Energy future remix

The American media is providing a great deal of attention to the oil spill which has taken place in the Gulf of Mexico, and it is evident that in respect of the impacts of this major environmental disaster the worst is not yet over. In fact, according to latest reports, not only is there thus far a complete failure to stop the flow of oil from the offshore well which has resulted in this problem, but much of the oil floating on the surface of the sea has yet to hit the coastline. The clean-up of this disaster would take several months according to informed estimates, and the loss in economic and ecological terms would be incalculable. The sight of birds dying slowly because their bodies and feathers have been covered by oil is not only a tragedy in terms of the species affected, but is also an indicator of how human activity is adversely affecting the ecosystems of this planet.

Governor Arnold Schwarzenegger of California has come out openly expressing opposition to drilling for oil and gas in offshore areas. The world has certainly been heavily dependent on consumption of hydrocarbons to run the economic engine of human society since industrialisation began, but we need to look at several factors that should influence our decision in favour of a distinctly different energy future. The reality is that the search for hydrocarbons will take us further and further away from established sources and into areas that are going to prove increasingly fragile. The symbolic sitting of a Russian flag at the North Pole is only an indicator of the fierce competition that we would witness over possible reserves of hydrocarbons in the Arctic region in the years ahead.

If we look at the projections of the International Energy Agency over the past five years they have changed downwards, leading analysts to believe that perhaps anything beyond a hundred million barrels a day of oil production is now going to be an impossible achievement. This figure is much lower than what was forecast just a few years ago - 115 million barrels a day.

There is no getting away from the fact that the world will have to move to a very different energy future from what we have assumed till very recently. Decision-makers should not ignore the fact that it was just three years ago that oil prices had increased to a level of $147. Further economic recovery worldwide is going to increase the demand for oil and natural gas to levels that would exert immense upward pressure on hydrocarbon prices very soon in the future. All of this should really convince decision-makers in governments and businesses to substantially step up research and development efforts and financial allocations by which not only do we improve the efficiency of energy use across the entire chain, but also bring about the development of viable and sustainable energy technologies essentially based on renewable sources.

Those countries which have read the writing on the wall are moving purposefully in creating technological solutions which would bring about a major shift in the world energy supply mix. It is now well known that China, for instance, is investing heavily in building its renewable energy supply capacity, and would clearly reach a position of comparative advantage that would not only help them in expanding supply in China itself, but also provide access to the growing global market which is likely to emerge under any set of scenarios that can be foreseen at this point of time. It is pertinent that Chinese Premier Wen Jiabao, while addressing a meeting of the State Council on May 5, 2010, to discuss issues of conserving energy and cutting emissions, emphasised the fact that China needs to make much larger efforts to cut emissions and conserve energy to meet their targets as set in the 11th five year plan. According to this plan, China will cut its per unit gross domestic product energy consumption by 20 per cent compared with the 2005 level by the end of 2010.

Another nation which has not deviated from its green growth strategy despite unfavourable economic conditions in the last two years is South Korea. In that country the green growth plan, which has been in place for over three years now, clearly targets a substantial increase in supply of green energy and in finding a share of the global market on the basis of projections made right up to 2030. The experience of Germany has also been largely favourable, not only in terms of expanding the physical supply of renewable energy, but also in generating new industry, creating employment and economic opportunities which did not exist earlier, given Germany's dependence on imports of energy.

Another impressive project which is been pursued vigorously now is the "desert tech" project which will essentially generate power in North Africa using solar energy and transmit electricity to Europe. Undoubtedly, there would be strategic opportunities from such developments because Western Europe, which relies heavily on gas from Russia, would be able to diversify its sources of supply.

The South Asian Association for Regional Cooperation (SAARC) nations met in Thimpu, Bhutan, earlier this month with climate change as the main theme of the meeting. While the declaration at the end of the summit has identified some useful directions, it is critically important for the countries of this region to embark on a programme of collaboration that would make the best use of technological opportunities and exploitation of economies of scale. For instance, the desert region of Sindh in Pakistan and Rajasthan in India have great similarities on the basis of which large-scale solar-based power could be generated to supply to a substantial area of Pakistan and a large part of western and northern India.

There are enormous benefits in exercising a vision that not only deals with the problem of pollution from conventional fossil fuel-based energy systems but also creating a base of technological cooperation that would bring this region a level of cohesion which has been missing thus far. New sources of energy could bring the nations of SAARC together, while showing the way to the rest of the world.

Full Text