New Delhi: In 2024, the global oil and gas industry finds itself grappling with a complex array of challenges that have shifted the focus away from decarbonisation and energy transition. As nations contend with escalating energy security concerns, primarily due to the ongoing Russia-Ukraine conflict — there is a palpable swing back towards reliance on fossil fuels. This shift raises critical questions about the future of energy policies and the pace of the transition to low-carbon alternatives.
In an exclusive interview with ETV Bharat, Narendra Taneja, an expert in energy policy and geopolitics and the Chairman of the Independent Energy Policy Institute, provided valuable insights into the current landscape. He emphasised that energy transition involves a gradual shift from traditional fossil fuels: oil, gas, and coal, towards renewable energy sources.
Taneja noted that while India has made significant strides in renewable energy, particularly in solar power, fossil fuels still account for a staggering over 70 per cent of the country's energy consumption.
Energy Independence and Economic Pressures
Taneja pointed out that India is among the world's top energy consumers and is heavily reliant on imports, 88% for oil and 54% for natural gas. With an ambitious national target for energy independence by 2047, the Indian government is investing heavily in renewable energy sources, including solar, nuclear, and hydrogen. However, the current geopolitical landscape poses significant hurdles.
The recent conflicts in the Middle East, particularly tensions involving Israel and Iran, have led to heightened fears regarding energy security.
"Whenever there is escalation in the Middle East, oil prices tend to surge," Teneja explained. Currently, oil prices hover around $79 to $80 per barrel, a figure he attributes to the geopolitical premium rather than actual supply shortages. He warned that an attack on oil installations could trigger a sharp spike in prices, potentially escalating by $10 to $20 per barrel almost overnight.
The Role of Geopolitics in Energy Pricing
The geopolitical situation is crucial not only for sourcing oil but also for determining its price. Taneja noted that, while India imports oil from approximately 40 countries, fluctuations in the global market are often dictated by global geopolitical events. For instance, the ongoing tensions between Israel and Iran could lead to unpredictable shifts in oil prices, creating further economic strain for oil-dependent countries like India.
Taneja emphasised the importance of technological advancements in traditional energy sources, stating, "If we think renewable energy will replace traditional energy in five or ten years, we are daydreaming." He argued that India must focus on developing both traditional and renewable energy sources simultaneously to meet its energy demands, especially as the nation aims for a GDP growth rate of 9 per cent.
A Call for Integrated Energy Solutions
To navigate these challenges, Taneja advocates for a dual approach, where traditional energy companies also invest in renewable sources. He suggests that companies should evolve into integrated energy players, leveraging their capital and expertise to diversify their portfolios.
"We need to mobilise all forms of energy," he said, reiterating the necessity of both fossil fuels and renewables in the immediate future.
Moreover, he acknowledged the pressing need for India to establish domestic manufacturing capabilities for solar panels, currently heavily reliant on imports. Taneja also noted that while the government is working to reduce this dependency, more efforts are needed, including the establishment of additional manufacturing plants to support the burgeoning renewable energy sector.
Navigating Consumer Sensitivity to Prices
India's energy consumers are acutely sensitive to price fluctuations, especially given that taxes account for nearly 50 per cent of fuel costs at the pump. Taneja urged consumers to understand the implications of global oil prices on local economies and to conserve energy wherever possible. He suggested practical measures, such as turning off vehicles at stoplights to reduce fuel consumption.
Additionally, he emphasised the importance of governmental policies that support domestic exploration and production. "We should invest more in exploring our own resources," he remarked, highlighting potential untapped hydrocarbons reserves in regions like the Andaman and Nicobar Islands.
Future Outlook and Policy Recommendations
As the global oil market contends with geopolitical turmoil, the imperative for energy security grows ever more pronounced. Taneja argues that India must chart its course based on its unique circumstances and not merely follow Western models of the energy transition. "We cannot copy the West," he stated. "Energy transition in India must reflect our own ground realities and characteristics."
He concluded by advocating for a more inclusive energy revolution that empowers local communities to participate in renewable energy initiatives, such as setting up solar power plants.
"We need to mobilise energy that is affordable and accessible for everyone," Taneja asserted, emphasising the importance of grassroots involvement in achieving energy independence.
