Price volatility and infrastructure constraints are expected to challenge India's target of increasing natural gas share in the overall energy basket to 15 per cent by 2030, from 6 per cent in 2017, despite resilient demand from city gas distribution networks and rising domestic production, Fitch Ratings said.
Progress on the target has been minimal - 6 per cent share in 2021 - as the natural gas growth has not managed to outpace total energy demand growth.
Demand for natural gas from price-sensitive industrial and power sectors may be limited in times of rising prices, as they switch to cheaper alternate fuels, Fitch Ratings said in a report on Tuesday.
"The pace of adoption of gas for mobility and household fuel may also slow in times when its price benefit against alternate fuels decreases," it said.
Further, the rating agency said India's inadequate gas pipeline infrastructure and potential execution delays in some projects under construction may delay natural gas demand growth.
"Underutilised existing LNG import infrastructure may slow new capex (capital expenditure) in the near to medium term. Still, the operationalisation of new CGD networks, the price advantage of natural gas against other fuels, and increased adoption of natural gas to comply with pollution norms would support long-term natural demand from CGDs," it said.
On the outlook, Fitch believes that energy growth, aided by India's GDP growth estimate of 7 per cent a year over the next few financial years and the government's efforts to increase natural gas and renewables' share in the energy mix on its path of decarbonisation would support mid-single-digit natural gas demand growth over the medium term.
What did India pledge for climate mitigation and ultimately net zero emission at COP:
At the COP26 summit in Glasgow in late 2021, Prime Minister Narendra Modi committed to an ambitious five-part "Panchamrit" pledge, including reaching 500 GW of non-fossil electricity capacity, to generate half of all energy requirements from renewables, to reduce emissions by 1 billion tons by 2030.
India also aims to reduce the emissions intensity of GDP by 45 per cent. Finally, India commits to net-zero emissions by 2070.
Walking the talk, India has gone ahead and banned the use of several single-use plastics starting July 2022.
The adverse impacts of littered single-use plastic items plastic on both terrestrial and aquatic ecosystems, including in marine environments are globally recognized.
( With inputs from ANI )
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