by: Sneha Jain
We have all had an overdose of the word ‘Oil’. Prices sky-rocketing to $120 a barrel in recession free times, countries scrambling in the chase to secure this precious resource at unimaginably high prices, and the oil-nations basking in the glory of it all, have all left us feeling a little helpless and morose. Countries like India that import up to 70% of its oil requirements are now facing a dilemma as to how to tackle the situation in the long run. With its plans to target an 8-10% growth rate in the long run, the country is wondering how it will sustain itself to tide over the energy crisis.
As of now, almost 70% of Indian energy needs are met by coal. This arises from the fact that India is the third largest producer of coal in the world. These reserves, concentrated mostly in the states of Bihar, Madhya Pradesh and West Bengal, are dwindling at a rapid pace. It is estimated that they will not last for more than 100 years. An additional issue that is associated with coal is that it produces harmful carbon emissions. Compared to other countries, even though India is not even close to being at a stage where environmental authorities need to step in and keep a check on coal production, one still needs to remember that increasing industrialization always leads to increased pollution.
The remaining 25% of energy needs are met by oil, out of which almost 70% is imported. Such a huge dependence seems to be very alarming. There are countries that have absolutely no oil, and are dependent 100% on others for meeting their energy needs. But that is no excuse for India. Keeping in mind the rate at which this nation is progressing and its emergence as an Asian superpower, this excessive dependence cannot be overlooked. The Mumbai High Oil Rig and the state of Assam are pretty much the backbones of oil for the country; but with production pressures increasing on these sources, they will not be able to sustain us forever.
The issue is that India cannot possibly increase its reserves of oil. Energy imports will continue to dominate the Indian Current Account balance. We have to be at peace with the fact that India cannot suddenly produce reserves out of thin air to meet its increasing needs. But we can leverage our position in such a way so that these increasing energy imports do not prove to be a hindrance to the progress of the nation. A plausible way to do so is to reduce oil consumption and focus more on alternate source like natural gas. Natural gas, which is always found in close association with oil, could be our new potential problem solver. As of now, only about 4% of Indian energy needs are met by natural gas, but it happens to be the fastest growing resource used in India. It is also much more environmentally friendly which makes it even more attractive. In comparison to coal and petroleum, its carbon dioxide emissions are almost 30-40% less. In addition, through the construction of trans-national pipelines, it is also easier to transport. And, not to mention, one of the biggest advantages is that it is much cheaper than oil. So if we need to import, we might as well import the cheaper and cleaner fuel. The world’s largest natural gas reserves are found in Qatar and Iraq.
Another alternative resource that is just waiting to be harnessed is solar energy. As of now, this source meets only a miniscule 0.5% of Indian energy needs, the reason being extremely high costs and lack of efficient production technology. It seems almost silly that the government has not put more investments in its development. Keeping in mind that India is a tropical country and experiences the scorching sun for most of its month, investments in solar energy can be seen as a great way to internally solve India’s energy problems. In fact, this would even reduce its dependence on other foreign nations.
Looking at PetroChina’s recent deal with the oil giant Petroleos de Venezuela to jointly explore natural gas rigs, India too, should aspire to keep pace in this energy battle. Government policies and new budget allocations should increasingly be focused on making sure that energy needs are given prime importance. Along with joint ventures with other countries, India should also look for ways to internally solve this problem and achieve a state that is a far cry from just self-sufficiency.