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An energy superpower? Not India!

By Arunabha Ghosh
August 08, 2017 09:27 IST
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Arunabha Ghosh on why India will increasingly become an energy great power, but not an energy hegemon.

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IMAGE: India has to find its voice, articulate concerns, and navigate the intersection of energy markets, energy transitions, and energy diplomacy. It needs to conceive new ideas for global energy governance. Photograph: Jitendra Prakash/Reuters.


Until the not so distant past, India was a marginal player in global energy. That story is rapidly changing.

India was, and still is, heavily dependent on imports of fossil energy resources. As a result, it was worried about the macroeconomic impacts of global oil shocks. The rupee had depreciated after the Iranian revolution, the Iran-Iraq war in 1980s resulted in shortfalls of oil and oil products, the first Gulf War forced India to purchase large quantities of expensive oil in the spot market, the Kurdish civil war in 1996 again triggered a spike in the current account deficit, and the second Gulf War forced an increase in domestic fuel prices. These were major headaches but India's footprint on the global markets was marginal.

However, by 2030, India's share in daily oil trade would be about 12.5 per cent. In 2014, this was only 7.4 per cent.

Its energy demand will grow the fastest among major economies. It will not be a price-maker; nor will it be inconsequential. In some ways, India's role in global energy in the 21st century will be similar to Europe's in the latter half of the 20th century. India will increasingly become an energy great power, but not an energy hegemon.  

Major economies have redefined energy security based on national circumstances.

The US Energy Independence and Security Act 2007 pushed for renewable fuels, protecting consumers, investments in energy efficiency, in addition to aspiring for greater energy independence. Of course, in the last decade, the energy landscape has transformed in the US, with growth of shale oil and gas.

After the Fukushima accident, Japan introduced its 4th Strategic Energy Plan in 2014, aiming for energy efficiency, doubling zero-emission power generation, and doubling energy self-sufficiency by 2030.

China's Twelfth Five-Year Plan considered diversifying supply sources and import routes, while increasing domestic production.

The International Energy Agency wants its member countries to conceptualise energy security in the short- and long-term.

In short, while the desire to rely less on overseas suppliers continues, leading economies have also realised that energy security is not the same as energy independence.

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For India, energy security is the availability of adequate quantities of critical resources, at prices that are affordable and predictable, with minimum risk of supply disruptions, to ensure sustainability for the environment and future generations in the face of existing and emerging threats.

But there is no global energy organisation. Global energy governance is fragmented and often incoherent.

As an energy great power, India has a strong national interest in functional, credible and transparent energy markets. It must create a platform for a global conversation on redefining energy security and reframing global energy governance. For several reasons.

First, the world of energy now looks very different from the oil crises of the 1970s.

New issues include the race for Arctic resources, turbulence in oil markets, the uncertain future of gas, transitions towards low-carbon energy, or renewed concerns over nuclear safety. Whereas diplomatic engagements on energy continue, largely, on traditional narrow definitions of energy security, discussions on these emerging trends are trapped in scientific and techno-economic conversations. The emerging political economy of international energy is little discussed, even less understood.

Secondly, the paucity of dialogue can be explained by the absence of frames, theories and concepts to interpret the dynamic world of international energy.

Discussions are dominated by the concerns of the current developed countries, not the opportunities and threats for the emerging economies, which will drive demand, trigger innovation and shape patterns of energy trade and investment. Moreover, common frames of reference that combine energy policy and climate policy are either missing or considered only intermittently.

Thirdly, many international relations scholars and professionals still inhabit a state-centric world.

States are considered primary actors wielding influence through diplomatic channels or military interventions. The world of energy is far more complex. States and national oil companies vie with large private corporations, many smaller innovators, consumers/citizens, local energy cooperatives and financial markets. A state-centric worldview sees energy security as a zero-sum game, resulting in inefficient use of resources and missed opportunities in creating cooperative frameworks for energy-related R&D, investment and commercialisation.

Fourthly, many emerging threats to the energy system have not been discussed much. These include:

(i) climate risks for energy infrastructure (water stress for power plants, coastal flooding);
(ii) cyber attacks on increasingly integrated energy grids and systems;
(iii) risks of financial collapse for established and emerging energy firms (fossil fuels and renewable energy); and
(iv) risks of restricted access to critical minerals essential for the manufacture and operation of new energy technologies.

Fifthly, lack of access to electricity or modern cooking fuels for billions of people affects human health, economic productivity and gender inequalities.

Access to affordable, reliable, sustainable modern energy services for all (glaringly omitted from the Millennium Development Goals) is now a prominent Sustainable Development Goal. But this development dimension is often missed in the din of big energy institutions, infrastructure and investments.

India has to find its voice, articulate concerns, and navigate the intersection of energy markets, energy transitions, and energy diplomacy. It needs to conceive new ideas for global energy governance. And it must shepherd this conversation because few others will.

Arunabha Ghosh is CEO, Council on Energy, Environment and Water and co-editor of The Palgrave Handbook of the International Political Economy of Energy (2016).
Twitter: @GhoshArunabha; @CEEWIndia

Also read: India's power crisis: Who's to be blamed?

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