DMPQ-“India needs an economic stimulus that can also aid green energy transition.”

A large demand stimulus seems necessary in getting the V-shaped economic recovery that we need. A green stimulus can create demand, address air pollution and accelerate the green energy transition.  In a few months from now, around Diwali, the burning of rice crop residue in northern India will create an air pollution crisis. This can be avoided by procuring all the crop waste at a remunerative price.

The waste can be converted into briquettes, which can be substituted for coal in thermal power stations. NTPC has already done this successfully without adding to the cost of generation, as the cost of briquettes is comparable to that of coal in energy terms. The crop waste can be given for conversion into briquettes to private entrepreneurs. Dispersed private investment for conversion would take place, creating demand for the conversion equipment, labour and transport.

lectric vehicles (cars, three and two-wheelers) are available in the market. They do not cause air pollution. They are also considerably cheaper to run on a life cycle per km basis. But demand is not rising because of the lack of charging infrastructure. Till a critical mass of charging infrastructure on roads as well as in residential and office complexes is created, demand for EVs will not pick up and the investment on charging stations would not generate returns — a classic chicken-and-egg conundrum. A national programme for building charging stations in all cities with a population of over a million is called for. It can be financed fully through a central government guaranteed debt. This would provide a large demand stimulus across the country, generate a sustained surge in demand for EVs and their manufacturing supply chain. The purchase of electric buses for city bus services may also be fully financed through government guaranteed debt. These measures, in addition to creating a demand stimulus, would also lead to substantial improvement in air quality in our highly polluted cities.

India has the largest cattle population in the world and the goal should be to convert all the cow dung into useful commercial energy. This would be a fit case for a bit of cross-subsidy. Cross-subsidy was used to get the National Solar Mission going. Costs have since fallen dramatically.

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