With the recent hike in Brent crude prices, the petrol and diesel costs in India have increased by approximately 4 rupees in around 10 days, with prices varying from state to state. This has led to a huge outcry across the nation. Social media, the modern platform to raise concerns, was flooded with anti-incumbency posts.
If we look at what has changed the fates and fortunes of nations in the last 160 years, it is the grand energy game played by presidents, ministers, business tycoons, top chief executive offices, international organisations and common men. In chess, the bishop is termed as bad, when hindered by pawns on squares of its own colour. Similarly, energy security, which plays a crucial role in nation’s well-being, is prone to be hindered by global politics, as long as a country is energy dependent.
Energy is a multi-player game involving big countries, companies and organisations. Even after revolutions like Arab Spring to overthrow governments, sanctions by super powers against countries hostile to established norms, delving into other countries’ affairs to form favourable governments, conflict of interests continue with renewed equations. But does a common man have a role to play in this grand game? Yes, say the changing circumstances. The common man could become a potential crusader for a much-awaited solution to energy dependency.
The game began towards the end of 19th century under the reign of economic powers and capitalists. Post the Second World War, it were the producer countries that took control. With rising environmental concerns and technological disruption, the control is now shifting towards the consumer nations. Decisions of consumer nations depend on the choices of its people. For the first time in the history of the energy industry, the common man has a chance to play the grand game. It is his choice to align with the nation’s interest and it is the nation's choice to make progressive policies for making it a smooth and participatory people's movement.
Today, out of 195 countries, very few are energy self-sufficient. Even energy-rich countries like Canada, Saudi Arabia and Russia import some sort of energy or its products. Almost all countries are dependent on imports, which causes huge trade deficits. India, with 66 per cent energy self-sufficiency, has to import for approximately 75 per cent of its oil demand. Oil is the key player in the global politics. World history gives us enough examples, where the fortunes of entire states have changed by oil prices dictated by political interests. Consumer countries turn victim to these dynamics.
The dramatic swings in the 21st century oil market have been unfriendly to all countries. From 2000 to 2008, there was an unprecedented spike from $25 per barrel to $150 per barrel. While 2008 recession crashed the oil market to $40 per barrel, further reforms helped in stabilising the industry to $125 per barrel by 2014. Islamic State's black market oil trade along with shale oil boom in the US created a huge glut, crashing the oil prices to $28 per barrel in 2016. The production cuts that followed made prices rise, but Venezuela got destabilised unable to bear production expenses as its economy was majorly dependent on oil exports. With the recent sanctions on Iran, Brent crude cost reached around $80 per barrel.
With India importing around 1,575 million barrels of oil a year, a $1 increase in the oil price for a year would cost Rs 10,000 crore for the nation. This increases its current account deficit, causes inflation and brings the growth rate down.
With growing technological disruptions in energy industry, especially in renewable space and India having good avenues of energy production, the country is well positioned to take a leap forward with progressive policies encouraging energy self-sufficiency on priority by:
- Ramping up biomass energy production – using forest, agriculture and urban waste. Creating momentum to gather the raw material and creating corresponding business models.
- Incentivising the usage of natural gas and disincentivising oil and coal usage.
- Reducing fossil fuel dependency by using solar, wind, tidal and other avenues of green energies.
- Incentivising electric vehicles with supportive business models to meet the consumer’s requirement.
- Investing in research and development of storage and other technologies.
India, being the third biggest consumer of crude oil, has a lot of stakes in the global trade. India transforming is one-sixth of mankind transforming. India also has a diversity, which the world looks up to. An underdeveloped district in India providing jobs to its people by becoming a producer in energy market would be an example for many poor countries to follow. It is using the money spent in importing oil to empower the last person.
India has highest livestock population in the world and its rural lifestyle is close to the nature. India has a long east coast for tidal energy generation, while having much-needed natural gas resources, which are globally preferred among fossil fuels. India, being a tropical country and maintaining good relations with other countries, is naturally spearheading the International Solar Alliance (headquartered at New Delhi). Our growing energy demands, disruptive technologies and being a sought-after market – give us a unique opportunity to take up global leadership role in the energy sector. Even if there are some problems in implementation, this impetus should continue. For this to happen, common man plays a key role by making intelligent decision.
Although in an open chess game the bishop reigns supreme. As situations turn complex, he turns into a liability. That is where the strategy should be reworked. In good times, the interdependence of countries works well, but when circumstances turn hostile, this is prone to be destabilising. Energy self sufficiency with an empowered citizenry at local level is what India can achieve, and that can be the message that we can carry to the world.
The author is Project Executive at the Vision India Foundation.
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