How today’s energy crisis will shape our world’s future

Source– The post is based on the article “How today’s  energy crisis will shape our world’s future” published in the mint on 31th October 2022.

Syllabus: GS2- International relations. GS3- Energy

News- The article explains the current energy crisis and its implications.

What are some facts related to the current energy crisis?

This has been initiated by Russia’s invasion of Europe.

According to the IEA, the world is in the midst of the first global energy crisis, a shock of unprecedented breadth and complexity.

It is much broader-based than the crisis in the 1970s. It does not cover just oil, but gas and other fossil fuels.

Between January and July this year, the IMF global price index has risen by 72%. But since then, the gas prices have fallen drastically due to lower demand.

The epicenter of the crisis has been Europe.

What will be the implication of this crisis?

There is a longer term shift. Even if the situation normalizes, Europe’s dependence on Russia will not be the same. The rupture between their energy relation will be permanent.

Germany is looking for other alternatives to meet energy needs. Major replacements have been Norway, Netherland.

Ripples of these realignments will be felt by big consumers like India. It will have to make more efforts to secure energy supply.

Russia will have to look for new buyers for its oil as the full European embargo on Russian oil begins in February next year.

Countries will have to prioritize energy security over other goals.

There will be a transition towards clean energy. IEA energy outlook says that coal demand will plateau by next few years and natural gas by next decade.

What is the scenario of India?

India dependence on Russian oil is not a short-term shift. India will likely be a major buyer in years to come. If Russia is able to build a pipeline in Asia infrastructure in Asia, India could be a major importer of Russian gas.

Renewable will continue to grow in importance. IEA Energy Outlook says that coal share in electricity generation  will fall by 20% in less than a decade. Share of solar power and wind energy in electricity generation will rise to about 27% from the current 10%. But it will be a major consumer of fossil fuel.