Abhimanu Interview Programme, 2015 Gurbaaz Singh Sidhu

Presentation 1

Indo-US Energy Politics with respect to Shale, Renewable Energy and Oil

Indo-US relations have a chequered history. Instances such as the 1998 economic sanctions imposed on us by

the US in response to India's growing nuclear programme, and more recently the diplomatic logjam ensuing

from the Devyani Khobragade episode have been severe roadblocks on all matters of policy. Energy

cooperation between India and the United States took off essentially in 2005 with the setting up of bilateral

energy summit and formal dialogue. The dialogue was focused on oil and gas, power generation and

distribution and renewable energy, among other things.

Why do we need cooperation with the US on energy

India is an energy starved nation - we need to fuel our surging economic ambitions

Majority of our hydrocarbons are sourced from Western Asia and other OPEC nations. Any political

instability in Western Asia is likely to cause a spike in oil prices. OPEC is essentially a cartel with a

propensity to arbitrarily alter oil prices.

Our domestic natural gas production is falling, leading to costlier LNG. The International Energy

Agency's report, World Energy Outlook 2013, put this down to low availablity and low capacity additon

on our part.

India has failed to successfully pursue gas-line diplomacy with neighbours. Promising initiatives like the

TAPI pipeline and the IPI pipeline have been delayed due to factors on the ground.

There is a need to develop sustainable domestic energy sources, and to cut down emissions form the

conventional thermal sources.

Cutting down on imports will help us reign in CAD.

Shale gas : a possible game changer?

Indian demand for natural gas to be up to 8 trillion cubic feet by 2030.

Dwindling domestic production makes a shift to shale gas inevitable.

We have 6.1 trillion cubic feet of shale gas in the K-G basin, and the US estimates it's own reserves at

96 trillion cubic feet.

The US cleared Shale gas export to non-FTA nations, India being one, in 2013. Exports likely to take off

in 2017.

India should build strategic reserves using these imports.

American help in exploration of difficult sites (as per a 2010 M.O.U), transfer of technology in

production and training to Indian personnel are vital dimensions of cooperation.

Would enable us to implement an effective Shale policy and attract FDI in gas production/distribution.

Shale gas development would cut down on LNG imports for fertilizer sector too, thereby curbing our

wild subsidy burden.

Possible bottlenecks include water and land availability, fracking process being controversial, market

forces would be strong and would influence distribution.

Renewable Energy : path to inclusive energy development

Under the bilateral Indo-US energy dialogue, renewable energy has been given impetus.

Initiatives include Clean Energy Finance, PACE-R (Partnership to Advance Clean Energy Reasearch),

increasing share of renewables in energy basket and policy dialogues, technical work and pilot projects

on clean energy.

Majority of the current developments are focused on solar energy, with India increasing the target under

Jawaharlal Nehru National Solar Mission to 100,000 MW by 2022. We need US investment and

technology transfer. The US has taken issue with Domestic Content Requirement conditions - 1000 MW

to be sourced from Indian companies, and has dragged us to the WTO. Similarly, India has taken the US

to the WTO as 4 US states have been protecting local firms with fiscal assistance and other incentives.

India considers this to be violation of TRIMS.

There is a need to iron out this jam, and make full use of US interest in our solar sector.

India has vast potential for solar energy, and domestic efforts must also be made to develop a more

efficient PV thin film and solar modules.

Wind energy is also untapped and could be the logical step after solar cooperation.

Oil

India imports oil form Western Asia and OPEC.

The fall in global oil prices in 2014 resulted in savings in Foreign Exchange.

Oil prices are closely related to ground realities in the source countries. Current political instability in

Western Asia is sure to impact oil prices adversely. India's other petroleum partners like South Sudan

and Nigeria too are under siege from sectarian strife.

Import of Iranian crude took a hit with US sanctions on Iran and freezing of bank accounts. However, as

sanctions receded we stepped up our imports.

The US and India have also made a landmark joint statement calling for freedom of navigation in the

South China Sea. Earlier Indian efforts to explore oil blocks were stumped by claims of Chinese

hegemony.

Points to keep in mind

We should be alert to any US attempts to play us as a counter to China's economic and military growth.

Cooperation in energy must lead to sustainable energy development, and must not degrade our

environment. Clean Energy technology assumes vita role in this regard.

Bottlenecks in ease of business, regulatory clauses and arcane policies need to be rationalized but not at

the expense of sovereignty.

There is need to shift to unconventional energy sources such as shale gas, gas hydrates and coal bed

methane to fuel our growth. At the same time access to energy must be inclusive. The balance between

market forces and inclusive growth thus becomes important.

There is need to develop our nascent energy resources in the shortest time with an eye on human, financial and

geological resources. The slogan of the 5th US-India Energy Partnership Summit - "Accelerating Resilient

Growth and Development" - perfectly captures the essence behind Indo-US energy cooperation in fields on

shale, renewables and oil. There are bound to be roadblocks and contentious issues but it is in the interest of

both nations to resolve such issues effectively and efficiently.