A new roadmap for end of oil age

Context: The latest book The New road Map: Energy, Climate and the Clash of Nations, provides some pointers on how should India navigate future energy transitions.

Explain the key pointers on navigating future energy transitions.

• Future pathway: It pulls together the transformative occurrences and technologies that have shaped the energy world in recent years into a clear framework.
• Six broad themes define The New road  Map:
  • The first is the US shale revolution, which transformed the US from a major importer of oil and gas to a significant exporter.
  • The second is the leveraging of gas exports by Russia to compel former members of the Soviet Union to stay within its sphere of influence and to embrace China into an energy partnership.
  • The third is China’s assertion of its rights over the South China Seas which is a critical maritime route for its energy imports and the Belt and Road initiative.
  • The fourth is sectarian strife (Sunni/Shia) in the Middle East which, compounded by volatile and falling oil prices, has brought the region to the edge.
  • The fifth is the Paris climate summit and its impact on public sentiment, investment decisions, corporate governance and regulatory norms.
  • The last is the consequential impact of the manifold and impressive advancement of clean energy technologies.
• Energy transition: Energy transition will unfold in different ways in different countries and over different time periods. This is because they will be influenced not just by economics and technology, but also by politics and public activism.
• Peak oil demand: They bring out one development that plays to India’s advantage i.e. the onset of “peak oil demand”. The earlier concern was “peak supply” (supplies are finite and the market will face a shortfall).
  • There is no consensus, however, on the timing of peak demand.
    • BP believes, for instance, it has already peaked;
    • the International Energy Agency (IEA) projects it will peak by 2028;
    • IHS Markit’s “rivalry” scenario puts the date around the mid-2030s.

What are the policy initiatives for future energy transitions?

• A framework for considering policy options
  • On the fossil fuel axis: The book suggests the government leverage its buyer (“monopsonist”) strength to secure “most favoured” terms of trade for crude supplies.
  • Battery storage: One, India must develop its own world-scale, competitive, manufacturing systems for photovoltaics (PVs) and battery storage.
    • If not, it will not be able to provide affordable solar units unless it accepts the further deepening of dependence on Chinese imports.
    • Currently, China manufactures 75 per cent of the world’s lithium batteries; 70 per cent of solar cells; 95 per cent of solar wafers and it controls 60 per cent of the production of poly silica.
  • Strategy: India must prepare a clean energy technology strategy.
    • The India strategy should identify relevant “breakthrough technologies”, establish the funding mechanisms and create the ecosystem for partnerships (domestic and international).

Conclusion

• No disagreement over the fact that the oil market does face a structural supply overhang. In regard with India, clean energy technology offers an early and mutually beneficial platform for charting out a new roadmap for the end of oil age.

WEF Releases “Energy Transition Index 2021”