India needs is a diversification of the energy sources now.
Since the effects of global warming are already visible the average temperatures today are only 0.8 degree Celsius higher than in 1880. Yet there is already an increasing frequency of extreme weather events, rising ocean temperatures and disappearing corals, melting glaciers and shrinking polar ice caps, and rising sea levels.
There are some observations which are needed to taken care of:
- The public actions have been too small and poor to cope with such looming disaster.
- Even after signing the Paris accord has been signed and containing global warming is now on the policy agenda, it is mostly business as usual both in private industry and in public policy
- According to an estimate by the Inter-governmental Panel on Climate Change (IPCC) –
- To contain the earth’s increasing temperature over the 1880 benchmark to under 1.5 degrees Celsius will require a 20% reduction in oil and gas production by 2030.
- But several oil companies have plans to produce 25% more oil and gas by 2025, and other oil majors are headed in the same direction.
- The double standards of the accord signatories are that they are the ones investing in it and also they are the one throwing it away.
- The roughly $300 billion of annual investment in renewables is just a fraction of the investment being made in extracting more fossil fuels.
- The fossil fuels like coal, oil and gas are more profitable than renewables and account for 85% of the total energy supply. That is what drives the current shareholder value of oil companies.
BP Energy Outlook (BPEO) report–
- The total energy supply of renewable sources will be just about 16% of total energy supply in 2040, up from around 3% today
- The Hydro and nuclear power will account for another 11%
- Fossil fuels will still account for over 70% of total energy supply.
- There will be a shift from coal to oil and further to gas, not from fossil fuels to renewable sources, according to BEPO.
- Therefore, market incentives fall well short of what it will take to contain global warming within the limits necessary for global survival. It is this market failure that requires muscular policy intervention by governments.
- A strict policy intervention is required by the governments
- An effective fiscal policy, to radically shift market incentives and profitability in favour of renewable sources is the need of the hour.
- Energy demand is projected to grow annually, considering the growing population and rising incomes in the developing countries.
- India remains heavily dependent on vast reserves of coal, which is also the dirtiest fuel but switching from coal to cleaner oil or gas poses a security risk since India is heavily dependent on imports for these fuels. Hence, India’s long-term strategic interest requires a radical shift from fossil fuels to renewables, including hydropower.
- Over the medium term, India requires a strategic energy policy. India should move towards maximum dependence on renewable.
- Instead of subsidizing power prices and distorting energy markets to achieve this goal, tax incentives should be used to maximize investment in renewables. Theycan turn India’s barren deserts and other non-cultivable land into vast energy generation fields.