The Elephant's Great Thirst
12.26.08 |
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Michael Kugelman, Program Associate, Woodrow Wilson International
Center for Scholars |
This is a story about a nation with a voracious appetite for energy.
This country is one of the world’s top energy consumers. Given its modest
supply of indigenous resources, it must satisfy its energy hunger abroad.
This billion-person nation presently imports about two-thirds of its oil --
a number projected to rise to 90 percent by 2030.
Its pursuit of energy resources overseas is spearheaded by its powerful oil
and gas companies, which invest billions of dollars in assets that in turn
generate vast quantities of gas and oil. Last year, its foreign ministry
established an energy security division. Today, the country’s government
supports its energy investments with robust “energy diplomacy,” which
extends from Central Asia to the Middle East, Africa, and Latin America.
Given that its energy interests are truly global, exposing the country to
different types of threats-from political instability to natural
catastrophe-this nation’s navy is undergoing a dramatic transformation: one
that will enhance its power projection capacities and convert it into a
blue-water force. Is this a tale about China?
No. It’s an account of India.
India is currently the world’s fifth-largest energy consumer, and is
expected to vault to third place by 2030-behind only the United States and
China. This soaring energy demand, coupled with low domestic supply, has
generated a veritable foreign addiction: India now consumes more imported
oil than China or the United States.
India’s rapidly rising energy needs, and its inevitable forays overseas to
satisfy them, have major implications for the country’s long-term economic
development. In 2006, New Delhi’s Planning Commission projected that India
must sustain an 8-10 percent economic growth rate over the next few decades
in order to end poverty and meet human development goals. However, to
maintain these rates through 2031-32, the commission judged that India must
triple its primary energy supply and quintuple its electricity generation.
In effect, both India’s prodigious economic growth and the well-being of its
citizens are at stake-so don’t expect India to tone down its global energy
hunt anytime soon.
Nonetheless, for some observers, the intensity of India’s global search for
energy provokes anxiety. Human rights activists point out that New Delhi’s
energy diplomacy entails close ties with repressive energy-rich regimes such
as Burma and Iran. Some free-market supporters label India’s acquisition
strategy as mercantilist and predatory, and perceive it as a potential
threat to the world’s energy resources. Of course, the very same complaints
are often made about China.
What can be done to help India meet its energy requirements while also
weaning it off its foreign addiction to hydrocarbons? Don’t expect the
recently concluded U.S.-India civil nuclear deal to be of much help-the
nuclear fuel it provides will fall far short of meeting India’s soaring
energy demand.
One important step is to support-through a combination of local and
international capital and technology-the development and sustainability of
India’s indigenous hydrocarbons. In the last few years, natural gas has been
discovered in the Bay of Bengal and oil deposits unearthed in India’s
northwest-major finds that create opportunities for future exploration and
investment. Coal-India’s primary domestic energy source-should not be
overlooked, and one fledgling U.S. Department of Energy project-which aims
to help India develop clean-coal technology-is encouraging.
Given the grave environmental consequences of massive hydrocarbon
consumption, India must also intensify investment in its non-hydrocarbon
resources. The U.S.-India Energy Dialogue, which facilitates discussions on
energy efficiency and renewables, is one useful tool to spark such
investments. India’s solar and wind energy sectors hold great promise; the
latter is already the world’s fourth-largest.
Such efforts will not cause India’s overseas energy dependence to disappear
overnight. Still, they will lay the foundations for an energy-independent
future-one in which New Delhi may turn to Rajasthan instead of Rangoon for
energy needs, but also one that will sustain India’s strong economic growth
and help lift its massive population out of poverty.
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