India's Clean Fuel Secret: Is CNG the Shocking Bridge to Cheaper Energy and EV Dominance?

DK Sarraf, who previously chaired the Petroleum and Natural Gas Regulatory Board (PNGRB) and led the expert committee on natural gas reforms, has emphasized the urgent need for India to boost its adoption of cleaner fuels. He specifically identified Compressed Natural Gas (CNG) as a critical 'bridge fuel' that can effectively transition the nation from fossil fuels towards electric vehicles (EVs).

Sarraf's core argument is that increasing the use of natural gas is essential for India to achieve its goal of raising the sector's share in the national energy mix from the current 6% to a targeted 15% in the coming years. He pointed out that globally, natural gas constitutes about 24-25% of the energy basket, significantly higher than India's share. He further elaborated that natural gas offers significant environmental advantages over coal and is often more economical than liquid fuels like petrol and diesel.

The former PNGRB chief stressed that CNG's role is complementary to the burgeoning EV market. While India should continue supporting EV growth, CNG presents the most practical and accessible clean energy option in the near term.

**Key Recommendations:** Sarraf's committee has proposed several strategic moves: 1. **Restore APM Gas Allocation:** Reinstating the allocation of Administered Pricing Mechanism (APM) gas specifically for the CNG segment is crucial to drive consumption growth. 2. **GST Inclusion:** A revenue-neutral inclusion of natural gas under the Goods and Services Tax (GST) framework is recommended to address long-standing industry issues, particularly concerning input tax credit. 3. **Excise Duty Framework:** The report suggests a framework for compensating states to offset potential revenue losses if excise duties on natural gas are removed, taking into account the fiscal impact.

**Impact** This news can significantly impact companies involved in natural gas exploration, production, transportation, and distribution, as well as CNG retailing. Policy shifts towards increased natural gas usage could spur investment in infrastructure and exploration. Government decisions on GST and excise duties will directly affect the cost structure and pricing of natural gas and CNG, influencing investor sentiment and market valuations in the energy sector. The push for CNG as a bridge fuel also affects the broader automotive and energy transition landscape. Rating: 7/10

**Definitions of Difficult Terms:** * **Compressed Natural Gas (CNG):** Natural gas that has been compressed to less than 1% of its volume at standard atmospheric pressure. It is commonly used as a cleaner fuel for vehicles. * **Electric Vehicles (EVs):** Vehicles that run on electricity, either stored in batteries or supplied by an external source. * **Petroleum and Natural Gas Regulatory Board (PNGRB):** India's autonomous regulatory body for the petroleum, petroleum products, and natural gas sectors. * **Energy Mix:** The range of energy sources used by a region or country, including fossil fuels, renewables, and nuclear power. * **Administered Pricing Mechanism (APM):** A system where the government controls or influences the pricing of certain commodities, in this context, natural gas. * **Goods and Services Tax (GST):** A comprehensive indirect tax levied on the supply of goods and services in India. * **Input Tax Credit (ITC):** A mechanism under GST that allows businesses to claim credit for taxes paid on inputs used in their business, reducing the overall tax burden. * **Excise Duty:** A tax imposed on the production or sale of specific goods within a country.