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Europe’s push for renewable energy at the cost of conventional fuel may lead to some second and third order effects, which will have global ramifications.
What is the issue?
As it cannot depend entirely on energy generated through Sun or wind, Europe has been relying more on natural gas to make up the electricity shortfall.
Europe’s sudden increased demand for natural gas has pushed up the prices of Liquefied Natural Gas (LNG), the form in which gas is traded globally. Higher gas prices have pushed up energy bills globally for households and are expected to impact household spending and consumption as well.
The sudden dependence on natural gas during winter has also made European countries wary of upsetting Russia amidst the Ukraine conflict.
What are the implications of this upsurge in Natural gas demand on other sectors of global economy?
Natural gas is used to produce urea – if gas prices go up, fertiliser also becomes expensive.
Expensive fertilizer means more expensive food – that will hurt the world’s poor disproportionately.
What are the lessons for India?
India is relatively less affected as the share of natural gas in the country’s energy mix is low but will still face problems due to high food prices. This will be above the negative effect that pandemic has already inflicted on the poor and disadvantaged.
India though has ambitious plans for using renewable technologies but doesn’t have the financial resources that are available with the European nations. So India should adopt a balanced approach in energy transition.
Cheap and reliable energy sources should not be abandoned until the alternatives have been stringently tested. India will be especially hard hit if oil prices spike as it is highly dependent on import.
Source– This post is based on the article “The consequences of an ill-considered green strategy” published in Indian Express on 27th Jan 2022.
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