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This country is one of the world’s top energy consumers. Given its modest supply of indigenous resources, it must satisfy its energy hunger abroad. This billion-person nation presently imports about two-thirds of its oil -- a number projected to rise to 90 percent by 2030.
Its pursuit of energy resources overseas is spearheaded by its powerful oil and gas companies, which invest billions of dollars in assets that in turn generate vast quantities of gas and oil. Last year, its foreign ministry established an energy security division. Today, the country’s government supports its energy investments with robust “energy diplomacy,” which extends from Central Asia to the Middle East, Africa, and Latin America.
Given that its energy interests are truly global, exposing the country to different types of threats-from political instability to natural catastrophe-this nation’s navy is undergoing a dramatic transformation: one that will enhance its power projection capacities and convert it into a blue-water force. Is this a tale about China?
No. It’s an account of India.
India is currently the world’s fifth-largest energy consumer, and is expected to vault to third place by 2030-behind only the United States and China. This soaring energy demand, coupled with low domestic supply, has generated a veritable foreign addiction: India now consumes more imported oil than China or the United States.
India’s rapidly rising energy needs, and its inevitable forays overseas to satisfy them, have major implications for the country’s long-term economic development. In 2006, New Delhi’s Planning Commission projected that India must sustain an 8-10 percent economic growth rate over the next few decades in order to end poverty and meet human development goals. However, to maintain these rates through 2031-32, the commission judged that India must triple its primary energy supply and quintuple its electricity generation. In effect, both India’s prodigious economic growth and the well-being of its citizens are at stake-so don’t expect India to tone down its global energy hunt anytime soon.
Nonetheless, for some observers, the intensity of India’s global search for energy provokes anxiety. Human rights activists point out that New Delhi’s energy diplomacy entails close ties with repressive energy-rich regimes such as Burma and Iran. Some free-market supporters label India’s acquisition strategy as mercantilist and predatory, and perceive it as a potential threat to the world’s energy resources. Of course, the very same complaints are often made about China.
What can be done to help India meet its energy requirements while also weaning it off its foreign addiction to hydrocarbons? Don’t expect the recently concluded U.S.-India civil nuclear deal to be of much help-the nuclear fuel it provides will fall far short of meeting India’s soaring energy demand.
One important step is to support-through a combination of local and international capital and technology-the development and sustainability of India’s indigenous hydrocarbons. In the last few years, natural gas has been discovered in the Bay of Bengal and oil deposits unearthed in India’s northwest-major finds that create opportunities for future exploration and investment. Coal-India’s primary domestic energy source-should not be overlooked, and one fledgling U.S. Department of Energy project-which aims to help India develop clean-coal technology-is encouraging.
Given the grave environmental consequences of massive hydrocarbon consumption, India must also intensify investment in its non-hydrocarbon resources. The U.S.-India Energy Dialogue, which facilitates discussions on energy efficiency and renewables, is one useful tool to spark such investments. India’s solar and wind energy sectors hold great promise; the latter is already the world’s fourth-largest.
Such efforts will not cause India’s overseas energy dependence to disappear overnight. Still, they will lay the foundations for an energy-independent future-one in which New Delhi may turn to Rajasthan instead of Rangoon for energy needs, but also one that will sustain India’s strong economic growth and help lift its massive population out of poverty.