between Energy Transition and Energy Security
The survey highlighted that the actions of developed countries reveal ongoing tension between energy transition and energy security. It emphasized how these nations continue to face challenges in shifting to renewable energy sources like wind and solar.
“The shift from coal to natural gas as the base load has been the policy choice for ensuring grid stability in the UK and other developed countries. Developed countries have utilised their most abundant fuel in their transition,” the survey asserted.
“The transition to renewable energy has been tardy, forcing a return to fossil fuels to ensure stable supply and address rising electricity prices,” it furthered.
Lessons India Needs to Learn
The economic survey highlighted India's continuing growing energy demands. However, it also noted that even in the most developed economies, renewable energy technologies and their implementation have not yet reached a level of maturity that would allow them to completely replace fossil fuel-based power plants.
Nageswaran’s team stressed that coal remains a crucial part of India’s sustainable development. Therefore, they underscored that there is no necessity to shut down coal plants. “In India’s case, most capacity additions to the coal-fired power plants were made only in the 2010s. There is no valid economic rationale for shutting down coal plants in India, leaving huge investments underutilised and stranded and without a dependable alternative in place,” the survey explained.
The survey team cautioned that India's current resource availability suggests coal remains an essential and cost-effective energy source for the country's development. While the survey does mention some alternatives, it highlights how nuclear energy has emerged as an efficient and dependable substitute for fossil fuels. However, the team urged policymakers to approach this transition carefully.
“The expansion of the use of nuclear power has to contend with public concerns about safety and the uncertainty that the latest technologies are controlled by a few countries,” it stated. The survey also pointed out the difficulties associated with "disposing of renewable energy technologies," particularly solar panels.
They used the example of California, a state that has been a major advocate for rooftop solar for two decades, yet failed to create a comprehensive plan for managing the end-of-life of these systems. “Disassembling and recycling solar panels is complex and demands highly specialised equipment and skilled workers,” the survey stated. Therefore, it advised India to focus on implementing effective waste management strategies for renewable energy systems.
“Effective disposal methods must be developed to manage by-products and materials associated with renewable energy technologies to mitigate potential negative impacts on ecosystems and public health,” the survey concluded.
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