NonAlignment 2.0: A Foreign and Strategic Policy for India in the 21st Century (12 page)

A significant constraint on India’s ability to reach and maintain 8 to 10 per cent growth over the next several decades, and to take advantage of the so-called ‘demographic dividend’, will be the availability of energy resources. India’s strategic autonomy will depend profoundly on its energy policy. The more dependent it is on imported fossil fuels or technology, the less autonomy will it have. Indeed, more than anything else, energy dependence often defines the limits of power. Energy competition is likely to remain an important driver of strategic competition.

Our energy security situation puts us in a position of structural dependence. Our dependence on imported oil is already 75 per cent and is estimated to go up to 90 per cent by 2030–31. Most of the oil is sourced from potentially volatile regions such as the Gulf. While the
situation concerning natural gas is better, the rising curve of demand will result in a steep rise in imports by 2030–31. There is an urgent need to assess and exploit shale gas deposits on India’s continental shelf. Thanks to shale gas, the United States is virtually self-sufficient in natural gas—though it was a major importer only a few years ago. However, a number of environmental issues, in particular water contamination, have arisen with shale gas production and need careful examination. In particular, India’s regulatory capacities may need substantial enhancement before we attempt sustainable shale gas production. Above all, we should not arrive at a situation where solving one resource crunch leads to a more problematic situation in another more critical resource, that is, water.

Coal is likely to remain the mainstay of India’s power generation. Over 50 per cent of current commercial energy is sourced to coal and this is unlikely to change in the short to medium term. It is estimated that 66 to 75 per cent of coal in 2030–31 would be imported. This appears to be based on a pessimistic analysis of the existing coal industry in India. This in turn points to the need for denationalization of coal and for reform of Coal India Limited and of the overall sector as a security imperative. The recent Committee on Allocation of Natural Resources offers a graduated path for such reform. Further, even if
this level of import continues, there are severe constraints in port capacity for such import volumes (we have few specialized coal terminals) and associated logistics of evacuation from the port to sites of use.

Hydroelectric power is about 20 per cent of our current power production, but is unlikely to rise in any significant manner, particularly due to environmental constraints. These constraints exist for almost all sources, particularly for coal but also for non-fossil sources like wind and nuclear energy. Further, hydroelectric power needs to be repositioned as primarily a supplier of peak power, which may require reconfiguration of the plants at the sites to produce more electricity within a shorter time frame, that is, more turbines.

Nuclear energy constitutes only 3 per cent of our current power production and may rise to 10 per cent by 2030–31 if the projected expansion, in the wake of the Indo-US civil nuclear agreement, fructifies. In this effort, it is important to look at the experience of countries that have rapidly increased the share of electricity from nuclear power such as France and Japan and understand the kind of institutional oversight, regulatory architecture and execution capacity that needs to be created in the public and private sectors for enabling such scaling-up.

Overall, India’s energy security is likely to deteriorate
in the short to medium term and the challenge will be to ensure predictable and adequate supplies from external sources, to ramp up energy-use efficiency at home and to remove constraints on expanding domestic supplies of all available sources of energy.

In the longer term, there is no alternative to making a strategic shift from our current reliance on fossil fuels to a pattern of production and consumption based, progressively, on renewable and clean sources of energy (such as nuclear energy). There will have to be a conscious effort to move away from energy- and resource-intensive patterns of growth to a model that is energy-conserving, which focuses on developing more public goods rather than focusing on individual consumption, for instance promoting cheap and efficient public transportation as against private vehicular traffic. The impact of such a shift will be felt in the longer term. But critical decisions to bring this about have to be taken now.

India is at a stage of growth where creation of infrastructure is a priority. It is also urbanizing rapidly. The choices we make now in terms of urban design and infrastructure development will constrain our possibilities for years to come. So energy efficiency and the technology and resource choices needed to achieve such efficiency must be placed at the centre of such decisions.

It is true that India has managed many of the demand-side issues well. The energy intensity of organized industry has been improving. India taxes all kinds of fuels. But this poses a strategic challenge for us. For, on the one hand, it signals a certain capacity to respond to energy concerns. On the other, it suggests that our headroom for making improvements is much less than many of our competitors.

There is an urgent need to align our plans for augmenting power-generation capacity with emerging demand patterns. Current indications are that virtually all the planned additional capacity is in the nature of base load capacity, with very little available to cater to peak load demand. We need the right mix to cater both to base load and to peak load demand. Our current mix is suboptimal. It is projected that power demand for space conditioning (which creates both diurnal and seasonal variations in demand) will be the fastest-growing component of energy use in the next twenty to thirty years. Therefore in terms of energy strategy:

a. There must be focus on power-generation capacity to meet load—following demand and peak demand, rather than base load.

b. Demand-side management will require introduction of time-of-day tariffs and a power distribution system responsive to demand variations.

c. We need to create a national and eventually subcontinental power grid network that enables more efficient energy use and the introduction of smart grid systems, which can integrate the use of emerging decentralized technologies like micro turbines (for uses that combine space conditioning and power) and fuel cells.

The Indian public and private sector oil companies are actively seeking energy sources abroad, from mines in Australia, Indonesia and Bolivia and oil exploration blocs in Central and South-East Asia, Russia, Africa and Latin America. These transactions are likely to pose new strategic challenges for Indian foreign policy. We need to establish the bargaining levers to ensure that these contracts work in India’s favour, and do not draw the government into diplomatic compromises it might otherwise want to avoid. In this context, India must take into account the transformational impact of the shale gas revolution on the global energy landscape. The exploitation of vast reserves of shale gas in the United States using new technologies such as fracking and horizontal drilling, has already made it self-sufficient in gas and a potential major LNG exporter. Indian diplomacy must vigorously pursue an energy partnership with the United States, using its privileged
relationship with that country, so that its energy security is advanced even as it continues its strategy of a graduated shift to renewable and clean sources of energy. This may also reduce India’s dependence on energy supplies from an increasingly volatile West Asia and North Africa.

According to the Petroleum Conservation Research Association (PCRA), the consumption pattern of petroleum products in India is as follows:

The issue is not so much fossil fuels or technology; rather it is about choices that keep options open and those that compel lock-ins. For example, a system that is based largely on electricity (electric buses and cars for transport, electric cooking stoves, electric pumps instead of diesel pumps, with no necessity to continuously run
backup generators in buildings and factories, electric trains, etc.) offers more options in terms of fuel sources, since electricity can be generated in a number of ways and using different sources. However, if the system depends on transport by liquid fuel, diesel pump sets, captive generation fuelled by diesel, diesel locomotives, and so on, then the options are obviously much more limited. As of now, even with current technologies, it seems feasible to aim at shifting localized personal passenger and freight transport, as well as much of public transport, to electricity. Long-range and heavy freight may require breakthrough technologies; but if one can limit liquid fuel use to largely these requirements, then considerable insulation can be achieved.

Energy security in this scenario would then be tied much more to the electrification of transport systems and homes and, more important, to the improvement in our electricity generation, transmission and distribution. A reliable electricity sector with sufficient capacity is thus a prime security concern.

The subsidiary implication of the focus on electrification would be to ensure that the production of electricity is sufficiently robust and sustainable in terms of fuel supplies. Coal and various forms of coal-related technologies—for example, an increase in the efficient use of Indian coal,
in-situ coal gasification, coal to liquids (while this was uneconomical earlier when the price of liquid fuel was much lower, it can be commercially viable now; about a quarter of South Africa’s liquid fuel needs are met from coal)—and the associated greenhouse gas implications, need to be placed more centrally on the agenda. Equally, the issue of the denationalization of the coal sector in order to permit a more vibrant local coal industry, instead of the current mix of various subsidiaries of Coal India Limited and connected private players, needs to be debated.

However, one must recognize that reliance on electricity can also be a limitation, as is evident in developed countries when natural disasters affect electricity supplies. Thus, a suitable backup emergency system would need to be put in place concomitant with electrification. Along with these actions on the supply side, there needs to be greater focus on demand-side actions. With electrification, this can be much more finely tuned, since the pricing can be much more dynamic and IT-based.

The pursuit and maintenance of nuclear capability has been integral to India’s quest for strategic autonomy
since Independence. There has been a consensus among successive governments on this issue—even in the face of immense international pressure and sanctions. In the absence of a credible nuclear deterrent, India would have few options when confronted with adversaries possessing nuclear weapons.

The objective of India’s nuclear policy is credible minimum deterrent. India has a stated nuclear doctrine with a declared no-first-use policy. It also has an exemplary record both on non-proliferation and on safeguarding its nuclear material. In contrast to the expectation of several observers and analysts, India has neither gone for unjustifiable expansion of its arsenal nor adopted a destabilizing nuclear posture.

But our nuclear policy has to be situated in the light of emerging, and often contradictory, realities of the global and regional environment. These realities will be a source of pressure on us from different directions. There are emerging trends to which we need to respond.

The continued growth and modernization of the Chinese and Pakistani nuclear arsenals should be a matter of some concern to India. In the context of the power transition and accompanying changes under way in the Asia-Pacific region, it is likely that the Chinese arsenal will expand. The range and sophistication of China’s
delivery systems are already increasing. This will have an implication for India’s nuclear policy and strategy. Similarly, Pakistan’s nuclear programme is set to expand in the foreseeable future. The cooperation between China and Pakistan on nuclear matters further complicates the situation for India.

As indicated in
Chapter One
, India will have to continue to deal with the consequences of a nuclear Pakistan. The presence of nuclear weapons has simultaneously emboldened Pakistan to pursue sub-conventional options against India and posed certain constraints on India’s strategic response. Further, given the absence of a published nuclear doctrine for Pakistan and the deliberate cultivation of ambiguity on the part of Pakistan, the nuclear balance in the subcontinent is far from reassuring.

The sources of nuclear proliferation globally are likely to increase. At one level, we will see more states attempting to acquire nuclear weapons capability. This will be driven by a combination of the desire to obviate the possibility of external military intervention and of the imperatives stemming from regional rivalries. At another level, the reliance on nuclear power, notwithstanding the Fukushima accident, is likely to increase—at least outside Europe. The threat of nuclear terrorism will certainly be higher in this
context—with nuclear facilities and plants themselves as targets.

There is greater global pressure for the ‘Zero Nuclear Option’. Unlike the earlier calls for complete nuclear disarmament (in the mid-1950s and early 1980s), the current round of activism is spurred not by protests from below but by policy initiatives from above. Whilst the involvement of great power elites makes the process more promising, it also provokes scepticism: there is a danger that the global zero discourse may end up being merely the pursuit of traditional non-proliferation objectives by other means. After all, traditional nuclear powers, like the United States and Russia, still have 90 per cent of the world’s nuclear arsenal and are in no hurry to reduce them significantly. Nor is China open to capping, let alone giving up, nuclear weapons any time soon. All the same, the global zero discourse will be a source of pressure on countries to forsake their nuclear ambitions. If not done in the context of global disarmament, such pressure could put countries like India, which have modest and less-tested arsenals, at a disadvantage.