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Twelve months ago, through this column, I India must navigate choppy waters in volatile oil markets We will never deviate from the “green” course to clean energy. I would say the same for 2023. The sea will be rougher and the course more maze-like, but the challenges will be similar in nature. What should our leaders do to meet this challenge?
The answer is not easy. The international energy market Shaken by the Ukraine conflictFour factors in particular characterize this spasm. One is that energy markets are fragmented and energy nationalism is driving policy. Second, the second iron curtain has fallen. Regardless of how and when the Ukraine conflict ends, Russia will not be allowed access to Western markets as long as Putin is at the helm. strengthening reconciliation. three, OPEC plus one This effectively means that Saudi Arabia and Russia have moved out of Western orbit. Saudi Arabia has made it clear that it intends to pursue a “Saudi First” non-aligned approach in international relations, including the United States. And four, new energy power centers are emerging around countries with a large share of the metals, minerals and components needed for clean energy. China now has a dominant power.
It is against this international backdrop that India must rotate the needle of its energy compass towards short-term energy security and long-term decarbonisation. In 2023, the following combination of measures should be considered:
Devalued Russian crude is an opportunistic panacea. It does not provide a sustainable cover that meets our requirements. To ensure such coverage, governments must increase the productivity of existing production sectors. Additional resources should be allocated to access relevant enhanced oil recovery technology. Additionally, the country’s market potential needs to be leveraged to secure long-term supply relationships with Saudi Arabia and capital tie-ups with Iran. Strengthen strategic oil reserves to cover consumption for at least 30 days, remove the Sword of Damocles wielded by CBI/CVC/CAG over public sector oil companies, and enable traders to tap oil without fear need to do it. market volatility. Construction of a pan-India national gas pipeline grid must be expedited.
Coal will remain the bulwark of India’s energy system for decades to come. It’s arguably the dirtiest of fuels, but it’s still one of, if not the cheapest, source of energy. Additionally, hundreds of thousands of people depend on coal ecosystems for their livelihoods. An environmentally compelling option to phase out coal is not yet macroeconomically or socially possible. In the meantime, governments must find energy transition routes that balance livelihoods and advance a green agenda. Some small, politically viable steps in that direction include increasing R&D spending on coal gasification and carbon capture and sequestration technologies. setting a carbon tax; establishing regulatory and monitoring mechanisms to measure carbon emissions from the industry; closing inefficient and old plants and deciding not to approve new ones. In parallel, it would be helpful if Niti Aayog could bring together a group of economists and energy experts to determine the competitiveness of coal and solar on a full cost basis.
Energy security cannot be achieved by focusing solely on the supply and distribution aspects of the equation. The demand savings and efficiency aspects are equally important. This is the cheapest, easiest and fastest way to reduce your reliance on external sources. In Europe, turning down the thermostat just 1 degree Celsius saves 10 bcm of gas per year. The government has conceptualized some demand management measures, but these have not been rigorously implemented. A priority for 2023 is therefore to fill this gap.
Three other steps must be taken on this year’s policy agenda. First, allocate funds to upgrade the grid network to make it resilient enough to absorb “clean” electrons intermittently. The sun doesn’t shine at night and the wind isn’t always blowing. In parallel, we need to address the underlying structural problems that currently hinder the expansion of renewable energy. Among the most important are the restoration of the balance sheet of the state-owned distribution company (Discom), the simplification of land acquisition procedures, and the elimination of regulatory and contractual uncertainties. Failure to sort out Discom’s finances undermines confidence in the legitimacy of the Power Purchase Agreement (PAA) entered into between Discom and renewable companies.
Second, mineral and chip diplomatic arrows have been added to the Indian diplomat’s quiver. It will take decades to harness the unique resources of metals and minerals essential for clean energy and build a domestic chip industry. Meanwhile, diplomats need to ensure diverse sources of supply to reduce the country’s vulnerability. Finally, building an ecosystem that enables the development and commercialization of 3rd generation clean energy technologies such as hydrogen, biofuels and modular nuclear reactors. In particular, nuclear should be promoted.
India is not to blame for global warming, but it will suffer the worst.Millions of people live on its coastline. Their livelihoods will be compromised by rising sea levels. Millions of people will be affected by melting glaciers and extreme temperatures. Therefore, India must continue on its decarbonization path, regardless of whose responsibility it is. You can’t afford to develop first and clean up later.
The author is President and Fellow of the Center for Socioeconomic Progress.
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