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Energy, economy and development (EED) triangle: Concerns for India
Energy Policy 39 (2011) 4651–4655
Contents lists available at ScienceDirect
Energy Policy journal homepage: www.elsevier.com/locate/enpol
Energy, economy and development (EED) triangle: Concerns for India A. Chaturvedi, S.K. Samdarshi n Department of Energy, Tezpur University, Tezpur 784028, Assam, India
a r t i c l e i n f o
abstract
Article history: Received 12 August 2010 Accepted 9 May 2011 Available online 23 May 2011
In this paper we discuss issues involving energy security with economic growth and development that brings out (i) the dimension of physical security alternative, (ii) framework for a pan South East Asian platform to support energy security and (iii) requirement of promoting regional energy cooperation and specific energy peace initiatives. Sustaining projected economic growth rate coupled with energy security in future is a concern for all developing countries like India. The energy security of these nations is threatened by the disruption of energy supplies by ongoing energy terrorism and geopolitical conflicts in the region. India’s geo-strategic position and increasing energy dependence raises concerns for its energy security. We discuss energy security, examine factors and approaches to attempt the energy security in the light of economic growth and development. & 2011 Elsevier Ltd. All rights reserved.
Keywords: Energy security Energy terrorism Regional cooperation
1. Introduction A very pertinent analysis on the complex issue of energy security has been carried out and is termed as the 4R concept (Hughes, 2009). The four ‘R’s to explain the energy security are: review (understanding the problem), reduce (using less energy), replace (shifting to secure sources) and restrict (limiting new demand to secure sources). A relatively newer paradigm getting associated with energy security is of energy supply security and it relates to energy availability and affordability. Availability, as such, refers to the extent an energy resource is accessible like electricity or gas. Affordability is the issue, which deals with ensuring that the requirements of the mass populace in the state are increasingly met and yet sustain the affordability (Vesa, 2007). Energy security concerns for India with a view to maintain the projected sustained growth rate of 8–9% through the next decades needs to consider increasing its primary energy supply by 3–4 times. Energy is the prime-mover of economic growth and availability of energy with the assured quality of supply is not only the key to sustainable economic development, but has a direct impact and influence on the quality of service in the fields of education, health and food security (Khurana, 2004). India is projected to maintain its impressive economic growth in the foreseeable future. Without reliable and affordable energy, India will not be able to sustain such high economic growth, i.e. India’s fast-growing economy and rapidly increasing population tend to raise serious concerns about the nation’s energy security. The fuel production from indigenous resources has failed to keep pace with the continuously rising demands and is being met by increasing imports. This is making India more dependant on and vulnerable to foreign
n
Corresponding author. Tel.: þ91 3712 267007x5304; fax: þ91 3712 267005. E-mail address: [email protected] (S.K. Samdarshi).
0301-4215/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2011.05.009
energy supplies (Bahgat, 2006). By 2025, import of oil figures are expected to balloon to 85% of total consumption for India and approximately 75% for China. As per the estimates made in the Integrated Energy Policy Report 2005, if the country like India is to progress on the path of this sustained GDP growth rate during the next 25 years, it would imply quadrupling of its energy needs over 2003–04 levels with a six-fold increase in the requirement of electricity and a quadrupling in the requirement of crude oil. The supply challenge is of such magnitude that there are reasonable apprehensions that severe shortages may occur. Both India and China bring in roughly 90% of their imported oil by sea. About 90% of the ASEAN primary energy supply has been fulfilled by fossil fuels (coal, oil and gas), of which nearly 60% is imported from the Middle East. China and India would account for 27% and 12% of the global energy demand in 2030, respectively (Thavasi and Ramakrishna, 2009). The projected increase in crude imports and dependency on oil tankers to transport the crude in the present scenario are standing threats to not only India’s energy security but in the overall region. Clubbed with the global disruption of crude supply due to the US intervention in Iraq and Afghanistan, and further recent spurt in piracy incidents directed towards bulk crude carriers in the Gulf of Aden promoted by the Somali pirates has added to a new dimension in ensuring the energy supply security in the oceans. The supply security issues imply that coordinated actions may be taken and that the world community may work out a strategy securing sustainable energy supplies for the future (Fortov et al., 2007). Therefore the urgency to consider energy supply security issues to sustain the projected growth rate in the Indian context needs due attention. The issues have been dealt in this paper by suggesting securing the energy supply lines by considering options of deploying security physically or by promoting energy sponsored regional cooperation with concerns specific to the Indian sub continent.
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A. Chaturvedi, S.K. Samdarshi / Energy Policy 39 (2011) 4651–4655
Fig. 1. EED triangle.
2. The energy economy and development (EED) triangle Ensuring energy security requires considering various factors. The threats to energy security can be from issues of maintaining supply lines to the uncertainty of availability of imported energy. In addition possible disruptions or shortfalls in domestic production and supply also need due consideration. Even when the country has adequate energy resources the development growth rate and economic stability will tend to pose strain on the energy demands to fuel the growth. Considering the EED triangle as in Fig. 1, we see that the three vertices namely, ‘‘energy security, economic growth and development’’, tend to pull each other thereby maintaining a status quo. The state of balance between the economic growth, development and energy security needs to be analysed in the light of the contributing factors. Economic growth, development and energy security in the Indian scenario are interlinked. The economy vertex of the EED triangle is subject to agro infrastructure and commodities stability. There are many more factors; however, the paper dwells into a simple demand supply economics of financial ability to fund commodity availability. A stable economy in turn enhances overall growth and suffers only when either it falls below the state’s capacity to buy, produce or to provision energy. Energy supply here refers to both, the demand as a commodity and the state’s capability to sustain the pressure of supplying energy within the realms of maintaining growth. Similarly the Development vertex of the EED triangle is both infrastructure and trade specific. Availability of infrastructure and economic potential is needed to accelerate growth and lack of it poses hindrances in industrial growth and in turn affects trade. Development is thus seen being interdependent on economy and energy specific and will aid growth so long as the balance is maintained. Just like the three vertices of a triangle have defined degree of freedom, the EED triangle is also found to have limited flexibility. None of the indices are capable of a free run and are bound by limits set within to economic viability of finance, availability of energy and sustenance of projected growth.
3. Understanding internal threats with particular reference to north east (NE) India The economy and development are interdependent on energy and shortfall in energy supply from domestic sources, such as from a random strike in coal companies or a state bund call also need to be addressed. Reduction in water level in reservoirs, due to delays in monsoon pattern has been causing shortfall in the hydro electric power generation. Induced tripping of transmission lines by sabotage
to abort the energy infrastructure grid is not a distant threat. The location of a larger share of the Indian energy resources in the insurgency ridden NE India and their proximity to disturbed neighbours with porous borders pose a high sabotage and pilferage threat to the nation’s concerns of energy supply security (Shahi, 2006). The recently reported incidents of pilferage of oil from railway wagons and lately of sabotage of railway tracks leading to burning of oil laden wagons of Numaligarh Refineries en-route to refineries upcountry, in Golaghat district of Assam bear mute testimony to the fact. Given the current volatility and uncertainty in the fossil-fuel market, it is imperative that the comprehensive energy security concerns take into account measures to ensure the supply security internally as well. Since most of the fossil fuel resources and process facilities in India are in the NE states the increasing threat perception to supply lines, managing the bulk oil flows to the mainland, are at risk. The communication lines run over thousands of miles and across some of the most volatile areas in the country. A simple explosive device engineered by any one of the multi-ethnic insurgency groups operating in the NE region could puncture a pipeline or sabotaging the railway tracks will make them non-operational. Even if the ideology is in the remote thought process of the anti state elements, owing to their length and vulnerability supply lines are difficult to protect. This makes the internal supply lines consisting of transportation elements, whether, by road, rail or pipelines as potential targets for energy terrorists and a costly proposition to ensure protection once required internally as well as externally. While considering the security of energy supply lines and the internal threats the situation demands handling by a multi-dimensional operational body of personnel loaded with the state of art technical and tactical prowess, which is not there at the moment and will take considerable investment in time and money to develop. Till such time a short term proposal can be made to consider by employing a highly trained and motivated defence forces despite the prohibitive cost to secure the energy supply lines. Thus as a policy the task of defending the energy supply lines, whichever dimension it may be, maritime aerial or terrestrial is bound to strain the economy. The seemingly large financial overburden of raising a specialist energy specific force is justifiable on account of the professional task at hand and also taking into account the increased reactive paradigm of such threats. The need to have a flexible organisation capable of being rapidly launched to operate from within state boundaries to at times across national boundaries or in the open seas in conjunction with multinational task forces require a different mindset and backing by a strong external political ideology.
4. Renewable energy and the EED approach An effective measure to decrease the consumption of fossil fuels in power is to promote the solar, nuclear or renewable technologies. The recent nuclear disaster in Fukushima Japan has once again brought the ghost of Chernobyl and the Tsunami triggered nuclear crisis at Japan, for the policymakers at crossroads once again when the issue of nuclear energy to power issue comes up. However, the fact that more than 40% of the population in India has little or no commercial energy access for their living and livelihoods and others with access often have to cope with poor and erratic availability alternates to maintain the energy security need to be thought of at a faster pace. This not only deprives them of basic human need for quality of life but also constraints generation of productive activities and incomes and employment in rural areas, which itself has become a critical factor in India’s future development process. Further the little supply that comes in such areas forces people to depend on use of kerosene for lighting and diesel for powering irrigation pumps and small enterprises. Both these are imposing further financial burdens on the economy because of high levels of subsidy and add to the
A. Chaturvedi, S.K. Samdarshi / Energy Policy 39 (2011) 4651–4655
problems of energy security. Renewable energy can also competitively meet the process heat as well as power requirements of large number of small and medium enterprises as well as in some other areas, which use lot of diesel for power generation. Thus, renewable energy should not be seen only, or even primarily so, in the context of grid related power. Its great strength and potential also lies in its ability to generate power in decentralised and distributed mode, which has the advantages of production at consumption points and does away with land and environmental related concerns and problems. The Ministry of New and Renewable Energy would like to step up renewable energy decentralised applications to save a billion litre of diesel/furnace oil/kerosene annually after five years. Telecom towers and industrial power generation are two focus areas to reduce consumption of diesel. This area generally remains largely unexplored or unexploited or even discussed. Historically, India has initiated systematic programmes for renewable energy including for research and development. However, the fast progress across the world, which has melted the national boundaries in terms of technology adoption and implementation, the optimisms as well as demand created by economic growth in India and the increasing concerns regarding climate change have led to a situation where renewable energy is experiencing vibrancy all across, whether in industry, research institutions, a common villager, a developer, an investor, bankers and so on. Each one has some aspirations and expectations from this sector and may indeed have a great responsibility. The main thrust areas have been in the form of the Jawaharlal Nehru National Solar Mission for development and deployment of solar energy technologies in the country to achieve parity with grid power tariff by 2022. Similarly in the renewable sector, offgrid has been the thrust area and the current potential for power generation from surplus agro and agro industrial residues is estimated to be 17,000 MWe. With progressive higher steam parameters and efficient project configuration in new sugar mills and modernisation of existing ones, the potential of surplus power generation through bagasse cogeneration in sugar mills is estimated at 5000 MW. Thus the total estimated biomass power potential is about 22,000 MW. A cumulative capacity of 2437 MW has so far been commissioned mainly in the states of Tamil Nadu, Uttar Pradesh, Karnataka, Andhra Pradesh, Maharashtra, Chhattisgarh, Punjab and Rajasthan, which includes 971 MW from biomass and 1466 MW from bagasse cogeneration in sugar mills. In order to create an enabling environment, new policy frameworks, technological innovations and human skills development programmes are under way under the aegis of the Ministry of New and Renewable Energy, Government of India. Renewable energy is central to climate change mitigation efforts. Broad estimates indicate that mitigation from existing renewable energy portfolio is equivalent to around 4–5% of total energy related emissions in the country. Although India is a favourable destination for Clean Development Mechanism (CDM) it is economy, which poses the single largest constraint as of now. Pending, which the energy security balance to maintain a steady
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growth is the reliance on the fossil fuel by all such developed and developing nations.
5. Understanding external threats The key to energy security of late has been diversification and promotion of research of new and renewable energy sources. This remains true, however, a newer approach is now required that takes into account the rapid evolution of the global energy trade, supply-chain vulnerabilities, terrorism and the integration of major new economies into the world market. As an unintended implication, rapid globalisation and its accompanying technical diffusion have also created spaces for highly diverse transnational fundamentalist groups, or stateless actors to expand in influence and lethality, directly influencing global supply security. Although in the developed world the definition of energy security is simply the availability of sufficient supplies at affordable prices, different countries interpret what the concept means for them differently. Energy-exporting countries focus on maintaining the, ‘‘security of demand’’, for their exports, which after all generate the overwhelming share of their government revenues. The concern for developing countries is how changes in energy prices affect their balance of payments. For China and India, energy security now lies in their ability to rapidly adjust to their new dependence on global markets, which represents a major shift away from their former commitments to self-sufficiency. For Japan, it means offsetting its stark scarcity of domestic resources through diversification, trade and investment. In Europe, the major debate centres on how to manage dependence on imported natural gas and in most countries, aside from France and Finland, whether to build new nuclear power plants or perhaps to return to clean coal technology. The United States must face the uncomfortable fact that its goal of ‘‘energy independence’’ – a phrase that has become a mantra since it was first articulated by Richard Nixon four weeks after the 1973 embargo was put in place – is increasingly at odds with reality (Yergin, 2006). India’s energy security seeks to ensure continuous availability of commercial energy to support its economic growth and meet the minimal energy needs with safe, clean and affordable forms of energy (Shahi, 2006). The rise in nation’s oil consumption from 127 million tonnes in 2004 to 160 million tonnes by 2009 is already poised to double by 2030 (at an approximate rate of 2.5%) from 2004 base consumption. The resulting impact is on crude imports as is evident from the corresponding increase in crude imports from 95 million tonnes in 2004 to 128 million tonnes during the same time span (Table 1). These projections underline the conclusion that the increasing trend in consumption will increase India’s dependence on imported oil. This projection underlines the current trend of rising consumption; however, India’s growing dependence on
Table 1 Growth of Indian petroleum industry, referred from ‘‘Basic Statistics on Indian Petroleum and Natural Gas, 2008–09’’, economic division, ministry of petroleum and natural gas, Government of India. S/No. Reserves 1 2 Consumption 3 4 Imports 5 6
Item
Unit
2004–05
2005–06
2006–07
2007–08
2008–09
Crude oil Natural Gas
Mn. Tonne Bn. Cube Mtr
739 923
786 1101
756 1075
725 1055
769 1050
Crude oil Petroleum products
Mn. Tonne Mn. Tonne
127 111
130 113
146 120
156 128
160 133
Crude oil LNG
Mn. Tonne Mn. Tonne
95 2
99 2
111 2
121 2
128 2
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energy imports makes its energy supply lines vulnerable to both the volatility of the oil price shocks by the oil rich producers in Gulf and the geopolitics of the region. The Indian Ocean and its contiguous waters have always had a major share of global pirate attacks and armed robbery in territorial waters due to intense shipping density, virtually non-existent maritime policing and extent of required security coverage. The increasing numbers of super tankers circumnavigating the globe transporting primarily energy and finished products to and fro have given a fillip to maritime terrorism and piracy. As of today, the most potent and viable threats demanding global attention is to sustain and maintain a free and secure international maritime trade. Complicating the maritime threat picture is growing speculation that a tactical nexus could emerge between piracy and terrorism (Mehta, 2008). Links between energy terrorism and piracy having being uncovered lately and the distinct possibility of nuclear weapons falling in the hands of terrorists due to overpowering by pirates of these shipping vessels ferrying such material, further add to the threat. The recent Mumbai terrorist strikes have undoubtedly left the nation and the world aghast and reconfirmed the adding of a new dimension of the international waters as the medium to convey instruments of terror. Containerisation of sea-borne trade and exploitation of container shipping by fundamentalist terrorist organisations like Al Qaida, compound the threat. Al-Qaeda leaders have claimed numerous times, to cut the ‘‘economic lifelines’’ of the world’s industrialised societies. Being the most inexpensive and capable of transport volumes, over 80% of the world’s trade involves ocean transit and thus there co-exists the threat potential also. Al Qaida is known to have secret designs to covertly transport arms, drugs and recruits through the sea. There is no doubt that al-Qaeda is intent on hurting the west economically by interrupting the flow of oil to American, European and Asian markets (Cook, 2008). Security of energy flows (Mehta, 2008) assumes importance since India’s annual oil consumption is expected to rise to 150 million tons by 2020, with the country likely to be the world’s single largest importer of oil by 2050. Global energy interests also translate into the permanent and increasing presence of extraregional forces in the Indian Ocean in general and the Arabian Sea in particular. Ensuring unhindered flow of oil from this region will be a major maritime pre-occupation, especially in times of conflict. Energy security, particularly meeting the challenge of transporting energy from sources to global markets consumers, has emerged as an issue of great importance in recent decades, as countries have become increasingly reliant upon imports of hydrocarbons rather than indigenous resources. Security of supply impacts on the wider concept of state security and disruption can seriously undermine a country’s economy. The presence in the area of the multilateral operations of task forces comprising of China, Russia, India, Japan, Malaysia, and UK is a sign of the extended international commitment to fight piracy but is adding to the cost burden potential of energy supply security. However, we must also factor possible coercive influence of these extra-regional maritime forces in our security calculus. The resulting incremental cost in maintaining the energy security in turn is skyrocketing and has to be either borne by the consumer state or collectively shared by enhanced mutual cooperation and strategic multi nation treaties aiming to cooperate and counter the increasing industry of energy terrorism operating in the region. This has thus emerged as a single most important area of concern among other energy specific disciplines like enhancing efficiency and expansion of renewable solar, wind and biological energy. The energy security comprehensive will entail within its ambit the deliverance of sound policies both for developing new energy resources and ways and means to secure the existing
energy supply state. Not only India’s energy infrastructure is exposed to the threat of energy terrorism, the threat is imminent in most of the states of the region including Pakistan, Afghanistan, Nepal, Sri Lanka, Myanmar and onto the ASEAN states who face militant and terrorist threats from groups that are likely to disrupt energy flow (Toft Peter et al., 2010) .This thus calls for a pan SE Asian approach as suggested to meet the overall economic growth and development in the interest of energy security. If institutions devoted to shared infrastructure, creation of strategic reserves and information are developed, SE Asia may find the mechanisms helpful for other gainful development areas including political, economic and social security-related issues to promote energy security in the region. The ASEAN economy is expected to continue to grow over the period from 2000 to 2020, and it is estimated that annual energy supply must increase by 4.2% a year to sustain this growth (Karki et al., 2005). The ASEAN makes up one of the largest regional markets in the world, and its reasonable proximity with such mechanisms, when in place will help share information, transfer conservation technology and coordinate regional strategic stockpiles to reduce the effects of supply disruptions. A multinational framework could spur concerted efforts to make projects like gas pipelines feasible and beneficial for the region as a whole. However, the region is very volatile, divided by a series of unresolved intra and internal conflicts, and calls for an enhanced understanding within SE Asia and in the Middle Eastern states as in Fig. 2. The requirements ahead are to escalate pan Asian cooperation and avoid resource disagreement over issues no matter how deep rooted is the crying need of today to have a better tomorrow. The tasks are quite clearly defined with a growing need to intensify diplomatic efforts towards promoting regional cooperation not only to better utilise the energy resources within the region like developing trans South Asian pipelines connecting the oil rich West Asia to the energy demanding and a securer South East Asia. This may well be the backdrop for developing in future a key part of a fully integrated transportation system, the ‘‘new Gulf ASEAN Energy Bridge’’’, which will include pipelines, railways, fibre-optic cables and power transmission grids linking the producers in West Asia further to the consumer economies in SE Asia and China as in Fig. 3. Thus there is an urgent initiative needed by energy affected nations to avoid competition and confrontation over energy resources, which are emerging between Asian countries especially between Japan, China and India. There is a pressing demand on the conflicting nations, considering that the resource availability is feasible, however, is to take steps to safeguard the energy security. This will need efforts at political levels to enhanced energy cooperation and promotion of newer strategic alliances amongst nations sooner than paced as of now. This will help not
Fig. 2. Regional flashpoints.
A. Chaturvedi, S.K. Samdarshi / Energy Policy 39 (2011) 4651–4655
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only to maintain the present economic growth but accelerate development in the SE Asian region.
based energy market. It is also clear that while energy conservation and energy-efficiency have an important role to play in the Indian national energy strategy, increased renewable energy supply will become a key part of the solutions and is likely to play an increasingly important role for augmentation of grid power, providing energy access, reducing consumption of fossil fuels and helping India pursue its low carbon developmental pathway provided the economy is supportive with the high costs. The blind race within the continent over takeovers of energy resources amongst India, China, and Japan needs to be avoided, whether, it be through joint supply agreement or creation of safe stockpiles to avoid pay higher energy prices and creates competition where there could be cooperation. In a world of increasing interdependence, energy security in this region will depend on how India and China manage their relations with one another, whether bilaterally or within multilateral frameworks. This poses requirements of factoring beyond the ups and downs of a myopic localised approach to mix the reality of an even wider and complex integrated global energy system into the energy biased relations within these countries.
6. Conclusion
References
Fig. 3. Energy bridge.
The EED triangle poses an overall need to be able to identify short term and long term effective strategies to tackle the energy supply security. Short term requirements can be met by combining combat naval groups exploiting a motivated and trained force at the expense of thinning out in some low priority sector due to their overstretched deployments but at a prohibitive cost. A midterm though sustainable solution lies in creation of a specialised, quick reacting and well equipped multinational energy security force to address both the supply security as well as the technical support role. The sound understanding of operating in multi-dimensional threat with a view to afford protection to the energy supply lines independent of national borders will require a joint specialist approach. The long term security objective, however, lies in promoting energy induced regional cooperation to eradicate the real energy security concern, that is the disruption of supplies threatened by the growing wave of energy terrorism and avoid traditional geopolitics in the region. With both India and Pakistan struggling currently in their fight against terror, the induced negative growth due to combating the same, time is now ripe to reconsider strengths and opportunities through enhanced regional energy supply security initiatives. In order to develop opportunities for strategic cooperation on energy security issues, India must promote and assist development of regional rules-
Bahgat, Gawdat, 2006. India’s Energy Security. Minerals and Energy—Raw Materials Report 21 (3), 35–41. doi:10.1080/14041040701362038. Cook, David, 2008. Oil and Terrorism. Working paper series. The Global Energy Market: Comprehensive Strategies to meet Geopolitical and Financial risks, The James Baker III Institute for Public policy, Rice University, USA and Institute for Energy Economics, Japan. Fortov, V., Makarov, A., Mitrova, T., 2007. Global energy security: problems and solutions. Herald of the Russian Academy of Sciences 77 (1), 7–14. Hughes, Larry, 2009. The four ‘R’s of energy security. Energy Policy 37 (2009), 2459–2461. Karki, Shankar K., Michael, D.Mann, Hossein, Salehfar, 2005. Energy and environment in the ASEAN: challenges and opportunities. Energy Policy 33 (2005), 499–509. Khurana, G.S., 2004. Maritime security in the Indian Ocean convergence plus cooperation. Institute for Defence and Strategic Analysis Journal, New Delhi. Mehta, Sureesh, 2008. Admiral Chief of Naval Staff, National Security Lecture series at IDSA, New Delhi, India. Shahi, R.V., 2006. Secretary of the Government of India. Paper Presented to the Board of International Energy Agency at Sydney on 12th December 2006 in the Seminar on Energy Insights from Asia Pacific. Thavasi, V., Ramakrishna, S., 2009. Asia energy mixes from socio-economic and environmental perspectives. Energy Policy. doi:10.1016/j.enpol.2009.05.061. Peter, Toft, Duero, Arash, Bieliauskas, Arunas, 2010. Terrorist targeting and energy security. Energy Policy 38, 4411–4421. Lappalainen, Vesa A. (2007) The new security of energy supply directives. A first response to some big questions, ERA Conference Brussels, vol. 8, pp. 427–434. doi: 10.1007/s12027-007-0024-5. Yergin, D., 2006. Ensuring Energy Security, Foreign Affairs.vol. 85, issue 2, New York, Mar/Apr 2006, p 69.
Contents lists available at ScienceDirect
Energy Policy journal homepage: www.elsevier.com/locate/enpol
Energy, economy and development (EED) triangle: Concerns for India A. Chaturvedi, S.K. Samdarshi n Department of Energy, Tezpur University, Tezpur 784028, Assam, India
a r t i c l e i n f o
abstract
Article history: Received 12 August 2010 Accepted 9 May 2011 Available online 23 May 2011
In this paper we discuss issues involving energy security with economic growth and development that brings out (i) the dimension of physical security alternative, (ii) framework for a pan South East Asian platform to support energy security and (iii) requirement of promoting regional energy cooperation and specific energy peace initiatives. Sustaining projected economic growth rate coupled with energy security in future is a concern for all developing countries like India. The energy security of these nations is threatened by the disruption of energy supplies by ongoing energy terrorism and geopolitical conflicts in the region. India’s geo-strategic position and increasing energy dependence raises concerns for its energy security. We discuss energy security, examine factors and approaches to attempt the energy security in the light of economic growth and development. & 2011 Elsevier Ltd. All rights reserved.
Keywords: Energy security Energy terrorism Regional cooperation
1. Introduction A very pertinent analysis on the complex issue of energy security has been carried out and is termed as the 4R concept (Hughes, 2009). The four ‘R’s to explain the energy security are: review (understanding the problem), reduce (using less energy), replace (shifting to secure sources) and restrict (limiting new demand to secure sources). A relatively newer paradigm getting associated with energy security is of energy supply security and it relates to energy availability and affordability. Availability, as such, refers to the extent an energy resource is accessible like electricity or gas. Affordability is the issue, which deals with ensuring that the requirements of the mass populace in the state are increasingly met and yet sustain the affordability (Vesa, 2007). Energy security concerns for India with a view to maintain the projected sustained growth rate of 8–9% through the next decades needs to consider increasing its primary energy supply by 3–4 times. Energy is the prime-mover of economic growth and availability of energy with the assured quality of supply is not only the key to sustainable economic development, but has a direct impact and influence on the quality of service in the fields of education, health and food security (Khurana, 2004). India is projected to maintain its impressive economic growth in the foreseeable future. Without reliable and affordable energy, India will not be able to sustain such high economic growth, i.e. India’s fast-growing economy and rapidly increasing population tend to raise serious concerns about the nation’s energy security. The fuel production from indigenous resources has failed to keep pace with the continuously rising demands and is being met by increasing imports. This is making India more dependant on and vulnerable to foreign
n
Corresponding author. Tel.: þ91 3712 267007x5304; fax: þ91 3712 267005. E-mail address: [email protected] (S.K. Samdarshi).
0301-4215/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2011.05.009
energy supplies (Bahgat, 2006). By 2025, import of oil figures are expected to balloon to 85% of total consumption for India and approximately 75% for China. As per the estimates made in the Integrated Energy Policy Report 2005, if the country like India is to progress on the path of this sustained GDP growth rate during the next 25 years, it would imply quadrupling of its energy needs over 2003–04 levels with a six-fold increase in the requirement of electricity and a quadrupling in the requirement of crude oil. The supply challenge is of such magnitude that there are reasonable apprehensions that severe shortages may occur. Both India and China bring in roughly 90% of their imported oil by sea. About 90% of the ASEAN primary energy supply has been fulfilled by fossil fuels (coal, oil and gas), of which nearly 60% is imported from the Middle East. China and India would account for 27% and 12% of the global energy demand in 2030, respectively (Thavasi and Ramakrishna, 2009). The projected increase in crude imports and dependency on oil tankers to transport the crude in the present scenario are standing threats to not only India’s energy security but in the overall region. Clubbed with the global disruption of crude supply due to the US intervention in Iraq and Afghanistan, and further recent spurt in piracy incidents directed towards bulk crude carriers in the Gulf of Aden promoted by the Somali pirates has added to a new dimension in ensuring the energy supply security in the oceans. The supply security issues imply that coordinated actions may be taken and that the world community may work out a strategy securing sustainable energy supplies for the future (Fortov et al., 2007). Therefore the urgency to consider energy supply security issues to sustain the projected growth rate in the Indian context needs due attention. The issues have been dealt in this paper by suggesting securing the energy supply lines by considering options of deploying security physically or by promoting energy sponsored regional cooperation with concerns specific to the Indian sub continent.
4652
A. Chaturvedi, S.K. Samdarshi / Energy Policy 39 (2011) 4651–4655
Fig. 1. EED triangle.
2. The energy economy and development (EED) triangle Ensuring energy security requires considering various factors. The threats to energy security can be from issues of maintaining supply lines to the uncertainty of availability of imported energy. In addition possible disruptions or shortfalls in domestic production and supply also need due consideration. Even when the country has adequate energy resources the development growth rate and economic stability will tend to pose strain on the energy demands to fuel the growth. Considering the EED triangle as in Fig. 1, we see that the three vertices namely, ‘‘energy security, economic growth and development’’, tend to pull each other thereby maintaining a status quo. The state of balance between the economic growth, development and energy security needs to be analysed in the light of the contributing factors. Economic growth, development and energy security in the Indian scenario are interlinked. The economy vertex of the EED triangle is subject to agro infrastructure and commodities stability. There are many more factors; however, the paper dwells into a simple demand supply economics of financial ability to fund commodity availability. A stable economy in turn enhances overall growth and suffers only when either it falls below the state’s capacity to buy, produce or to provision energy. Energy supply here refers to both, the demand as a commodity and the state’s capability to sustain the pressure of supplying energy within the realms of maintaining growth. Similarly the Development vertex of the EED triangle is both infrastructure and trade specific. Availability of infrastructure and economic potential is needed to accelerate growth and lack of it poses hindrances in industrial growth and in turn affects trade. Development is thus seen being interdependent on economy and energy specific and will aid growth so long as the balance is maintained. Just like the three vertices of a triangle have defined degree of freedom, the EED triangle is also found to have limited flexibility. None of the indices are capable of a free run and are bound by limits set within to economic viability of finance, availability of energy and sustenance of projected growth.
3. Understanding internal threats with particular reference to north east (NE) India The economy and development are interdependent on energy and shortfall in energy supply from domestic sources, such as from a random strike in coal companies or a state bund call also need to be addressed. Reduction in water level in reservoirs, due to delays in monsoon pattern has been causing shortfall in the hydro electric power generation. Induced tripping of transmission lines by sabotage
to abort the energy infrastructure grid is not a distant threat. The location of a larger share of the Indian energy resources in the insurgency ridden NE India and their proximity to disturbed neighbours with porous borders pose a high sabotage and pilferage threat to the nation’s concerns of energy supply security (Shahi, 2006). The recently reported incidents of pilferage of oil from railway wagons and lately of sabotage of railway tracks leading to burning of oil laden wagons of Numaligarh Refineries en-route to refineries upcountry, in Golaghat district of Assam bear mute testimony to the fact. Given the current volatility and uncertainty in the fossil-fuel market, it is imperative that the comprehensive energy security concerns take into account measures to ensure the supply security internally as well. Since most of the fossil fuel resources and process facilities in India are in the NE states the increasing threat perception to supply lines, managing the bulk oil flows to the mainland, are at risk. The communication lines run over thousands of miles and across some of the most volatile areas in the country. A simple explosive device engineered by any one of the multi-ethnic insurgency groups operating in the NE region could puncture a pipeline or sabotaging the railway tracks will make them non-operational. Even if the ideology is in the remote thought process of the anti state elements, owing to their length and vulnerability supply lines are difficult to protect. This makes the internal supply lines consisting of transportation elements, whether, by road, rail or pipelines as potential targets for energy terrorists and a costly proposition to ensure protection once required internally as well as externally. While considering the security of energy supply lines and the internal threats the situation demands handling by a multi-dimensional operational body of personnel loaded with the state of art technical and tactical prowess, which is not there at the moment and will take considerable investment in time and money to develop. Till such time a short term proposal can be made to consider by employing a highly trained and motivated defence forces despite the prohibitive cost to secure the energy supply lines. Thus as a policy the task of defending the energy supply lines, whichever dimension it may be, maritime aerial or terrestrial is bound to strain the economy. The seemingly large financial overburden of raising a specialist energy specific force is justifiable on account of the professional task at hand and also taking into account the increased reactive paradigm of such threats. The need to have a flexible organisation capable of being rapidly launched to operate from within state boundaries to at times across national boundaries or in the open seas in conjunction with multinational task forces require a different mindset and backing by a strong external political ideology.
4. Renewable energy and the EED approach An effective measure to decrease the consumption of fossil fuels in power is to promote the solar, nuclear or renewable technologies. The recent nuclear disaster in Fukushima Japan has once again brought the ghost of Chernobyl and the Tsunami triggered nuclear crisis at Japan, for the policymakers at crossroads once again when the issue of nuclear energy to power issue comes up. However, the fact that more than 40% of the population in India has little or no commercial energy access for their living and livelihoods and others with access often have to cope with poor and erratic availability alternates to maintain the energy security need to be thought of at a faster pace. This not only deprives them of basic human need for quality of life but also constraints generation of productive activities and incomes and employment in rural areas, which itself has become a critical factor in India’s future development process. Further the little supply that comes in such areas forces people to depend on use of kerosene for lighting and diesel for powering irrigation pumps and small enterprises. Both these are imposing further financial burdens on the economy because of high levels of subsidy and add to the
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problems of energy security. Renewable energy can also competitively meet the process heat as well as power requirements of large number of small and medium enterprises as well as in some other areas, which use lot of diesel for power generation. Thus, renewable energy should not be seen only, or even primarily so, in the context of grid related power. Its great strength and potential also lies in its ability to generate power in decentralised and distributed mode, which has the advantages of production at consumption points and does away with land and environmental related concerns and problems. The Ministry of New and Renewable Energy would like to step up renewable energy decentralised applications to save a billion litre of diesel/furnace oil/kerosene annually after five years. Telecom towers and industrial power generation are two focus areas to reduce consumption of diesel. This area generally remains largely unexplored or unexploited or even discussed. Historically, India has initiated systematic programmes for renewable energy including for research and development. However, the fast progress across the world, which has melted the national boundaries in terms of technology adoption and implementation, the optimisms as well as demand created by economic growth in India and the increasing concerns regarding climate change have led to a situation where renewable energy is experiencing vibrancy all across, whether in industry, research institutions, a common villager, a developer, an investor, bankers and so on. Each one has some aspirations and expectations from this sector and may indeed have a great responsibility. The main thrust areas have been in the form of the Jawaharlal Nehru National Solar Mission for development and deployment of solar energy technologies in the country to achieve parity with grid power tariff by 2022. Similarly in the renewable sector, offgrid has been the thrust area and the current potential for power generation from surplus agro and agro industrial residues is estimated to be 17,000 MWe. With progressive higher steam parameters and efficient project configuration in new sugar mills and modernisation of existing ones, the potential of surplus power generation through bagasse cogeneration in sugar mills is estimated at 5000 MW. Thus the total estimated biomass power potential is about 22,000 MW. A cumulative capacity of 2437 MW has so far been commissioned mainly in the states of Tamil Nadu, Uttar Pradesh, Karnataka, Andhra Pradesh, Maharashtra, Chhattisgarh, Punjab and Rajasthan, which includes 971 MW from biomass and 1466 MW from bagasse cogeneration in sugar mills. In order to create an enabling environment, new policy frameworks, technological innovations and human skills development programmes are under way under the aegis of the Ministry of New and Renewable Energy, Government of India. Renewable energy is central to climate change mitigation efforts. Broad estimates indicate that mitigation from existing renewable energy portfolio is equivalent to around 4–5% of total energy related emissions in the country. Although India is a favourable destination for Clean Development Mechanism (CDM) it is economy, which poses the single largest constraint as of now. Pending, which the energy security balance to maintain a steady
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growth is the reliance on the fossil fuel by all such developed and developing nations.
5. Understanding external threats The key to energy security of late has been diversification and promotion of research of new and renewable energy sources. This remains true, however, a newer approach is now required that takes into account the rapid evolution of the global energy trade, supply-chain vulnerabilities, terrorism and the integration of major new economies into the world market. As an unintended implication, rapid globalisation and its accompanying technical diffusion have also created spaces for highly diverse transnational fundamentalist groups, or stateless actors to expand in influence and lethality, directly influencing global supply security. Although in the developed world the definition of energy security is simply the availability of sufficient supplies at affordable prices, different countries interpret what the concept means for them differently. Energy-exporting countries focus on maintaining the, ‘‘security of demand’’, for their exports, which after all generate the overwhelming share of their government revenues. The concern for developing countries is how changes in energy prices affect their balance of payments. For China and India, energy security now lies in their ability to rapidly adjust to their new dependence on global markets, which represents a major shift away from their former commitments to self-sufficiency. For Japan, it means offsetting its stark scarcity of domestic resources through diversification, trade and investment. In Europe, the major debate centres on how to manage dependence on imported natural gas and in most countries, aside from France and Finland, whether to build new nuclear power plants or perhaps to return to clean coal technology. The United States must face the uncomfortable fact that its goal of ‘‘energy independence’’ – a phrase that has become a mantra since it was first articulated by Richard Nixon four weeks after the 1973 embargo was put in place – is increasingly at odds with reality (Yergin, 2006). India’s energy security seeks to ensure continuous availability of commercial energy to support its economic growth and meet the minimal energy needs with safe, clean and affordable forms of energy (Shahi, 2006). The rise in nation’s oil consumption from 127 million tonnes in 2004 to 160 million tonnes by 2009 is already poised to double by 2030 (at an approximate rate of 2.5%) from 2004 base consumption. The resulting impact is on crude imports as is evident from the corresponding increase in crude imports from 95 million tonnes in 2004 to 128 million tonnes during the same time span (Table 1). These projections underline the conclusion that the increasing trend in consumption will increase India’s dependence on imported oil. This projection underlines the current trend of rising consumption; however, India’s growing dependence on
Table 1 Growth of Indian petroleum industry, referred from ‘‘Basic Statistics on Indian Petroleum and Natural Gas, 2008–09’’, economic division, ministry of petroleum and natural gas, Government of India. S/No. Reserves 1 2 Consumption 3 4 Imports 5 6
Item
Unit
2004–05
2005–06
2006–07
2007–08
2008–09
Crude oil Natural Gas
Mn. Tonne Bn. Cube Mtr
739 923
786 1101
756 1075
725 1055
769 1050
Crude oil Petroleum products
Mn. Tonne Mn. Tonne
127 111
130 113
146 120
156 128
160 133
Crude oil LNG
Mn. Tonne Mn. Tonne
95 2
99 2
111 2
121 2
128 2
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energy imports makes its energy supply lines vulnerable to both the volatility of the oil price shocks by the oil rich producers in Gulf and the geopolitics of the region. The Indian Ocean and its contiguous waters have always had a major share of global pirate attacks and armed robbery in territorial waters due to intense shipping density, virtually non-existent maritime policing and extent of required security coverage. The increasing numbers of super tankers circumnavigating the globe transporting primarily energy and finished products to and fro have given a fillip to maritime terrorism and piracy. As of today, the most potent and viable threats demanding global attention is to sustain and maintain a free and secure international maritime trade. Complicating the maritime threat picture is growing speculation that a tactical nexus could emerge between piracy and terrorism (Mehta, 2008). Links between energy terrorism and piracy having being uncovered lately and the distinct possibility of nuclear weapons falling in the hands of terrorists due to overpowering by pirates of these shipping vessels ferrying such material, further add to the threat. The recent Mumbai terrorist strikes have undoubtedly left the nation and the world aghast and reconfirmed the adding of a new dimension of the international waters as the medium to convey instruments of terror. Containerisation of sea-borne trade and exploitation of container shipping by fundamentalist terrorist organisations like Al Qaida, compound the threat. Al-Qaeda leaders have claimed numerous times, to cut the ‘‘economic lifelines’’ of the world’s industrialised societies. Being the most inexpensive and capable of transport volumes, over 80% of the world’s trade involves ocean transit and thus there co-exists the threat potential also. Al Qaida is known to have secret designs to covertly transport arms, drugs and recruits through the sea. There is no doubt that al-Qaeda is intent on hurting the west economically by interrupting the flow of oil to American, European and Asian markets (Cook, 2008). Security of energy flows (Mehta, 2008) assumes importance since India’s annual oil consumption is expected to rise to 150 million tons by 2020, with the country likely to be the world’s single largest importer of oil by 2050. Global energy interests also translate into the permanent and increasing presence of extraregional forces in the Indian Ocean in general and the Arabian Sea in particular. Ensuring unhindered flow of oil from this region will be a major maritime pre-occupation, especially in times of conflict. Energy security, particularly meeting the challenge of transporting energy from sources to global markets consumers, has emerged as an issue of great importance in recent decades, as countries have become increasingly reliant upon imports of hydrocarbons rather than indigenous resources. Security of supply impacts on the wider concept of state security and disruption can seriously undermine a country’s economy. The presence in the area of the multilateral operations of task forces comprising of China, Russia, India, Japan, Malaysia, and UK is a sign of the extended international commitment to fight piracy but is adding to the cost burden potential of energy supply security. However, we must also factor possible coercive influence of these extra-regional maritime forces in our security calculus. The resulting incremental cost in maintaining the energy security in turn is skyrocketing and has to be either borne by the consumer state or collectively shared by enhanced mutual cooperation and strategic multi nation treaties aiming to cooperate and counter the increasing industry of energy terrorism operating in the region. This has thus emerged as a single most important area of concern among other energy specific disciplines like enhancing efficiency and expansion of renewable solar, wind and biological energy. The energy security comprehensive will entail within its ambit the deliverance of sound policies both for developing new energy resources and ways and means to secure the existing
energy supply state. Not only India’s energy infrastructure is exposed to the threat of energy terrorism, the threat is imminent in most of the states of the region including Pakistan, Afghanistan, Nepal, Sri Lanka, Myanmar and onto the ASEAN states who face militant and terrorist threats from groups that are likely to disrupt energy flow (Toft Peter et al., 2010) .This thus calls for a pan SE Asian approach as suggested to meet the overall economic growth and development in the interest of energy security. If institutions devoted to shared infrastructure, creation of strategic reserves and information are developed, SE Asia may find the mechanisms helpful for other gainful development areas including political, economic and social security-related issues to promote energy security in the region. The ASEAN economy is expected to continue to grow over the period from 2000 to 2020, and it is estimated that annual energy supply must increase by 4.2% a year to sustain this growth (Karki et al., 2005). The ASEAN makes up one of the largest regional markets in the world, and its reasonable proximity with such mechanisms, when in place will help share information, transfer conservation technology and coordinate regional strategic stockpiles to reduce the effects of supply disruptions. A multinational framework could spur concerted efforts to make projects like gas pipelines feasible and beneficial for the region as a whole. However, the region is very volatile, divided by a series of unresolved intra and internal conflicts, and calls for an enhanced understanding within SE Asia and in the Middle Eastern states as in Fig. 2. The requirements ahead are to escalate pan Asian cooperation and avoid resource disagreement over issues no matter how deep rooted is the crying need of today to have a better tomorrow. The tasks are quite clearly defined with a growing need to intensify diplomatic efforts towards promoting regional cooperation not only to better utilise the energy resources within the region like developing trans South Asian pipelines connecting the oil rich West Asia to the energy demanding and a securer South East Asia. This may well be the backdrop for developing in future a key part of a fully integrated transportation system, the ‘‘new Gulf ASEAN Energy Bridge’’’, which will include pipelines, railways, fibre-optic cables and power transmission grids linking the producers in West Asia further to the consumer economies in SE Asia and China as in Fig. 3. Thus there is an urgent initiative needed by energy affected nations to avoid competition and confrontation over energy resources, which are emerging between Asian countries especially between Japan, China and India. There is a pressing demand on the conflicting nations, considering that the resource availability is feasible, however, is to take steps to safeguard the energy security. This will need efforts at political levels to enhanced energy cooperation and promotion of newer strategic alliances amongst nations sooner than paced as of now. This will help not
Fig. 2. Regional flashpoints.
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only to maintain the present economic growth but accelerate development in the SE Asian region.
based energy market. It is also clear that while energy conservation and energy-efficiency have an important role to play in the Indian national energy strategy, increased renewable energy supply will become a key part of the solutions and is likely to play an increasingly important role for augmentation of grid power, providing energy access, reducing consumption of fossil fuels and helping India pursue its low carbon developmental pathway provided the economy is supportive with the high costs. The blind race within the continent over takeovers of energy resources amongst India, China, and Japan needs to be avoided, whether, it be through joint supply agreement or creation of safe stockpiles to avoid pay higher energy prices and creates competition where there could be cooperation. In a world of increasing interdependence, energy security in this region will depend on how India and China manage their relations with one another, whether bilaterally or within multilateral frameworks. This poses requirements of factoring beyond the ups and downs of a myopic localised approach to mix the reality of an even wider and complex integrated global energy system into the energy biased relations within these countries.
6. Conclusion
References
Fig. 3. Energy bridge.
The EED triangle poses an overall need to be able to identify short term and long term effective strategies to tackle the energy supply security. Short term requirements can be met by combining combat naval groups exploiting a motivated and trained force at the expense of thinning out in some low priority sector due to their overstretched deployments but at a prohibitive cost. A midterm though sustainable solution lies in creation of a specialised, quick reacting and well equipped multinational energy security force to address both the supply security as well as the technical support role. The sound understanding of operating in multi-dimensional threat with a view to afford protection to the energy supply lines independent of national borders will require a joint specialist approach. The long term security objective, however, lies in promoting energy induced regional cooperation to eradicate the real energy security concern, that is the disruption of supplies threatened by the growing wave of energy terrorism and avoid traditional geopolitics in the region. With both India and Pakistan struggling currently in their fight against terror, the induced negative growth due to combating the same, time is now ripe to reconsider strengths and opportunities through enhanced regional energy supply security initiatives. In order to develop opportunities for strategic cooperation on energy security issues, India must promote and assist development of regional rules-
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