Lights On Briefing: Energy diplomacy at the border, Pakistan petrol incentives and more

Happy Monday and welcome to today’s edition of Lights On, a newsletter that brings you the key stories and exclusive intel on energy and climate change in South Asia.

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India

Energy storage defunded

Investors appear to be moving away from the storage sector right when India needs them most, as the country embarks on the next chapter of its clean energy expansion. According to the research firm Mercom, the total corporate funding for the sector totalled $2.2 billion in the first quarter of 2023, against $12.9 billion raised in the same period of 2022. Experts agree that developing efficient and cheap batteries is essential for India’s energy transition - the lack of private investment will make the task much harder.

India braces for CBAM

The launch of the EU Carbon Adjustment Mechanism (CBAM) in October looms over India’s manufacturers, and the government is taking action to protect the country’s economy. Official sources revealed to Businessline that the government will prepare a sectoral analysis to estimate the impacts of the carbon pricing scheme on individual industries. Existing estimates by independent research groups calculate that around $8.2 billion worth of exports will be exposed to the CBAM, which was designed to protect the integrity of the EU Emission Trading Scheme (EU ETS) against so-called “carbon leakages”.

Hydropower development at the border

The government is planning an $18.2 billion boost to hydropower capacity in the north-eastern state of Arunachal Pradesh. The state, which has strategic and geopolitical value for its proximity to the Chinese border and is indeed claimed by Beijing, holds 41 percent of India’s hydropower potential, of which only 1.1 GW of capacity have been installed. This week, the power minister RK Singh is expected to oversee the signing of 13 deals to kickstart the development of nearly 17.9 GW of new hydropower capacity, adding 38 percent to the country’s total existing capacity.

New energy as geopolitical weapon

Tensions between China and India are fast-tracking clean energy development beyond conventional hydropower. Both countries are setting up geothermal power plants on each side of the border, with the latest expected to be built by India in Arunachal Pradesh. The unit will be the second such project for India, and according to sources speaking with the Mint it will be designed in partnership with a Norwegian agency. The project comes amid concerns that India is not responding with adequate force to Chinese development along the border.

New off-grid solution for high altitudes

A first-of-its-kind hydrogen-based microgrid will power the guest house of a major hydropower project at 3200 metres of altitude in Leh, capital city of the union territory of Ladakh. The small pilot project wants to test and demonstrate the viability of green hydrogen-based fuel cells in remote environments where power supply is a challenge.

Pakistan

Cheap Russian oil deal finalised

With its first cargo of discounted Russian oil expected to dock in Karachi next month, Pakistan joins India, China and Turkey in defying the global consensus against trading with Russia. While the move is politically challenging for the country, Pakistan’s economic crisis and mounting debts mean that the opportunity to acquire fuels on the cheap is hard to pass up. If this first transaction goes well, the country hopes to import up to 100,000 barrels per day.

A workaround to subsidise petrol

As talks over a $6.5 billion bailout with the International Monetary Fund (IMF) drag on, the government is taking matters into its own hands and is going ahead with a plan to raise fuel prices for wealthy drivers. This would help subsidise petrol for poorer consumers owning motorcycles and rickshaws. The plan, initially outlined in February, raised concerns within the IMF and the wider public as it is seen as increasing the financial burden for citizens already facing record high inflation.

Bangladesh

With the heat come the power cuts

In the face of a heat wave and the resulting spike in power demand, Bangladesh has been forced to cut supply during the month of Ramadan, putting a strain on its citizens during a period of daylight fasting. Increased irrigation and commercial activities have contributed to a growing electricity demand that the national grid could not meet, meaning it has resorted to turning lights and fans off at a time when citizens needed them the most.

On Twitter this week

Research and further reading

Opinion: How caste comes into play when climate changes - The author shines a spotlight on how the most vulnerable communities in today’s India, Dalits and Adivasis, are also the most exposed to climate change impacts due to social and political discrimination and a lack of adaptation options as the environment becomes harsher.

Study: Lethal heat waves are challenging India’s sustainable development - Heat waves don’t exist in isolation. Their impacts are far reaching and last well beyond the high temperature period. They affect public health, agriculture and complex socio economic systems. And as this study finds, they are starting to hinder India’s progress in fulfilling the Sustainable Development Goals (SDGs).  

Explainer: Why summer air pollution is the new normal in India - In India, severe air pollution is often associated with the cold season. But climate change is altering the weather dynamics that used to keep the air cleaner during hotter days, causing pollutants to stagnate even over unbearably hot cities.

Report: The Laundromat: How the price cap coalition whitewashes Russian oil in third countries - Researchers teased out the journey of Russian oil and oil derivatives from countries buying the fuel at a discount to those who have pledged to reduce Russian revenues from fossil fuels. While the strategy is working, because Russia is being forced to offer hefty discounts, countries of the “price-cap coalition” could do even more, the authors argue.

Opinion: 7 ways to ease impact of Carbon Border Tax - The EU could be the first of many actors rolling out carbon taxes on imports, and carbon intensive economies such as India are bound to suffer. Here, the author suggests a range of practical measures to minimise future impacts.

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