Liquefied Natural Gas – The Bridge to Green Profits

The world is going green. Pushed to act in the face of regularly occurring extreme weather events, governments globally have made ambitious pledges to cap global warming and mitigate climate change.

Carbon neutrality is the name of the game but the path to it is far from straight forward.

At the recently concluded COP-26 Climate Conference in Glasgow, a majority of the participating countries pledged to make their economies carbon neutral by the year 2050.

India, which hitherto had stopped short of making such pledges, too stunned the world by announcing its own goal to become carbon neutral by 2070. Now begins the challenge of making this pledge a reality.

The vision of a carbon neutrality rightly envisages a world powered primarily by renewable sources of energy. But, this journey will be nothing short of a decades-long march. Nearly half (45%) of India’s current energy needs are met by coal, according to the International Energy Agency’s (IEA) World Energy Outlook 2019 edition.

Petroleum and other liquid energy sources account for another 25%, while biomass & waste are at 20%. Hydroelectricity, nuclear energy and other renewable sources account for just 1 percent each of the country’s energy consumption pie.

Therefore, scaling up the share of renewable energy will take time. But it’s time India doesn’t have if it is to meet its pledge. The country needs energy to industrialise to lift the standard of living of its vast population. But, in the absence of any meaningful climate finance from richer countries to help develop clean technology, that’s going to come at the cost of emissions.

How then does India strike a balance between its seemingly contrasting goals of emissions reductions and greater industrialisation?

Enter natural gas.

Natural gas is the cleanest fossil fuel in existence today and can serve as a transitionary fuel while the switch to renewables is taking place.

A study conducted by the IEA across selected regions found that between 2010 and 2018, a switch from coal to gas saved around 500 million tonnes of carbon dioxide, the same as putting 200 million EVs on the road in the same period.

Yet, the IEA in its 2019 World Energy Outlook found that natural gas made up just 6% of India’s energy mix. Higher cost of imported natural gas, with domestic sources of production scarce, have tended to hold back the switch to natural gas, especially for coal-powered industry.

But making a start by transitioning even just the industries operating on liquid sources of energy to natural gas, before then taking on coal with the aid of incentives and policy interventions, has the potential to deliver immense emissions reductions and improved profitability for industries.

Many emerging enterprises, such as Ultra Gas & Energy, are doing just that.

At a time when sustainability, carbon footprint and ESG (Environmental, Social, Governance) are becoming increasingly bigger differentiators of corporate performance, a switch to natural gas can future-proof a business and its income streams.

Customer-facing businesses are growing ever more cognizant of their environmental impact, as consumers’ purchase decisions are increasingly influenced by their perception of how sustainable a brand is.

These companies are now insisting on similar sustainable practices from their vendors and associates. Export-oriented business also need to future-proof their operations, or they could find themselves losing business from demanding companies and countries, for not meeting their sustainability standards.

The government of India, too, is backing its push for a greener economy with a regulatory framework that emphasizes sustainable practices.

For instance, any entity can distribute and market LNG in any Geographical Area (GA), even if it is not the authorised entity for that GA. This significantly widens the scope for new entrants in this space. Additionally, India’s top 1000 listed businesses will mandatorily have to report their ESG activities, goals and outcomes from FY22-23.

Recognising the role of natural gas as a key fuel in the transition from polluting fuels to renewable energy, the government has set a goal to double its share of the energy basket by 2030.

Ultra Gas and Energy is committed to catalyzing the adoption of clean fuels by industries through a low-capex model that assures green profits through fuel cost savings, operational efficiencies and reduced emissions.

The company’s virtual pipeline network, along with its upcoming pan-India network of Green Fuel Hubs, ensures uninterrupted LNG supply to companies that are off-gas-grid and in the hinterlands.

Yes, arguably, there are fuels such as LPG that deliver emission reduction benefits over other fossil fuels.

However, the Ultra Gas LNG solution isn’t just cleaner than LPG, but it’s cheaper too.

A full-fledged shift to renewable energy may still be decades away. But businesses have to go green now. Switching to natural gas as a bridge fuel offers them the chance to stay relevant at a lower cost and rake in the profits… or should we say ‘green profits’?

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