This year's energy shock – inflicted largely by the Ukrainian situation – is the most serious the world has witnessed since the Middle Eastern oil crisis of the 1970s. There will certainly be some short-term pain, and in the long-run there will be gain only if the energy industry is transformed from its current status of heavy dependence on fossil fuels, and towards the direction of renewables. If governments respond aptly, even the intractable climate change issue could be addressed along the way.
Energy shocks can have economic and political consequences. A third of the developed world's inflation rate of 8% could be explained by rising fuel and power costs. Given historical experience, public handouts and tax-breaks for fossil fuels once given, will be hard to withdraw. The enhanced global chaos is understandable, but potentially dangerous, as it could derail the clean-energy transition, and make it even harder to get back to square one.
But Maharashtra seems to be doing reasonably well here. With no new thermal generation units coming up across the state, there is a huge push for multiple solar and wind projects. A slated government objective is to fuel e-vehicles, whose strength is growing slowly but steadily. This is especially true for e-buses and other forms of public transit. Maharashtra recently signed contracts at Davos for generating 12,000 MW of solar and wind energy across the state. According to some estimates, Maharashtra plans to generate a total of 17,360 MW of solar energy with some more projects in the pipeline in the coming five years. Solar power can be used to fuel e-buses, which can then run on 100% green fuel. This would be a major step ahead in reducing the carbon footprint of the state.
The global energy industry needs to be made more predictable. Climate change has added an extra layer of uncertainty to socioeconomic policymaking worldwide, even as it simultaneously requires a massive increase in infrastructure investment, which not all countries will be able to afford. The risk is that current global developments and the largely chaotic government response to it globally is making international investors wary. However, in the midst of difficulty lies opportunity. This could also be the moment when more investor-friendly government policy could trigger the much-needed investment to resolve the conflict between having a cleaner energy supply and a safer climate.
With the onset of the monsoons, the transportation of coal within India typically slows down as rains affect the weight and quality of coal during transit. Thus, this is the best time to push for a transition to cleaner and greener energies. In dealing with this evolving scenario, government policy will have a key role to play. As long as energy security does not reach the bottom of the pyramid, inclusive socioeconomic growth will remain a myth.
Electricity continues to remain one of the most efficient forms of energy, and we should attempt to electrify every possible industrial process. It is cleaner for the environment and increasingly more cost-effective to cook without gas, heat buildings without oil, and fuel cars and other vehicles without petrol or diesel. Mass electrification will automatically reduce demand for fossil fuels. Progress is being made to this end in India, but a lot more still needs to be done. Handling the energy crisis astutely is no longer optional for anyone.