oil shock of 1970's was a wake up call to global economy.
With the oil price skyrocketing, economists suddenly woke
up to the non-renewable nature of fossil fuels, the price-volatility
on account of cartelization, potential disruption of supplies
on account of war or terrorism, and the looming environmental
disaster on account of greenhouse gases. Energy conservation
measures, demand side management by higher fuel efficiency,
greater investments in oil industry and diversification
to other forms of energy have been the sensible responses
to that oil shock. But sadly, as the oil prices fell and
much of the world enjoyed robust economic growth over the
past two decades, economists, politicians and media have
succumbed to an irrational exuberance. As a result, our
dependence on oil is now greater than ever before, even
as the risks continue undiminished.
are two large concerns which make overreliance on oil dangerous
for the future. First, as is well known, oil is a fast depleting
non-renewable source. Global oil consumption, currently
at 30 billion barrels a year, is rising 5 percent every
annum. The current proven reserves of 1400 billion barrels
will be exhausted within 25 years. This level of consumption
can be sustained only by new and significant reserves which
can be economically tapped. Even then, there is a limit
to oil availability. And overreliance on a few countries
makes all oil importers vulnerable to disruption of supplies
because of terrorism or war and dramatic price increases.
Already, India depends on imports for 70% of oil needs,
and it is slated to rise to 80% within a decade.
burning of oil and coal in vast quantities has significantly
contributed to global warming. Most scientists now believe
that climate change is perhaps the greatest threat to our
planet in the coming decades. While we cannot, perhaps,
replace fossil fuels completely, clearly everything possible
must be done to find substitutes. India accounts for 3 percent
of world oil consumption, and demand is rising 10 percent
per annum. China, whose oil demand is rising by over 15
percent, accounts for 8 percent of global consumption. Soon,
both nations will have to find ways of reducing emissions
without hurting economic growth.
this scenario, what can India do to protect our economic
and environmental future? While in the short term we should
ensure uninterrupted supplies of oil, we need to rethink
our future energy strategy. There are three broad areas
we need to consider: modes of transportation in rapidly
growing economy with an increasingly mobile population;
meeting growing power needs without polluting the environment,
congesting transport lines, and increasing costs; and alternative,
plentiful, flexible fuels of the future to meet our growing
personal motor car has become the ubiquitous symbol of growing
prosperity in India, as in many other rich or growing economies.
The results of this mania are debilitating: increasing urban
congestion, growing local pollution, contribution to global
warming, and rapid rise in demand for oil. And yet, our
policies are irrational. There is no serious investment
in urban public transport. Wider roads and flyovers cannot
address the problem; they will merely increase car purchases,
and soon lead to further congestion. Electric trains, non-polluting
buses, and subways are critical to preserve our cities.
If an equivalent of two years' automobile purchases or two
years' oil imports is invested judiciously, India will have
a world-class public transport system in most cities. A
massive national effort is needed to create incentives by
subsidies and easy credit, and discourage demand for personal
transport. China, for instance, sells motor permits at nearly
$ 5000 in Shanghai. True, that has not yet dampened the
demand, but we need to heavily tax motor cars and build
public transport systems.
we need to rethink our power generation strategy. Most of
our electricity is generated in thermal power plants, most
burning coal, and a few based on naphtha or natural gas.
While gas is a clean fuel, it is non-renewable, and precious
chemicals are burnt without value addition. Coal is a fungible
global commodity whose long-term price is declining. But
high ash and sulphur content, and greenhouse gas emissions
make coal environmentally unsound locally and globally.
And we have to move tens of millions of tons of coal across
the country or on high seas, congesting our transport network
and wasting precious energy and money. We need to look for
alternative sources. The most viable option is nuclear power.
France meets 78% of its power needs through nuclear reactors.
Small quantities of fuel can meet our requirements, and
nuclear energy is extremely safe, clean and environmentally
attractive because there are no emissions. The only problem
is disposal of nuclear waste. One answer seems to be stacking
away the waste in silos until technology improves to dispose
of it safely. Most of the new power generation can be in
nuclear plants. It requires planning, technology collaboration
with rich countries, and public education about the benefits.
third issue is identification and mass production of renewable
fuel. Fuel cells based on hydrogen can partly address transport
needs. Solar power based on photo voltaic cells has limited
local application. Biomass in the current form is in short
supply. Erection of even 100 MW capacity biomass-based power
plants in a state lead to shortage and price rise of groundnut
husk and other bio fuels for use in factory boilers. Hence,
we need to deploy resources and talent for research and
development of alternative fuels.
crisis presents an opportunity. The 70's oil shock led to
change of fuel in power plants, conservation and rapid nuclear
energy development. The current shock caught us off guard
at the peak of our oil demand increase. This is the time
for a radically new energy strategy to safeguard our growth,
environment and health.