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Energy crunch

The energy crunch that the country will soon be beset with, as global fossil fuel reserves fail to adequately satisfy the growing energy needs of emerging economies, is an issue that has yet to receive the urgency it warrants. While the persistent rise in oil prices has drawn attention to the problem, the government's long-term plan to address it remains either sketchy or under wraps. Few realise that India's commercial energy consumption is now growing at almost double the world's average rate, and indeed, almost as fast as China's. The consumption base is low, admittedly. Despite being home to a fifth of all humanity, India's current share of world energy usage is only 3.9%, as compared to China's 15.6%. That OECD countries consume half the world's commercial energy supplies is a reflection of how developed those economies are. For India to gain share, as its emergence demands, "clean energies' like nuclear and hydro electricity have been widely recommended. But even here, India's global share is only 0.6% and 3.7%, respectively, compared to 84.5% and 43.5% enjoyed by OECD countries. India's hydrocarbon reserves do not inspire much confidence either. By current estimates, India's oil and gas will last only about 19 and 34 years, respectively, half the world average for these reserves. Only in coal can the country claim to have a reasonable edge, with its current reserves expected to last up to 207 years, about a third longer than the world average. But, in an interlinked world, global warming complicates the coal scenario. Indian policymakers would be well advised to chalk out a long-term plan that discreetly optimises all the options within the set of existing and emerging energy-use constraints. Overt trends and underlying pressures would have to be taken into realistic account. While global oil prices, which shot above $100 per barrel early last week, are a hot subject of discussion worldwide, natural gas and coal have also touched critical highs. Natural gas in the EU, which slid steadily for a decade-and-a-half to a low of $1.80 per million btu in the late 1990s, now rules at around $9, with spot rises spiking higher. International coal prices have nearly doubled in the last three-four years. Market forces, even if allowed to operate unhindered, would still spell high prices, given demand trends. India does have assets. Good management could see the country through.

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