Blowing Smoke: How Oil India’s credibility crisis could spell doom for oil and gas in Assam

Newsletter - August 6, 2020

Blow out effect: OIL has failed to inspire confidence as the fire at OIL's Baghjan oilfield in Assam rages on | Photo: Sachin Bharali

Blowing Smoke: How Oil India’s credibility crisis could spell doom for oil and gas in Assam

Seventy days after initial reports of a leak at Oil India Ltd’s oil well in the Baghjan oilfield in eastern Assam, the Navratna company’s struggles to contain the blaze looks far from over. The most recent setback, and the biggest yet, came on August 1, when a capping attempt carried out by Singaporean firm Alert Disaster Control at the well collapsed. A statement by OIL clarified the toppling of a hydraulic lift that had been setup to install a Blow Out Preventer in the well is what led to the failure of the attempt. The capping failure, which came about 10 days after three foreign experts received burn injuries during preparations for the attempt, further dents the credibility of OIL’s competency in dealing with the disaster.

Meanwhile, spurred on by OIL’s clear lack of a handle on the situation, protests seeking closure of the facilities have mounted at the company’s oil production units. The company has claimed that widespread and growing protests at their sites are leading to huge production losses, even as it surveys the damage to households in the vicinity of the leak and fire. “Cumulative production loss since May 27, 2020, due to bandhs and blockades: 18,852 MT crude oil, 44.88 MMSCM of natural gas,” OIL’s August 1 release said. While the company has put out statement after statement assuring a speedy resolution to the issues, their very public struggles have ensured that each statement rings hollower and emptier than the last. 

Recently, farmers’ protests and public anger in Tamil Nadu over the central government’s decision to make oil and gas drilling more investor-friendly in the Cauvery delta have forced the state to ban any new oil and gas projects in the region. Can we expect Assam to follow suit? 

The Baghjan Blowout

On May 27, a massive fire engulfed Well No. 5 at Baghjan oil field and its surrounding areas in Upper Assam’s Tinsukia district, when it suddenly started spewing out gas uncontrollably during a workover operation.

The blowout was followed by an inferno on June 9, which killed two OIL firefighters and destroyed a wide area consisting of agriculture land, human settlement, wetlands with exotic aquatic fauna and a riverine system. A Wildlife Institute of India (WII) report submitted to the central government on July 15 flagged immediate and long-term damage to the biodiverse region, including contamination of the groundwater. While 9,000 people were initially moved to relief camps after the blowout, the WII report reveals that 65-70ha of the burnt-out area mapped included crop fields, grasslands, and swamps. “There was a visible oil spill [oil and sediment] on June 16, downstream of the well,” the report stated. The report also highlighted steep decline in bird and fish populations due to the oil slick that accompanied blowout. 

Photo: Bitupon Kolong

While the area had been identified back in 1991, the Baghjan Gas Field was created in 2003 after the presence of commercial hydrocarbon in the area was first established in the first well (Baghjan-1) in the same year. Within a couple of years, the oil and gas field was converted into a Petroleum Mining Lease, and the company currently has 23 such drill sites across the area.

A damning report by an expert panel on the Baghjan blowout incident released at the end of July found serious deficiencies in the operation of the well site from both the contractor and OIL, practically since drilling for the Baghjan-5 well began in 2006. “There was a deficiency in understanding of the gravity of a critical operation like removal of BOP without having a confirmed and tested secondary safety barrier. There was deficiency in proper planning of critical operations. There was a clear mismatch between planning and its execution at site and deviations from the Standard Operating Procedure,” the 406-page panel report revealed. 

Equally alarming was the revelation that OIL had “flagrantly violated” the procedure envisaged under Section 25 and 26 of the Water Act and Section 21 of the Air Act, which establishes procedures for the mandatory Consent to Establish and Consent to Operate that were to have been granted by the Assam Pollution Control Board. The panel report found that OIL had the required consent for drilling and testing of hydrocarbons in the DSNP Area for just three of the 14 years since drilling for Baghjan-5 began.

In 2012, similar concerns were raised by the National Board of Wildlife (NBWL) on the subversion of law for the laying of pipelines in the ecologically sensitive region. 

A new low in risk assessment

In the months before the gas leak and blaze at Baghjan-5, the Ministry of Environment, Forests and Climate Change (MoEFCC) issued Environmental Clearances (EC) for a total of 25 hydrocarbon exploration and extraction to OIL in Mechaki and Tinsukia districts where the Baghjan oilfield is located. The cleared list includes seven exploratory wells covering 96,000 sqm under the Dibru-Saikhowa National Park (DSNP).

In 2011, OIL received EC for drilling of 26 wells for development and 15 wells for exploration in Tinsukia from India’s environment ministry, following two public hearings in July and August 2011. 

For the Extension Drilling and Testing (EDT) of hydrocarbons at seven locations under Dibru-Saikhowa National Park area project, OIL applied for EC from MoEFCC in June 2016 and the Terms of Reference (ToR) was granted in August with the condition that OIL conducts a public hearing. 

Soon after, American consultancy firm EMR was contracted by OIL to conduct an Environment Impact Assessment (EIA) for the seven new sites. OIL submitted the final EIA report to the Ministry of Forest and Environment and Climate Change (MoFE&CC) in December 2018.

According to the EIA report, the seven subsurface locations located within DSNP are to be drilled by Extended Reach Drilling (ERD) from three surface well pads within Baghjan PML, with the nearest boundary of DSNP situated about 1.34 km from the ERD surface locations. The report further stated that land around the sites is primarily used as settlements, homestead plantations and agricultural lands for the villages Dighaltarang and Baghjan, which are surrounded by several tea plantation estates.

Photo: Business Standard

Incidentally, the report also claimed that the likelihood of blowouts in the wells to be “Occasional/Rare”. Their assessment was based on the database on on-shore drilling and comprehensive root cause analysis of the US Gulf Coast blowouts between 1960 and 1996. It further stated that ‘the probability of ignition of blow out releases of hydrocarbons for the proposed exploratory drilling project will be about ~0.027% and can be considered to be as negligible.’ Notably, a comparable analysis for Indian conditions was conspicuously absent in the report.

Admitting a petition filed by Assam-based conservationists Bimal Gogoi and Mridu Paban Phukan against the EC granted to OIL for drilling in the Dibru-Saikhowa National Park, the National Green Tribunal (NGT), on July 20, directed India’s environment ministry, OIL, APCB and the Assam State Biodiversity Board to explain how drilling in the national park was permitted. The conservationists have raised doubts over the legality of the EC as neither a biodiversity assessment study, nor a public hearing was conducted for the project—which is in violation of September 2017 Supreme Court order, and the Environment Impact Assessment (EIA) Notification of 2006 respectively. The matter is now listed to be heard by the NGT on August 13. About a month before that, on June 25, the green court also penalised OIL with an interim penalty of ₹25 crore for the oil major’s failure to stop the blow out.

Perhaps even more egregious is the apparent reluctance to engage with public consultations for the project. Despite being granted the ToR for drilling activity being conditional on public consultations, OIL was evidently in no mood to conduct any such hearing.

In the 20th EAC meeting held on February 27 and 28 2017, OIL requested an exemption from public hearing for the drilling project in the vicinity of the national park by citing details of public hearings conducted in 2011 for the 26 development and 15 exploratory wells for which EC had been granted. This stance was validated by the MOEFCC’s Expert Appraisal Committee (EAC) in July 2017. While the EAC insisted on holding public hearings over the drilling project in DSNP by OIL till May 2019, this requirement was curiously dropped thereafter. During an EAC meeting on 8 May 2019, the OIL chairman pressed for an exemption from public hearings stating “it will otherwise jeopardize the whole process, for which OIL is persuading since 2016”.

The EAC cleared the project considering its “national importance” for energy security on January 16, 2020.

Will Assam go the TN way?

OIL’s hesitance to undertake public hearings in the area also reveals the public discontent with the project, much before the latest wave of protests following the blowout at Baghjan-5. “It was informed that conducting a public hearing in the area is a big challenge and couldn’t be completed at times due to unruly acts by the local pressure groups,” OIL further added in a testament to the EAC.

Public anger with the company has only worsened over the past two months as OIL floundered in its attempts to manage the blaze, and demand to halt all oil and gas exploration and development is gaining volume in the state. In addition to the ecological devastation brought on by the blow out, damage to agricultural land and plantations has fanned anger among local populations. This is perhaps the most worrying aspect for OIL and other oil and gas operators in the state. Unless OIL moves beyond insipid palliative assurances regarding the safety of their operations, the risk that the public anger could snowball into an existential threat for hydrocarbon exploration and development in the state.

Photo: Indian Express

Recent developments in Tamil Nadu speak volumes of how persistent public anger can translate into political pressure. The Cauvery delta is estimated to hold 700 million tonnes of hydrocarbon reserves here, such as oil and natural gas, including CBM and shale gas. The region is also among the most agriculturally potent lands in the state, accounting for a bulk of the rice grown. The agricultural sensitivity to hydrocarbon exploration, and the vulnerability of agricultural lands to accidents spurred protests across the state, starting in a tiny village of Neduvasal in 2016. While agricultural and student groups from across the state kept the pressure on the state government to halt the expansion of exploration and drilling in the region, the central government moved in the opposite direction in a bid to make oil and gas drilling more investor friendly.

Something had to give. In January this year, as the Indian government announced exemptions from EIA for onshore and offshore oil and gas drilling, farmers’ protests and public anger in the state rose to a fever pitch. Acknowledging the public sentiment, the state government promptly requested the Centre for an exclusion from the exemption. This was followed by the state government’s declaration of the delta as a ‘protected agricultural zone’ where no hydrocarbon projects would be allowed. The move puts into suspended animation plans by Vedanta and ONGC to drill 274 and 67 wells respectively, at a cumulative cost of ₹18,000 crore.

The Tamil Nadu experience ought to serve as a cautionary tale for oil and gas companies in the country. But it probably won’t. As this article was being written, reports of a fresh gas leak from one of ONGC’s facilities in Assam have surfaced. Energy companies have long hidden under the cloak of “national interest” to dodge accountability for lapses in procedure and operational safety. The credibility of this claim and of the entities that make them can only erode further, barring the elevation of the fact that a nation is nothing without its people, and national interest necessarily has to be in the interest of the public, including primarily those directly affected by these installations.

Climate Science

Erratic: Mumbai faced the brunt of a fierce resurgence in monsoon activity following a dry July | Photo: Scroll

Monsoon Update: Wet start to August offsets deficit from driest July in five years

An uptick in monsoon activity in the first days of August has seen the nationwide monsoon deficit fall from 10% recorded at the end of July to just 1% on August 5. Poor rainfall was recorded in north and central India in July with heavy deficits recorded across almost half the country. Activity, however, has picked up in the beginning of August as the monsoon continues with erratic distribution- particularly in rain rich regions in the Western Ghats and the Northeast where heavy deficits have been recorded alongside big excesses.

While the weather department issued a ‘red alert’ for Mumbai, which braved incessant rain and cyclonic wind speeds for two consecutive days, the season’s first low pressure area over the Bay of Bengal is likely to bring heavy rains over eastern India over the coming week.

A new study, however, claimed that the intensity of India’s monsoon season is likely to weaken in the near future because of the warming of the Indian Ocean and the Bay of Bengal that is accentuated by land mass changes. This study by the National Institute of Oceanography at Goa is significant because unlike other studies, which rely on temperature and rainfall variations recorded by the India Meteorological Department (IMD), this one reviewed under-sediment cores derived from the Krishna Godavari basin of the Bay of Bengal to understand rainfall pattern changes in the past 2,000 years.

Neighbouring China and Bangladesh have been left devastated as a result of torrential rain. Up to 50 million people have been affected in China, while a third of Bangladesh’s population has been displaced because of massive flooding.

Heatwave days in India increased by over 80% in 2019: Report

A new report found that the average number of heatwave days saw an increase in 2019 after recording a decline the previous two years. State-wise data in the EnviStats India 2020 report released by National Statistical Office (NSO) revealed there were 157 heatwave days in 2019 – which is an 82.6% year-on-year increase.

Rajasthan was the worst-hit (20 days) followed by Uttar Pradesh and Uttarakhand (13 days each). The report stated 2019 had the third-highest number of heatwave days in the past decade after 2010 (254 days) and 2012 (189 days).

Expect significant temperature rise in J&K Himalaya region by end of century: Study

A new study predicted a significant temperature rise in the Jammu and Kashmir Himalaya region by the end of the 21st century. The study projected three scenarios – it predicted the average annual temperature in the region to rise by 4.5 °C, 3.98 °C, and 6.93 °C, depending on the rate of emissions rise and climate change. The study also predicted that the cold desert climate zone in the Ladakh region would shrink by 22% with a corresponding rise in subtropical and temperate zones by the end of the century.

First active leak of methane found in Antarctica sea bed

A group of scientists have revealed the first active leak of methane from Antarctica’s sea floor. The scientists also found that microbes that absorb the gas before it reaches the atmosphere were small in number even five years after the leak was first detected in 2011. The scientists, however, have not linked the leak to climate change as yet because the Ross Sea, where the leak was found, is not yet warmed significantly.

3 billion animals killed, displaced by Australian bushfires, say scientists

The Australian bushfire season of 2019 and 2020 killed or displaced nearly 3 billion animals, scientists said. The first glimpse into the scale of the impact revealed an estimated 143 million mammals, 180 million birds, 51 million frogs and 2.5 billion reptiles were affected by the fires. Even if the animals survived the fires, the resultant starvation, dehydration and predation by feral animals – mostly cats – that followed is sure to have killed them, scientists said.  

Two Arctic ice caps disappear; region’s sea ice records all-time low

Images from NASA’s Terra satellite revealed two Arctic ice caps, located on the Hazen Plateau of Canada’s Ellsmere Island, have completely disappeared. The National Snow and Ice Data Center linked the disappearance to global warming.

Sea ice hit an all-time low for this time of the year in the Arctic region, which has been battling record-high temperatures and massive wildfires. A cyclone was also observed over the thinning ice.  The National Snow and Ice Data Center observed that sea ice was disappearing at a rate of more than 56,400 square miles a day earlier this month compared with the usual rate of 33,000 square miles. The Siberian coast has been hit the hardest, according to satellite images.

‘Worst case scenario’ of rise in temperatures is still best policy guide until 2050: Study  

In a wake up call for climate action, a new US study has defended the RCP 8.5 CO2 emissions scenario, also called a “worst case scenario” as the ‘most useful choice’ for the governments to plan climate policy until 2050. Published in the Proceedings of the National Academy of Sciences, the study states that the UN panel of climate scientists in reports over the past decade, had accurately tracked cumulative CO2 emissions to within 1% in the years 2005-2020. 

The representative concentration pathway RCP 8.5 estimates a surge in temperatures of up to 5C above pre-industrial times by 2100, way higher than the target of the 2015 Paris Agreement to limit warming “well below 2C”, agreed by 200 countries. The study states that the scenario remains consistent with announced government policies until 2050 and has “highly plausible” levels of CO2 emissions in 2100, Climate Home reported.

The study also states that the usefulness of RCP 8.5 is not changed due to the ongoing COVID-19 pandemic. If pandemic restrictions continued till end 2020 it would result in a reduction in emissions of -4.7 Gt CO2. This represents less than 1% of total cumulative CO2 emissions since 2005 for all RCPs and observations, the report stated.

Climate Policy

Unsound plans: The Uttarakhand government has sidelined objections raised by NGT's expert panel in the newly finalised Bhagirathi eco-sensitive zone’s zonal master plan | Photo: Scoopnest

Bhagirathi zonal plan finalised despite expert panel disagreement

The Bhagirathi eco-sensitive zone’s zonal master plan (ZMP), which was finalised by the Uttarakhand government and approved by the environment ministry last month, did not take into account objections put forth by the expert members of the National Green Tribunal (NGT) committee that was in-charge of preparing the plan.

Annexures to the ZMP, published on the Union environment ministry’s website, mention the concerns raised by the NGT panel such as cutting into the slopes for roads and change in land-use norms. Experts and activists previously raised their own concerns that the ZMP would make the Bhagirathi region vulnerable to natural disasters.

Trump’s biggest climate rollback to be investigated by EPA inspector general

In a move that could prove to be a setback for the Trump administration, the internal watchdog of the Environment Protection Agency (EPA) launched an investigation into the government’s decision to weaken the Obama administration regulations to tackle climate change.

The Trump administration had announced the biggest rollback of federal climate change rules in March. The EPA’s inspector general asked top agency officials to surrender all documents related to the rollback. The investigation will be focused on understanding whether the move by the Trump administration was “consistent with requirements, including those pertaining to transparency, record-keeping, and docketing, and followed the EPA’s process for developing final regulatory actions.”

Strengthen Ireland’s climate action plan, Supreme Court tells govt

In a significant win for environmentalists, Ireland’s Supreme Court ordered the government to take more aggressive climate change action after noting that current emission cutting plans fell ‘well short’ of the action required to meet the country’s climate commitments. Under its Climate Action and Low Carbon Development Act, 2015, Ireland needs to cut its emissions by 80% by 2050 compared to 1990 levels.

The court was hearing a case filed by Friends of the Irish Environment (FIE), which pointed to the shortcomings of Ireland’s National Mitigation Plan published in 2017. The NGO said the developed countries such as Ireland should be looking at cutting emissions by 25-40% by 2020 from 1990 levels.

Russia raises concerns about EU’s carbon border tax plan

Russia made its displeasure over the EU’s proposed carbon tax at the bloc’s borders known as it raised concerns the move would not adhere to World Trade Organisation (WTO) rules. The country’s economic development minister, Maxim Reshetnikov, made it clear last week that Moscow was ‘concerned’ that the carbon tax was an attempt to use the climate agenda to ‘create new barriers’.

France set to ban heated terraces for restaurants, cafes

In an encouraging move towards environment protection, France announced plans to ban heated terraces for cafes and bars. The country’s ecology minister made the announcement, calling outside heating or air conditioning an ‘ecological aberration’. More than 75% of restaurants and cafes in Paris have a heated terrace, according to trade groups.

The ban will come into force in the winter season, keeping in mind the blow restaurants have suffered as a result of the COVID-19 pandemic. The country will also made it mandatory for all heated or air-conditioned public buildings to keep their doors closed in a bid to stop wastage of energy.

Air Pollution

Reality check: South Asia is the most affected region in the world in terms of lost life-years due to poor air quality, reveals an extensive global study | Photo: Financial Express

Indians losing 5.2 years of life expectancy by inhaling polluted air, UP worst hit: Study

An average Indian loses 5.2 years of life expectancy to air pollution, while the average north Indian loses it by 8 years, concluded the study by Energy Policy Institute at the University of Chicago (EPIC), which used the 2018 pollution levels as a base. Life expectancy of an average person in Delhi is reduced by 9.4 years and those living in Lucknow by 10.3 years, the study stated. 

India ranked second on the global list in terms of lost life years behind Bangladesh, while Nepal, Pakistan and Singapore made up the top five on the list.

The study revealed that the top 14 most polluted districts in India were in Uttar Pradesh. Lucknow ranked as the most polluted district, while Delhi ranked the 15th-most polluted region in India. According to the study, India’s average 2018 air quality life index 63.2 ug/m3 was an improvement from the life expectancy lost in 2016, which was 6.1 years when the particulate pollution was at 71ug/m3.

Green court gives Indian government 2 months to finalise end-of-life vehicle scrapping policy 

The National Green Tribunal (NGT), India’s green court, has given two months to the central government to release policy guidelines on scrapping of the polluting end-of-life vehicles (ELV) and setting up authorised recycling centres compliant with environmental norms. 

The NGT said the government’s delay lacks sensitivity. The court also pointed out that the stand of the Delhi Pollution Control Committee shows that clandestine activities are still being found for which vigilance may be strengthened.

The number of ”end-of-life vehicles” will be over 21 million by 2025. Earlier, transport minister Nitin Gadkari had blamed the delay on the requirement of taking approvals from different departments and state governments. He had said a scrapping policy will allow recycling through industrial clusters, which will help the industry reduce imports and cost.

Study: Mumbai lost 42.5% urban green cover over 30 yrs, land-surface temp increased three-fold 

Mumbai’s urban green cover dropped by more than 42.5% in the past 30 years, according to a study published in peer-reviewed journal Springer Nature. In 1988, of Mumbai’s total area of 63,035 hectares (ha), the green cover was 29,260 ha, which has fallen to 16,814 ha in 2018.

Scientists used Landsat-5 and Landsat-8 multi-temporal satellite images provided by the United States Geological Survey to assess land use land cover (LULC) changes, land surface temperature (LST), proportion of vegetation, and other parameters for Mumbai during spring (March-April) over 30 years. The loss of the trees and increase in built-up area led to a three-fold increase in land surface temperature (LST), according to the study. Experts said the LULC changes have altered the micro-climate of the city’s urban ecosystem.

Mumbai’s tree census, completed in 2018, however, identified 2.975 million trees, over 1 million more than in 2008. Campaigners, however, said the census data is suspicious. 

Mumbai to get India’s 1st low-cost air monitoring study in Nov

Mumbai will conduct a first-of-its-kind hyper-local air pollution monitoring in the country using low-cost sensor-based technology. The Maharashtra Pollution Control Board (MPCB) and the Indian Institute of Technology-Kanpur (IIT-K) signed a memorandum of understanding (MoU) to install low-cost sensors across 15 locations in the Mumbai Metropolitan Region (MMR) to accurately measure the harmful pollutant concentration in the air.

Professor SN Tripathi of IIT-K, who is heading the National Clean Air Programme, said the idea was to check the stability and accuracy of low-cost sensors. He said the scientists will assess how low-cost sensors measure pollutants, stability of calibration models and the final use for hyper-local monitoring.

Manual monitors cost ₹8 lakh per station per annum, while the continuous ones cost ₹1.5 crore per station every year.  Experts said low-cost monitors cost ₹50,000 to ₹2 lakh (including maintenance), based on the number of pollutants they measure. 

SC contempt warning brings IIT-Bombay U-turn on NCR smog tower project, experts call the move wasteful

Following a warning of contempt notice from the Supreme Court over backing out after agreeing to install a smog tower, IIT-Bombay signed a fresh MoU with the government to install a smog tower in Anand Vihar bus terminal, one of the most polluted regions in the National Capital Region. Helped by the University of Minnesota and IIT-Delhi, the installation may take another 10 months to complete. 

Experts have called smog towers “highly unscientific”, and a “waste of taxpayers money”. The Council on Energy, Environment and Water (CEEW) said the move is unfeasible as it will take 2.5 million such towers to clean Delhi’s air. That money can be used to clean up thermal power plants that refuse to install technology to cut emissions, experts said.

Experts also pointed out that no government is using smog towers as a regulatory measure, and only private entities are installing them. A citizens’ group called Jhatkaa has been running a campaign against smog towers since March 2020, giving the science and rationale behind it.

Land acquisition issues halt pipeline of cleaner CNG to arrive in Kolkata 

The supply of Compressed Natural Gas (CNG) eludes Kolkata as the project is in a limbo over land acquisition issues at a stretch between West Bengal’s Durgapur and Kolkata, which is hampering the work on a 858-kilometre-long pipeline, according to an affidavit filed in the NGT by Gas Authority of India (GAIL) Ltd, the Union government’s nodal agency for CNG.

According to GAIL, the work on a 166-km-long section of the pipeline from Durgapur to Hansagara (Hooghly) and Kolkata can only begin after acquisition of the Right of Usage (RoU). The pipeline is designed to pass through Uttar Pradesh, Bihar, Jharkhand and will end in Kolkata. The tribunal is expected to hear the case by the end of August. Experts pointed out that Kolkata immediately needs CNG to replace polluting diesel vehicles. Almost 95% of commercial vehicles in the city run on diesel.

China raises $12 billion anti-pollution fund in phase 1

As part of its first dedicated environmental fund, China has raised US$12.59 billion in its first phase to fight water, air and soil pollution. China’s environment minister Huang Runqiu said the fund will back the ‘green transformation’ of the economy and strengthen the role of the market in fighting pollution.

Over the past four years, the Chinese government allocated US$13.96 billion (97.4 billion Yuan) on air pollution. According to Zou Shoumin, a director responsible for finance at China’s Ministry of Ecology and Environment (MEE), China will continue backing anti-air pollution programmes, as the government plans to  coordinate the treatment of ozone pollution and PM2.5 simultaneously.

‘Badvertising’: Ban aggressive ads of polluting SUVs, demands UK campaign

Aggressive ads are pushing up sales of polluting big SUVs and jeopardising climate targets hence such ads should be curbed just like the ads promoting smoking — that’s the demand by an anti-pollution campaign called ‘Badvertising’, which is gaining strength in the UK. The campaign demanded an immediate end to ads promoting cars with average emissions of over 160g CO2/km, and those exceeding 4.8m in length.

Experts said sales of big polluting cars will breach UK climate targets, and should be banned as the government is developing an ambitious transport decarbonisation plan to reach net zero by 2050. According to a report by green think-tank The New Weather Institute and climate charity Possible, SUVs make up more than 4 in 10 new cars sold in the UK, and the trend towards big cars is propelled by aggressive advertising. Their report found that 150,000 new cars on the road are too big for a standard UK street parking space.


No concessions: The Indian government is reportedly considering withdrawing duty concessions for imports from China in the wind energy sector to boost manufacturing | Photo: Carbon Brief

India may withdraw duty concession for wind manufacturers to discourage imports?

To encourage domestic manufacturing in the wind energy sector, the government is likely to withdraw Customs duty concessions on wind turbine components next year. Unlike the solar sector, where about 90% of the modules come from China, nearly 85% of wind-turbine manufacturing takes place in India, except some vital parts that are imported from China because they are cheaper. 

Talk of withdrawing Customs duty concessions reportedly started after the border issues between India and China. Some experts see it as a setback for the wind power, which forms the biggest chunk of India’s renewable energy sector. They said the move will increase costs, while matching expertise and skillset in India within a year would not be possible.

India extends safeguard duty on solar imports, will it boost domestic manufacturing?

India extended the safeguard duty (SGD) on solar imports from China, Thailand and Vietnam by another year from July 30, 2020. Solar imports will attract 14.9% SGD in the first six months, followed by a reduced 14.5% SGD for the next six months ending July 2021.

Mercom reported that the government plans to keep the effective duty on Chinese imports at 25% for which it may announce an additional basic Custom’s duty (BCD) of 10%. 

Government was supposed to implement the BCD on August 1, but it has postponed the plan by two to three weeks over the issues of power purchase agreements that have been signed before August 1. The effective duty is expected to rise up to 40%. The World Trade Organisation’s (WTO) rules do not allow more than four years of safeguard duty. 

Experts said that the extension of safeguard duties won’t do much to boost domestic manufacturing in the short term. Locally produced solar cells and modules will initially cost about 20% more than Chinese imports. Around 80% of India’s solar imports are from China. The rest are sourced from Thailand and Malaysia, which are mostly made by Chinese-origin companies. With India being the signatory to the ASEAN Free Trade Agreement, it cannot impose the basic Customs duty on these two countries. Experts point out that Thailand and Malaysia cannot keep up with India’s requirements in the short term.

India’s distributed renewable energy sector sinking in financial crisis

Covid-19 restrictions have hit the distributed renewable energy sector badly. The industry complained of a major dip in revenue in the past few months. The sector is vital for the energy needs of farmers in rural India.

The market for distributed solar products such as solar lanterns, pump sets and mini-grids was estimated to grow to ₹10,117 crore by 2023 before the pandemic hit. Investment experts said financiers, despite having unutilised credit limits, are expecting the current outstanding loans to be retired first. They pointed out that the bad loans are not getting reflected due to an extended moratorium.

Rooftop solar rates decline 22%, India may still miss 40 GW by 2022 target

Government’s benchmark rates for rooftop solar have fallen 22% for the projects between 1KW and 10 KW, and 20% for over 10 KW. This is a fourth successive annual decline except in the hilly regions of the Himalayas where the rates are higher by up to Rs5 because of the absence of an operational network. 

Experts said India will miss its 40 GW by 2022 rooftop solar target, with current capacity at less than 3 GW. The sector is facing implementation challenges, despite CFA (central finance assistance) schemes and net metering regulations. 

Experts said discoms are reluctant to back rooftop solar projects as they have to bear maintenance expences and they end up losing high paying customers. To cite an example of just one state, the report of Maharashtra chief engineer states that the consumer applications have been pending for two years. This despite the regulator MERC has already prescribed stage-wise time limits for processing applications all the way to their commissioning stage. 

In January, the discom MSEDCL shocked consumers as it decided to levy heavy grid support charges for net metering rooftop solar systems with a capacity of over 10 kW. Since the Covid-19 pandemic the state decided to not levy any grid support charges on rooftop solar installations until the cumulative rooftop capacity of the state reaches 2 GW.

 Maharashtra discom MSEDCL has asked its engineers to speed up clearing the applications of rooftop installations online within the time limit because an inspection revealed that applications have been pending for over one or two years.

Kolkata-based Vikram Solar to set up massive 3 GW solar manufacturing unit in Tamil Nadu

India’s Vikram Solar will invest US$726 million to set up a solar equipment factory in Tamil Nadu as India encourages manufacturing to reduce imports. The massive 3-gigawatt plant will be ready by 2025. It will make wafers, cells and modules. The government is encouraging investors to back domestic manufacturing by imposing duties on cheaper imports of solar cells and modules. 

The state incentives are beginning to draw investors. Earlier, ReNew Power Pvt announced plans to invest as much as ₹20 billion to set up a 2-gigawatt cells- and modules-making facility. The renewable power producer is in talks with various Indian states for the venture, it said. India’s installed manufacturing capacity is about 3.1 GW of solar cells and 11 GW of solar modules. India’s annual demand is 10 GW solar PV equipment, nearly 85% of which is met via imports.

Rajasthan draft policy increases solar tariffs for open access consumers

According to a draft policy, Rajasthan is planning to increase tariffs by at least half-a-rupee on big consumers trying to purchase renewable energy through the open market. This way, the most sun-rich state will join Maharashtra, Andhra Pradesh, Karnataka and Telangana, which are restricting large consumers from buying power from the open market to protect their power distribution companies.

Experts said the draft of the renewable energy regulations is not aligned with the state’s solar policy released last year. The renewable energy lobby in the state said open access projects run well, but the draft policy will worsen the future for open access.

UK’s offshore wind farm power costs so cheap the developers will pay to produce power: Study

Once backed by subsidy, the offshore wind power farms in the UK will soon be paying to produce power after a dramatic drop in the offshore wind power costs. According to a study by Imperial College London, the latest offshore wind farms will operate with “negative subsidy”.

Between 2015 and 2019, the price paid for power from offshore wind farms across northern Europe fell by 11.9 ± 1.6% per year.  Researchers said at this rate, UK schemes may become the first to cross the threshold of ‘negative subsidy’ even before Europe does. 

In the 2019 auctions, the cost came down to around £40 per megawatt hour. The study expected wholesale electricity prices to rise above this level over the lifetime of the projects, so wind farm operators will have to pay the government the difference between their £40 ‘strike price’ and the wholesale energy price. The savings will be passed on to households via their energy bills.

Electric Vehicles

Focus on self-reliance: With the security situation with China at an all-time low, India's focus on drafting a nation-wide EV battery policy is a timely step forward | Photo: Indiatimes

Bajaj still wary of switching to EVs, NITI Aayog says battery policy in the works

India’s largest two-wheeler manufacturer, Bajaj Auto, has said that it plans to ‘go slow’ on electric vehicles for the time being, even though it was India’s first large manufacturer to launch an electric two-wheeler — the electric Chetak — in January 2020. The decision is influenced by what Bajaj feels are still high prices for battery packs, despite their costs having dropped to ~$150/kWh. Its competitors, Kinetic, Mahindra, TVS and even Ather, have, however, steadily expanded their EV product lineups. 

Meanwhile, Amitabh Kant (CEO, NITI Aayog) revealed that the planning body is working on a policy that will cover battery manufacturing within India. This would be good news for local automakers as battery packs account for as much as 45-50% of the cost of EVs. Most of them are imported from China and are a concern in terms of self-reliance for India’s EV ambitions. 

All of remote French town given the Renault Zoe for free 

The Renault Zoe electric car has been leased out to each resident of the remote French town of Appy for three years for free, and the carmaker is also installing a home EV charger for each resident. Renault said the point of the exercise was to prove that if even a town as remote as Appy can drive EVs, it’s certainly possible for mainstream consumers. 

The 100% electric Zoe drives 394km on a single charge of its 52kWh battery pack, which may come in handy for its approximately 26 new owners as the nearest town to Appy — the industrial hub of Toulouse — is 150km away. The car can also be charged to 90% capacity in just 30 minutes using a DC fast charger, and comes with an eight-year, 100,000 mile warranty on its battery pack, and has already sold over 100,000 units across Europe — despite having been launched in 2020. 

Kandi to launch cheapest electric car in US at $20,490

Chinese EV maker Kandi (known as Zhejiang Kangdi Vehicles in China) will launch the cheapest electric car in the US — the $20,490 K27— in the last quarter of 2020. The small, but fully-electric K27 could actually retail at $12,999 after factoring in the federal credit of $7,500, in which case it would be $2,000 cheaper than even the $14,790 Chevrolet Spark. 

The car runs for a claimed range of up to 100 miles on a single charge of its 17.7 kWh battery pack. It could also be joined by its sister product, the K23, which, at $29,999, is designed to travel up to 180 miles on its 41.4kWh battery pack.

Fossil Fuels

Losing its sheen: Despite holdings enormous reserves, the high cost of extracting oil from the Canadian oil sands has forced Total to abandon future plans | Photo:

Total to exit Canadian oil lobby group, write down US$8.1 billion in fossil fuel assets

In a major decision, French energy giant Total SE has announced that it will exit the Canadian oil lobby group and pull out of developing the country’s much talked about oil sands. Total’s exit is based on assessments that show that extracting oil from oil sands is costlier and more carbon intensive than from conventional oil fields. The group is also writing down $8.1 billion of its fossil fuel assets — $7 billion of which comes from the oil sands alone — after realising that oil prices in the post-Covid world may level at around US$50/barrel (beyond 2030), instead of the US$60-80/barrel that major oil explorers had anticipated. 

Canada slashes budget for environmental impact monitoring in oil sands territory

The Canadian federal government and the province of Alberta have come to joint agreement to slash the budget for environmental impact monitoring downstream of oil sands development in the province by 25% — from $58 million last year to no more than US$44 million for 2020-21. The decision will imply that water from ponds that tail the oil sands deposits may be released into the Athabasca river without testing for quality, and field assessments for impacts on mammals, birds, amphibians, wetlands, insects or fish will be dispensed with. 

The agreement has been justified on the back of the Covid-19 pandemic, under which much of the time allotted to field assessments was lost to restrictions placed by social distancing. Incidentally, the administrative costs for the program have risen from US$7 million last year to $10 million in 2020, but the budget for the Alberta Biodiversity Monitoring Institute will be curtailed from the usual US$4-5 million a year to a mere US$1.4 million. 

23-year-old Australian sues govt for not disclosing climate risks 

A 23-year-old law student in Australia is reportedly suing the country’s government for failing to disclose the risks of climate change to investors buying government bonds. In her unique lawsuit, Katta O’Donnell said that in failing to warn investors of the risks of global warming, the government was not telling Australians the truth about climate risks, and her suit specifically stated that “any risks to the country’s economic growth, value of its currency or international relations, to name a few factors, might change the value of her investment”. 

In other developments, the Australian Energy Market Operator (AEMO) called for AUD 6.1 billion (₹32,000 cr) in new investment for power transmission infrastructure that will carry solar and wind power across New South Wales, Victoria and Tasmania. This is as part of the country’s plan to wind down coal power plants by 2040. Incidentally, coal still powers nearly 2/3rds of all Australian households, but the intermittency of renewables and the advent of rooftop solar and batteries also presents new challenges to the country’s electricity grid. 

Poland to exit coal by 2060, Austria’s OMV targets net-zero emissions by 2050

The deputy prime minister of Europe’s largest coal consumer, Poland, announced that the country will cease its dependency on coal by 2050, or latest by 2060. The official communication also noted that “the non-coal sector will have to make huge investments in alternatives to coal”. 

The announcement is hugely significant as Poland’s power sector is heavily dependent on the fuel, and the country has so far strongly opposed any commitments to go carbon-neutral. In 2018, coal accounted for 47.1% of the nation’s power output, and the news also followed the planned merger of Poland’s three utilities, Tauron, Enea and PGE, into two groups that will focus on coal and non-coal operations going forward.

Across the border, Austrian oil and gas driller OMV Group said that it will aim to slash carbon emissions from its upstream and downstream operations to zero by 2050. The reduction will come about via the use of solar power for operations within Austria, energy efficiency measures and carbon capture and storage.