Sansad TV Perspective: ‘World Energy Outlook’

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: ‘World Energy Outlook’

Anchor: Vishal Dahiya

Participants:

1. Deepak Sriram Krishnan, Associate Director, Energy, WRI India
2. Ajay Shankar, Distinguished Fellow, TERI
3. Urmi Goswami, Senior Journalist

Highlights of the Discussion:

• Introduction- About the report
• Key Findings
• India Specific findings
• India’s path to energy security

Context: The International Energy Agency (IEA) has recently released its World Energy Outlook 2022 report.

Introduction:

• The annual World Energy Outlook is the International Energy Agency’s flagship publication, widely recognised as the most authoritative source for global energy projections and analysis since 1998.
• It provides comprehensive insights into the global energy supply and demand in different scenarios and their impact on energy security, climate targets and economic development.
• The 2022 report provides indispensable analysis and insights on the implications of this profound and ongoing shock to energy systems across the globe triggered by ongoing Russia-Ukraine conflict.
• The World Energy Outlook 2022 analyzed the future global energy scenario by exploring through three different scenarios differentiated primarily by the assumptions made on government policies. They are:
  • The Stated Policies Scenario (STEPS) shows the trajectory implied by today’s policy settings. 
  • The Announced Pledges Scenario (APS) assumes that all aspirational targets announced by governments are met on time and in full, including their long-term net zero and energy access goals. 
  • The Net Zero Emissions by 2050 (NZE) Scenario maps out a way to achieve a 1.5 °C stabilization in the rise in global average temperatures, alongside universal access to modern energy by 2030. 

Key Findings:

• The Global Energy Crisis:

• • The global energy crisis sparked by the Russia-Ukraine conflict is having far-reaching implications for households, businesses and entire economies, prompting short-term responses from governments as well as a deeper debate about the ways to reduce the risk of future disruptions and promote energy security. 
  • High energy prices are causing a huge transfer of wealth from consumers to producers, back to the levels seen in 2014 for oil, but entirely unprecedented for natural gas. 
  • High fuel prices account for 90% of the rise in the average costs of electricity generation worldwide, natural gas alone for more than 50%. 

• How is Russia’s Invasion of Ukraine Reshaping the Energy World?

• • Russia has been by far the world’s largest exporter of fossil fuels, but its invasion of Ukraine is prompting a wholesale reorientation of global energy trade.
  • High and volatile energy prices are hurting households and businesses, shifting the choice of fuels and setting back progress towards achieving universal access to energy.
  • Several governments across the globe have adopted new policies that give a major boost to investments in clean energy and efficiency.
  • A significant reorganization of global trade flows is being brought on by European restrictions on the imports of coal and oil as well as Gazprom’s decision to reduce gas supply.
  • High fossil fuel prices are stoking inflationary pressures; the combination of falling real incomes and rising prices is creating a looming risk of global recession.
  • Ongoing global energy crisis is a setback to the efforts to tackle climate change.

• Outlook for Energy Demand:
  • Natural gas’s annual demand growth slows to 0.4% from now to 2030 in the Stated Policies Scenario -STEPS, down from 2.3% from 2010 to 2019.
  • Coal sees a temporary surge in demand in some regions from the power and industry sectors in response to increases in natural gas prices.
  • In most affected regions, higher shares of renewable energy sources reduced the energy prices significantly. It also eased access to electrified homes for many.
  • The demand for oil rises 0.8% per year to 2030, but peaks soon after at around 103 million barrels per day as electric vehicles (EVs) and efficiency gains undermine its prospects.

India Specific Findings:

• According to the World Energy Outlook 2022 the growth in India’s energy demand will rise at more than 3% annually from 2021 to 2030 in the stated policy scenario (STEPS), fuelled by urbanization and industrialisation as it becomes the world’s most populous country by 2025. 
• The primary challenge for India is going to be about meeting its rising electricity demand.
• India will see the largest increase in energy demand of any country through 2030, an aspect that will continue to pose a challenge to the country’s energy security as the global crisis sparked by the war turns the world energy system upside down. 
• In India, the Outlook projects continued expansion in coal generation in absolute terms in the STEPS, peaking around 2030. 
• Its share of electricity generation, however, is projected to fall from just below 75% to 55% over this period. 
• It sees renewables meeting more than 60% of the growth in power demand, and account for 35% of the electricity mix by 2030. 
• India became the world’s second‐largest coal producer in 2021 (in energy terms), overtaking Australia and Indonesia. 
  • At present, India accounts for just over 10 percent of global coal consumption, after China which accounts for 55 percent. 

India’s road to energy security: 

• India’s energy security is vulnerable to regional and global events because it relies on external sources.
• India’s fragile energy security is under severe pressure from its rising dependence on imported oil, regulatory uncertainty, international monopolies and opaque natural gas pricing policies
• Transition Towards Green Hydrogen: Green Hydrogen has proven to be a game-changer in the renewable energy space. India has the potential to become the world leader in green hydrogen and associated technologies like electrolyzers. NITI Aayog is supporting the initiatives on the National Hydrogen Energy Mission for promoting green hydrogen.
• Various reform initiatives have been undertaken by the government in the coal sector, including commercial coal mining with no end-use restrictions. At the same time, there is a global move towards a clean energy transition. 
• The government of India has taken various measures to develop and promote the EV ecosystem in the country such as:
  • The remodeled Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme
  • Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) for the supplier side.
• India has built its strategic petroleum reserves in order to meet any supply shocks due to any external exigencies like wars, natural disasters etc. India has constructed three strategic petroleum reserves in huge underground rock caverns at Visakhapatnam on the East Coast, and at Mangalore and Padur on the West Coast.
• India’s SCO membership could now play a bigger role in ensuring greater energy cooperation between energy producers and consumers by linking Central Asia and South Asia.

 
Read all the previous Sansad TV Perspective articles in the link.

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