India’s energy elephant only beginning to rumble

Whichever coalition emerges out of the Indian elections, the new government’s decisions on energy will be vital for social justice, the environment and economic acceleration.

The world’s biggest election features 814 million eligible voters and takes five weeks. Indians are hoping the new government will accelerate growth and tackle the burden of poverty – only achievable by solving the country’s entrenched energy challenges. But if the Indian economy does break into a run, it could emerge as one of the leaders in global energy markets.

India’s 1.2 billion population is now not far behind China’s 1.3 billion, and if we add its subcontinental neighbours, 1.6 billion makes this the planet’s most populous region. While China may be leaving the era of resource-intensive growth, India could be entering it – and unlike China’s ageing population, India’s remains youthful and fast-growing.

But this take-off will not happen without reliable, affordable energy. Three-hundred million Indians still lack electricity and 700 million cook with wood or dung. The poor need access to modern energy to avoid lung disease from indoor smoke, to allow children to study at night, and for farmers to pump water and grow crops. To create jobs, manufacturing industries require dependable electricity supplies, exposed in the great blackout of July 2012. The expanding middle classes clamour for fuel for their vehicles, power for their fridges and air-conditioners. And all want clean air and water.

Each of the three leading parties has promised to expand renewable energy in India. Congress introduced the National Solar Mission and has said it will supplement it with a National Wind Energy Mission.

Gujarat, governed by BJP prime ministerial candidate Narendra Modi, is the country’s leader in solar power. But it has also built controversial coal power plants such as Mundra on the Gulf of Kutch, opposed by local people for environmental damage.

The Aam Aadmi Party, meanwhile, wants to expand decentralised renewable energy, in harmony with its approach of local governance. But its attempts to lower bills for consumers in Delhi promises the continuance of shambolic utility company finances, state bailouts and underinvestment. And it is running strong candidates in Tamil Nadu where it has led protests against the Kudankuluam nuclear plant. Nuclear, only a small part of India's energy mix today, is planned to make up a quarter of electricity by 2050.

But whatever the progress on renewables and nuclear, coal will inevitably be a big and cheap part of the Indian energy mix. The inefficiency of state monopoly Coal India and campaigns against coal mining mean it has to import growing amounts of the fuel. But India is one of the most exposed countries to the damage of climate change, and needs to avoid the air pollution disaster overtaking China.

The government's new policy to increase gas prices steadily will boost domestic production. But India's geography – flanked by Pakistan and Afghanistan – gives it no easy route to gas supplies from the Gulf or Central Asia.

India is often presented as one of the countries driving high oil prices. But in fact, the story so far has all been about China. While the oil demand of India’s lumbering elephant grew by less than 1 million barrels per day over the last decade, the crouching tiger grew by 4 million bpd, and is now the world’s biggest oil importer.

Indian oil demand rose just 0.6 per cent last year, because of slowing economic growth, a weak rupee and cuts to subsidies. But a return to stellar growth rates might make it the world's fourth-largest oil consumer by 2020, and poised to overtake Japan, supporting global oil prices even as shale production rises and Chinese demand slows.

Whichever coalition emerges, the new government’s decisions on energy will be vital for social justice, the environment and economic acceleration. Such changes would resonate far beyond New Delhi. As China has, the Indian energy elephant can shake the world.

Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis

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