Why Waste a Good Crisis: The Pipeline Paradox

Last week began with a commitment to the past.

The Petroleum and Natural Gas Ministry announced a major expansion of India’s gas pipeline network. The push was framed in familiar terms: energy security, import substitution, a bridge fuel for the transition. The subtext was geopolitical: with global gas markets still volatile and wars reshaping supply chains, India would secure its own molecules, on its own terms.

The week ended with a commitment to the future.

The government approved India’s updated Nationally Determined Contribution for 2035. The headline numbers were ambitious: 60% non-fossil fuel power capacity by 2035, a 47% reduction in emissions intensity of GDP, and a 3.5-4 billion tonne carbon sink. The framing was explicit: “Conflict and energy security concerns are pulling countries away from climate commitments,” the government said. India would move toward renewables because of energy security, not despite it.

Two announcements, two visions of India’s energy future: one rooted in the molecules that defined the 20th century, the other in the electrons that will define the 21st. They cannot both be right.

And put this in the context of what’s happening elsewhere. Experts point out that unlike earlier, the Iran oil shock has happened at a time when renewables and electrification offer a credible alternative. Australia, facing the same vulnerability, has concluded that electrification is a mature, cost-effective alternative, and can deliver reductions in oil imports at scale, offsetting them with domestically supplied clean energy. China, of course, used the last oil-import crisis to systematically move towards becoming the world’s first electro-state.

The Gas Economy That Wasn’t
The gas pipeline push is not a new initiative but a doubling down on a strategy India first adopted in the mid-2000s. Back then, abundant, cheap natural gas seemed within reach. The plan was to build pipelines, sign long-term supply contracts, and transition from coal to gas. Natural gas, with half the emissions of coal, would be the bridge fuel, the molecule to power India’s growth while the world figures out renewables.

As is common knowledge, the government built its gas economy strategy around projections made by a private company for the KG-D6 block in the Krishna-Godavari basin. Pipelines were planned accordingly, and cities prepared.

But the promised gas supplies did not materialise. The reasons were contested — geological complexity, commercial disputes, regulatory uncertainty — but the results are clear: India’s gas share of primary energy consumption, which was supposed to reach 20% by 2025, remains stuck below 7%. The pipelines that were built run below capacity. The cities that had prepared for gas now burn imported LNG at prices that make the whole proposition questionable.

Now, in 2026, the government is announcing a new push. New pipelines, new supply contracts, new bets on molecules. The question that went unasked in the mid-2000s is now urgent: what happens to all this infrastructure when the world moves past fossil fuels?

The Gas Pipeline
The scale of the current pipeline build-out is significant. In February 2026, the Centre allocated ₹4.91 billion for the Tripura-Mizoram gas pipeline, a 119.5 km stretch. This is part of a larger ₹92.65 billion outlay for the North East Natural Gas Pipeline Grid. The project is already 45% complete.

Across the country, the government is laying thousands of kilometres of new gas pipelines, betting that the molecules will flow. But there is another way to read these numbers. The North East grid alone is nearly ₹100 billion, scarce capital that could have been deployed into the grid, into storage, into the systems that make renewable energy work.

Some of the additional arguments that go beyond the immediate need for enhanced gas supply to justify the pipeline push do not hold up to detailed analysis. A sample:

1) The hydrogen hedge
The claim: these pipelines are not, and will not become, stranded assets. They are actually part of the hydrogen infrastructure, built early (India’s January 2026 agreement with Germany’s technical standards body to develop hydrogen readiness suggests the government is thinking along these lines). The logic is seductive, as retrofitting a gas pipeline for hydrogen costs 75-90% less than building a new one.

The problem is that hydrogen does not make economic sense for most applications. Electrolysis converts about 70–80% of input electricity into hydrogen. Transport and storage eat another 10–20%. Conversion back to electricity loses another 40–50%. By the time renewable electrons become usable power again, 70–80% of the original energy is gone. In most applications, it is far more efficient to use the electricity directly.

The angle of costs is even worse than this. Green hydrogen today costs $4-6 per kg. To compete with direct electrification, it would need to fall below $2, which is a decade away at best. And at 20% hydrogen blending — the technical limit most pipeline operators consider safe — the CO₂ reduction is just 7%.

For heavy industry (steel, fertilisers, the sectors that genuinely cannot electrify), green hydrogen may eventually have a role. But those applications are better served by dedicated production facilities located where renewable resources are cheapest, not by a repurposed gas grid. So the pipeline push, framed as hydrogen infrastructure, confuses the exception with the rule. The pipelines being built today will not wait for the economics to resolve. They are gas pipelines, period.

2) The ethanol hedge. In the same week that the government announced its pipeline push, three industry bodies formally proposed ethanol as a clean cooking alternative to reduce LPG import dependence, with compelling numbers: substituting 20% of domestic LPG with ethanol would reduce LPG use by 6 million tonnes annually and save over ₹80 billion in subsidies. India’s ethanol production capacity already exceeds 20 billion litres, with surplus beyond the E20 blending programme. Cooking applications require only 90–95% purity, not the 99.9% of fuel-grade ethanol. The technology is ready, as ethanol stoves have been developed, and pilots in the Sundarbans have demonstrated viability in off-grid settings. By this argument, the gas pipelines can be used eventually to wheel out ethanol for domestic purposes

But ethanol cannot be an argument for gas pipelines. A study funded by the US Department of Transportation found that existing carbon steel pipelines are susceptible to stress corrosion cracking when transporting ethanol and only blends below 15% can be safely moved without significant modification. So a pipeline built for gas is not a pipeline ready for ethanol. and the alternative is not to build more pipelines but to scale a distributed solution that bypasses them entirely.

Without weighing in, for now, on the merits of ethanol as a substitute fuel, if the goal is to reduce LPG imports, spending ₹100 billion on ethanol infrastructure like storage, distribution networks, stove deployment, would go much further than the same amount spent on pipelines that cannot carry the fuel they are supposedly meant to complement.

What About the Transition?
A counter question could be: if not gas pipelines, then what? Cylinders are cumbersome, hazardous, and expensive. The grid is not yet ready. Is the alternative that we freeze in the dark?

The honest answer is that the transition will be messy. Cylinders will remain for years. Some pipelines will be built, some of them will be useful. But the scale of the current push, the timing in response to a geopolitical crisis, and the absence of a coherent framework for conversion - these are not signs of strategy. They are signs of a government reaching for the tools it knows, rather than the tools it needs.

The answer is not to stop building infrastructure. It is to build the right infrastructure. The choice is not between pipelines and nothing. It is between pipelines and a portfolio of alternatives: better LPG distribution, accelerated grid investment, decentralized renewables, and, where gas genuinely serves a flexibility role, targeted infrastructure designed for eventual conversion.

China’s example is often cited, but it proves the opposite. China is still building gas infrastructure - three major pipelines broke ground in February 2026 alone. But its pipelines are being designed from the start with specifications for future conversion to hydrogen, ammonia, or methanol. Its gas supply is 60 percent domestic, reducing import dependency to 40% — the lowest level in years. And its gas plants are being built to provide flexibility for renewables, not baseload replacement. None of this makes China’s bet risk-free, but its approach is structured to minimize risk. India’s push has none of these features.

Investing in the Grid
Now consider the alternative. India’s transmission infrastructure is undergoing a “green grid revolution”. Where the government spends nearly ₹100 billion on gas pipelines in the North East alone, the grid, which is the backbone of an electro-state, awaits its own investment.

The government has committed ₹2.44 trillion to build over 50,000 circuit kilometers of new transmission lines by 2030. The National Electricity Plan projects transmission line length rising from 4,86,000 circuit kilometers in March 2024 to 6,48,000 circuit kilometers by 2032, i.e., an addition of 1,62,000 circuit kilometers.

Industry estimates put total grid investment at ₹4.5 trillion through 2030. Of this, the interstate transmission build-out alone, primarily to evacuate renewable energy from solar- and wind-rich states, is estimated at ₹1.6-2.8 trillion.

These are the enabling infrastructure components of the electro-state, but investment is already behind schedule. Annual line addition has fallen from over 20,000 circuit kilometers prior to 2020 to 14,000-15,000 circuit kilometers for FY22-FY24. The challenges (right-of-way delays, forest clearances) are familiar, but the difference is strategic. Every circuit kilometer of transmission lines built today will be used for decades, regardless of the generation source. Every kilometer of gas pipeline built today is a bet on a specific molecule, at a specific price, delivered over a specific timeframe.

The stakes in such a choice are already visible elsewhere in the subcontinent, where we see two countries moving in opposite directions. Pakistan, facing the same geopolitical pressures, has seen a boom in distributed solar, so much so that the amount saved this year in reduced fuel imports is expected to more than compensate for the money spent on importing the constituent solar equipment. On the other side, Bangladesh has nearly doubled its imports of LNG, betting on the molecules being the path to energy security.

India stands between them and the March announcements captured the tension: one foot in the gas pipeline strategy, one foot in the electro-state model (which Pakistan may actually stumble towards).

The Cost of Waiting
Lastly, the 45-55 GW of renewable capacity currently idling for want of signed PPAs is not a technology failure. Regulatory data confirms the backlog: projects awarded, grid connectivity secured, but the final signature that unlocks financing never arrives. What is missing is the institutional capacity to turn awarded capacity into delivered power.

Gas pipelines will not solve this problem. They will consume capital that could instead strengthen the grid and create a constituency for molecules that will compete with electrons for policy attention. And they will lock India into a 20th century energy model.

The IEA’s latest World Energy Outlook places this in stark relief. India will be the world’s largest driver of energy demand growth through 2035 and the choices India makes will shape global markets for solar, batteries, LNG, and critical minerals.

The binding constraints on India’s energy transition are no longer technological: costs are falling faster than regulatory frameworks have been able to adapt to. Transmission corridors require coordinated investment. Distribution reform depends on predictable tariffs. So the renewable capacity waiting for signed PPAs is an institutional failure, not one that gas pipelines will solve.

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This is Part 1 of a three-part series titled Why Waste a Good Crisis: India's Chance to Become an Electrostate

Part 2 will look at the alternative strategy. China’s transition to the electro-state era, a strategy of deliberate long-term planning, unified power markets, and grid modernization at scale, offers a template.

Part 3 turns to the institutional crisis. It maps the innovations that could unlock the PPA logjam.