Energy security is a multidisciplinary field that overlaps with engineering and energy systems analysis, earth sciences, economics, technology studies, political science, international relations, and security and military studies. Climate change, globalization, and the uncertain future of fossil fuels have added new dimensions, such as sustainability, energy efficiency, mitigation of greenhouse gas emissions, accessibility of energy services (energy poverty), etc. Thus, the concept of energy security became interconnected with other environmental, social, political, and security issues.
Energy Security is an attempt to overcome the low vulnerability of vital energy systems and it is a priority for India. Two main ideas are packed into the definition. First is the Vital energy systems, which are energy resources, infrastructure that support critical functions. They can be delineated by sectoral or geographic boundaries (e.g. ‘India’s oil and gas market’ or ‘the European energy sector’). Second is the Vulnerabilities, which is the combination of exposure to risks and resilience capacities. To look at vulnerability we look at how energy security concerns have changed through history and three persistent types of concerns have been identified.
Three Distinct concerns of Energy Security:
- Sovereignty: The first concern from the sovereignty perspective, answering the question of who controls the energy. Are we importing all oil needed from one country or are we producing it domestically?
- Robustness: The second is how long will our energy system lasts and that’s the robustness perspective, answering the question if we going to run out of energy and is infrastructure ready to hold on to different types of threats.
- Resilience: The third is the resilience perspective which is asking the question, in the case when we face disruption how fast the system responds and recover.
Energy Security: A Contemporary Challenge
- Energy security is no longer a purely geopolitical problem, though securing access to internationally traded fuels, especially oil, is still at its centre. India is the world's third-largest energy-consuming country and electricity demand grows by 4.7 per cent each year.
- The diverse challenges to energy security, like the global limits, and the role of markets and investments brought natural science, engineering etc, which had historically been tackled separately, have recently become increasingly entangled.
- We have a major dependency on the oil economy. Even we are wanting to shift to the gas economy, the major hurdle is that domestically we don’t produce enough to fulfil the demand. The government of today need to have an integrated energy policy where the energy basket must have a balanced mix of energy sources.
India’s Geo-Political Strategy:
- India’s geopolitical identity has evolved from being the leader of the non-aligned movement - a representative of the developing poor nations of the world to becoming a member of the G-20, the world’s leading industrialized and emerging economies.
- In classical energy geopolitics, the actors were the States and their armies, today they are multiple and varied, encompassing governments, international and national companies (public and private).
- Our geopolitical energy policy must be independent of energy policy. Right now, geopolitics influence a lot of our decision making. The finest example is that of Iran, which once used to be our main supplier but India has to stop importing oil from Iran in mid-2019 following sanctions on the Persian Gulf nation by the Trump administration.
- Energy security warrants the uninterrupted supply of energy at affordable prices. India faces the twin challenges of meeting the aspirations of its 1.3 billion population even as it safeguards its energy security and contributes to global efforts to mitigate climate change.
CHALLENGES FOR INDIA’S ENERGY SECURITY
- Despite 100% FDI in petroleum and natural gas in exploration activities under the automatic route, India has failed to attract international investment in domestic hydrocarbon exploration. For example, New Exploration Licensing Policy (NELP) has failed to attract the interest of large international energy corporations.
- Major stake in Equity Oil: Major investments need to be made to acquire hydrocarbon reserves overseas.
- Administrative Challenges: Coal mining in India suffers from delays due to regulatory and environmental clearances.
- Inadequate domestic supplies: Coal, oil and natural gas are the most important sources of primary energy in India. Inadequate domestic supplies of these hydrocarbons are forcing the country to increase its import bill.
- Affordability: India ranks low in affordability of petrol, notwithstanding the claims of high subsidies to oil. In 2017-18, a litre of petrol cost about 25% of the average daily per capita GDP in India. High prices of petroleum products directly contribute to higher retail inflation. High fuel prices also contribute to inflationary pressure on several other sectors. Diesel prices account for 60-70% of the freight cost in India. Higher cost of freight contributes to price rise for products in every sector.”
- India's fragile energy security is under severe pressure from its rising dependence on imported oil, regulatory uncertainty, international monopolies and opaque natural gas pricing policies.
- India seeks to achieve its energy security through multiple partnersg. Indo-USA nuclear deal, Oil import from the Middle East etc. However, in recent times due to conflict among India’s energy partners e.g., USA and Iran; India had to reduce oil import from Iran.
- China’s One Belt One Road initiative can give China a definitive advantage if any conflict ensues between countries, by disturbing India’s access to energy.
- $10 billion project- TAPI (Turkmenistan, Afghanistan, Pakistan and India) failed to make any progress since it was conceived about three decades back mainly due to tensions between India and Pakistan, but the changed situation in Afghanistan has further marred chances of making progress.
India expenditure on oil imports:
- At the current pace, this year’s import spending would easily surpass $101.4 billion of 2019-20 and may match $112 billion of 2018-19.
- Oil was trading above $88 per barrel on Monday, 36% up since the beginning of the current financial year, as supply has lagged a sharp recovery in global demand. Geopolitical tensions in the Mideast and Eastern Europe have also aided price rise in recent days. India spends over ?12 lakh crore on energy imports every year.
Threats to Energy Security:
- Political Instability of Several Energy Producing Countries,
- Manipulation of Energy Supplies,
- Competition over Energy Sources,
- Attacks on supply infrastructure, as well as accidents,
- Natural Disasters,
- Reliance on Foreign Countries for Oil
MEASURES FOR STRENGTHENING ENERGY SECURITY:
- Diversification of the sources of Imports:
- To ensure the security of crude supplies and to mitigate the risk of dependence on crude oil from a single region, oil PSUs have diversified petroleum baskets. Indian government working on diversifying the country’s energy basket with crude oil supplies from non-OPEC sources.
- State-run Indian oil companies have started importing crude oil from the US, Russia, Canada, Australia, Brazil, Guyana, Norway, Egypt, Gabon, Ghana, Congo, Equatorial Guinea, Libya and Nigeria.
- Discovering and Exploiting own Energy Resources:
- Boosting oil and gas production has been a key part of the government’s Aatmanirbhar Bharat initiative. It has set a goal to boost the use of natural gas in India’s primary energy mix from the current 6.2% to 15% by 2030.
- To promote oil and gas production at the domestic level, the Indian Government has been taking several steps which range from encouraging the Indian companies to increase their domestic activities and widening their engagement with multinational companies, broadening opportunities for them to participate in oil and gas exploration in India.
Recently Cairn Oil & Gas, a Vedanta makes an oil discovery in Rajasthan's Barmer under the Open Acreage Licensing Policy (OALP).
- Exploiting Shale and Its Potential in India:
- India has got technically recoverable shale gas of 96 trillion cubic feet. The recoverable reserves are identified in Cambay, Krishna – Godavari, Cauvery, Damodar Valley, Upper Assam, Pranahita – Godavari, Rajasthan and Vindhya Basins.
- Reducing domestic energy demand:
- Increasing insulation of homes, encouraging greater cycle use rather than cars, and subsidising solar panels for house and business roofs can assist attempts to reduce the need to rely on other countries for energy supplies.
- Distributed energy generation:
- Distributed energy generation systems are based on renewables and use diversified energy resources such as sunlight for photovoltaic systems and wind for turbines.
- Building Strategic Reserves:
- Strategic Petroleum Reserves are stockpiles of crude oil, held by the government of a particular country or a private industry, to use in case of any crisis or emergency. It can act as insurance against imported supplies. Presently, India has three strategic petroleum reserves with a combined storage capacity of 5.33 million tonnes (about 38 million barrels).
- Visakhapatnam (1.33 million tonnes)
- Mangalore (1.5 million tonnes)
- Padur (2.5 million tonnes)
- Expansion of Renewable Energy Consumption:
- India ranks 3rd in renewable energy country attractive index in 2021. The country has set an ambitious target to achieve a capacity of 175 GW worth of renewable energy by the end of 2022, which expands to 500 GW by 2030. This is the world's largest expansion plan is in renewable energy.
- Increasing Domestic Production of Coal:
- Coal is the only fuel that India has in abundance and the geopolitics of India’s neighbourhood do not permit ready access to piped natural gas. The reforms in the coal sector have led to an increase in domestic production of coal by 9.01 per cent and the overall production of the dry fuel rose to 447.54 million tonnes (MT) till November this fiscal, compared to 410.55 MT in the corresponding months of FY'20.
- Thermal Power Plants accounted for only 59.7% of the total installed generation capacity of 395 GW (as of January 2022). Coal, therefore, plays a vital role in India’s ongoing efforts to achieve Sustainable Development Goal 7, which is “to ensure access to affordable, reliable, sustainable and modern energy for all” and while doing to will help us to strengthen our energy security.
Focus on non-fossil Fuels:
- Non-fossil fuel energy sources have relatively limited geopolitical consequences compared to fossil fuels. Alternative energy sources are generally produced and consumed within national borders, limiting their influence on international relations. Securing reliable and economical oil and gas are key national interests of the modern nation-state, and because of the tremendous volume of oil and gas that must cross international borders to reach their end-user, they are direct concerns of the energy security of nations.
Prime Minister Narendra Modi has stressed India’s aim to achieve 50% of its installed energy capacity through non-fossil fuels by 2030 in a bid to promote sustainability and reduce the country’s dependence on imported oil. The domestic efforts have also seen a concerted focus on exploring various alternative sources of energy that are infinite, renewable and environment-friendly. The government has given a massive push in this regard in energy production through solar energy, wind power, hydroelectricity power, biomass, and nuclear energy.
- Solar Energy:
- From an energy security perspective, solar is the most secure of all sources, since it is abundantly available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can meet the entire country's power requirements. Solar’s contribution to the grid has grown steadily and reliably in the meantime.
|About 5,000 trillion kWh per year of energy is incident over India's land area with most parts receiving 4-7 kWh per sq. m per day. Solar photovoltaics power can effectively be harnessed providing huge scalability in India.
- It supports the government agenda of sustainable growth, while, emerging as an integral part of the solution to meet the nation’s energy needs and an essential player for energy security.
- India’s target is to achieve 500-Gigawatt non-fossil energy capacity and 50% of installed energy capacity through non-fossil energy by 2030.
- Green Hydrogen:
- For a country that imports 85 percent of its oil and 53 percent of its gas, the green hydrogen can be seen as a game-changer for India’s energy security as well as its ambitious decarbonisation targets. A shift to large-scale use of hydrogen fuel can help bolster India’s geopolitical heft and bolster energy security.
- Hydrogen is emerging as very useful in storing and transporting renewable energy over long distances so that regions surplus in renewable energy can help meet the needs of deficit regions. This will help decarbonise heavy industry, long haul freight, shipping and aviation.
- Wind Power:
- As per NITI Aayog’s Report of the Expert Group, the wind energy sector is expected to clock 60 GWs of installed capacity from a total RE target of 175 GW by 2022. India’s current total installed wind capacity stands at 40 GW, as of November 2021.
- In India, the wind and solar generation profiles complement each other, and an adequate mix is essential to achieve sustainability targets in a cost-competitive manner.
- Ethanol Blending:
- The government of India has advanced the target for 20 per cent ethanol blending in petrol (also called E20) to 2025 from 2030. E20 will be rolled out from April 2023.
- This measure is aimed at reducing the country’s oil import bill and carbon dioxide pollution. This new initiative is also part of measures to improve energy security and self-sufficiency measures.
- Nuclear Power:
- Nuclear power is produced from uranium. However, we have very limited deposits of uranium within the country. The alternative is to convert thorium into uranium and then use it for the generation of nuclear power. We have adequate sources of thorium.
- India has the world’s third-largest reserves of thorium. Thorium, however, cannot be used as a fuel in its natural state. It needs to be converted into its usable “fissile” form after a series of reactions. In 2022, nuclear power capacity stands at 6,885 MWe.
- Out of India’s 23 nuclear power reactors, 18 have a capacity of fewer than 300 MWe which means that most are “small” reactors.
- The nuclear power sector has the slowest growth rate amongst fuels despite ambitious targets, strong protection, and generous budgetary allocations.
Nuclear Energy Based on Thorium:
- Bhabha’s three-stage programme involved using uranium to fuel pressurised heavy water reactors (PHWRs) in the first stage followed by reprocessing spent fuel to extract plutonium. In the second stage, plutonium was to be used in fast breeder reactors (FBRs) and the third phase involved the use of thorium in breeder reactors.
- The primary goal was to develop nuclear energy based on thorium of which India had abundant resources and replace uranium that was relatively scarce in India.
ENERGY CRISIS IN INDIA:
- Over-consumption due to energy inefficiencies, in India's consumption of energy, is three times more than in developed countries for the same quantity production.
- Overpopulation, the rise of the middle and high-class people increases the energy demand
- Due to climate change, more energy is needed for cooling and worming of home.
- Political crisis in OPEC countries
- US sanctions on Iran and Russia(recent)
- The cartel of OPEC countries
- Overexploitation of resources leads to a loss of resources.
- Logistical problems (Monsoon affects the CIL production every year)
Change in approach:
- In the past, India’s energy security has been following a narrow approach, mainly aimed at managing supply. But over the past two decades, India’s energy security policy has evolved and the approach is much more inclusive which takes into account the political, economic, social and environmental issues and concerns under which the energy security policy is being pursued today internationally.
- India’s quest for energy security could be seen under the framework of four ‘A’s: availability, accessibility, affordability and acceptability, which is to make energy accessible to all the sections and sectors at an affordable price in a socially and politically acceptable carbon-controlled environment.
- Energy requirements for the Make in India Initiative: Energy security has emerged as one of the top foreign policy priorities of the Modi Government. This becomes significant as Modi Government embarks to make India a manufacturing hub through its much vaulted ‘Make in India’ initiatives. Energy security’s primacy in Modi government’s foreign policy is reflected in his record number of high-profile foreign visits during which he has been cutting energy deals with energy-rich countries.
Reason for the Recent Surge Crude Prices:
- Insufficient Investment exploration of Oil: The one major reason is that the world has not invested enough in the exploration and development of new fields, on the other hand, the oil demand is going up globally. The entire world is talking more about renewable energy, climate crisis etc, so many companies have stopped investing in oil and gas.
- No alternative to oil and gas: We are still living in an oil economy and there is no immediate alternative to oil for the next 15-20 years. The fact is that we are still in oil civilisation and not out of it yet. Barring a few countries, most countries are very heavily dependent on oil.
- Ukraine Crisis. It is the latest geopolitical addition, which is adding to the inflated crude oil market. Oil markets don’t like any geopolitical uncertainty. Even if there is a little bit of turbulence in terms of geopolitics, the oil market presses the panic button and post the Ukrainian crisis we have seen it happening.
Impact of Russia-Ukraine Conflict on Global Energy security:
- US president has announced a ban on the import of crude oil and natural gas imports from Russia.
- The UK has announced that it will phase out the import of Russian oil by the end of the year.
- European countries which are usually dependent on Russian imports are not joining in the ban even though the EU has laid out a plan to end its reliance on Russian gas in the next few years. An angry Russia has threatened to cut natural gas supplies to Europe via the Nord Stream-1 gas pipeline and if that happens it could heighten the turmoil in energy markets and drive consumer prices even higher.
- India too is bracing for an impact of rising crude oil prices on its economy.
Impact of Ukrainian Crisis on India:
- For India, the implications of high prices are a bigger concern than Russian crude supplies. "India's direct dependence on Russia for oil is quite low. But it will be hit by the change in the global price level. The effect on India will not be significant from a crude sourcing perspective since the share of Russian crudes is quite small in the Indian crude basket, which majorly consists of Middle Eastern crudes.
- But high flat prices of crude will create an inflationary pressure on economic recovery since India is mostly dependent on imported crudes. Elevated oil prices may result in a jump in inflation and higher raw material costs will put pressure on corporate margins.
- It's natural, that oil marketing companies will increase retail auto fuel prices in the short term to partly pass on the burden. Part of the burden may be borne by the government through duty cuts. Higher crude oil prices may impact trade deficit and weaken Indian currency, and a weaker currency brings higher imported inflation.
- From a policy perspective, higher inflation and deteriorating deficits will increase the pressure on the Reserve Bank of India to act more aggressively.
- It widens India's current account deficit when the value of imports of goods, services and investment income exceeds exports.
- It puts pressure on prices at a time when inflation has already climbed to above 6%.
Oil, Gas and Coal India Imports from Russia:
- Coal Imports: India imported 1.8 million tonnes of thermal coal from Russia in 2021, down from 2.5 million in 2020. Russia's share in India's thermal coal imports fell to 1.3% in 2021 from 1.6%.
- Crude oil Imports: India imports 85% of its oil from more than 40 countries. The bulk of supplies come from the Middle East and the US. (India imports only about 2% of its supplies from Russia.)
- Gas Imports: India accounts for about 0.2% of Russia's natural gas exports. GAIL (India) Ltd has a 20-year deal with Gazprom to buy 2.5 million tonnes of LNG a year which started in 2018.
Reason for not Pressing the Panic Button:
- Cushioning of foreign exchange reserves: India's ample $633bn (£473bn) foreign exchange reserves provide a good cushion to weather an oil price shock.
- Increased production of oil: Oil-producing countries could ramp up production to bring prices down and offer relief.
- Low per-capita consumption: Per-capita consumption of energy in India is among the lowest in the world. India has a long way to go in providing electricity security to its people since its per capita electricity consumption is still only a third of the global average.
- India faces an energy and environmental problem that is acknowledged by everyone. Notwithstanding, the word “energy” is not part of the political or administrative lexicon. At least not formally. As a result, there is no energy strategy with the imprimatur of executive authority. India has to carve out an independent energy policy which is an integrated energy policy, which captures all the aspects of the sector with deadlines to become self-reliant in its energy needs which in turn going strengthen India’s energy security.
- The year 2021 has witnessed, one hundred and thirty-three countries pledging to a “net-zero carbon emissions date”. The energy transition for India will be long and expensive, at the same time, there is no room for compromises to be made over the matter of India’s energy security. The fossil fuel-based economic system will have to be redesigned and continuous effort shall be required to increase the contribution of renewable sources in the energy basket to build a cleaner, greener and energy-secure India.