[Answered] Examine the trade-offs and dilemmas faced by energy policy in the age of AI and climate change. Critically analyze the security implications of overdependence on a single cheapest supplier for the green transition.

Introduction

IEA’s World Energy Outlook 2024 highlights how AI expansion and climate change are reshaping energy systems, compelling countries like India to balance economic growth, decarbonization, technological diffusion, energy security and geopolitical vulnerabilities simultaneously.

The New Energy Landscape: AI and Climate Change as Dual Disruptors

Growing AI-driven electricity demand

1. India earlier prioritised access, affordability and supply security, but today must integrate decarbonisation, digital infrastructure, grid modernisation and resilient supply chains.
2. AI data centres consume 10–50 times more electricity than traditional centres (IEA, 2023).
3. Google’s $15 billion Visakhapatnam AI hub and upcoming industry clusters require gigawatt-scale renewable power, demanding upgraded transmission, battery storage and smart grids.
4. Policy dilemma: rapid AI growth vs. insufficient renewable capacity and grid readiness.

Climate commitments vs. socio-political realities

1. Coal India employs 3.5 lakh workers, with millions dependent on coal-linked ecosystems—a major political economy constraint.
2. Simultaneously, six of the world’s ten most polluted cities are in India (World Air Quality Report 2024).
3. Under the Paris Agreement, India’s NDC targets 50% non-fossil electricity capacity by 2030.
4. Dilemma: environmental urgency vs. livelihood dependence and electoral constraints.

Key Trade-offs in Contemporary Energy Policy

1. Affordability vs. deep decarbonisation: Renewables are cheaper (solar below ₹2.5/kWh), but integrating them requires: Grid-scale battery storage, Green hydrogen infrastructure, Flexible thermal backup, High-voltage transmission corridors. Trade-off: low-cost generation vs. high-cost integration.
2. Fragmented governance vs. integrated energy planning: Multiple ministries (Coal, MNRE, Petroleum, Power) lead to siloed decisions, slowing coordination required for AI–climate era challenges such as: Cross-sectoral energy demand, Technology transfer and Critical mineral supply chains. A shift towards a whole-of-government energy governance architecture is essential.
3. Accelerated transition vs. political and fiscal constraints: Rapid decarbonisation risks job losses and regional imbalances; slow transition jeopardises sustainability targets and ESG-linked investments.
4. Overdependence on a Single Cheapest Supplier: Security risks like China controls: 80% of solar panels, 95% of polysilicon wafers, 80% of lithium-ion processing. Dominant shares in rare earths, battery chemicals and critical minerals.

Security Implications

1. Geopolitical vulnerability: Overdependence creates strategic risks similar to Europe’s pre-2022 reliance on Russian gas. China’s dominance can be leveraged for coercive diplomacy or supply disruption during crises.
2. Supply chain fragility: Disruptions—pandemic shocks, export restrictions or geopolitical tensions—can stall India’s green transition infrastructure, from solar parks to EV manufacturing.
3. Technology lock-in: Relying on ultra-cheap imports discourages: Domestic manufacturing under PLI for Solar Modules, Innovation in next-gen technologies (perovskites, sodium-io n batteries) and competitive value chains.
4. Economic risks: Price manipulations or cartel-like behaviour can undermine domestic industry, increasing long-term import dependence and eroding energy sovereignty.

Conclusion

As Vaclav Smil notes in Energy and Civilization, resilient energy systems underpin national power. India must diversify supply chains, strengthen domestic capacity and adopt integrated governance to balance competing energy dilemmas effectively.