According to oilprice.com, the talks concluded positively with memorandums of understanding for the two countries to cooperate on research and development, more extensive use of environmentally friendly technologies, and greater coordination on scientific development.
The dialogue between the two countries included six working groups on areas such as coal, oil and gas, sustainable development, new technologies and renewable energies, and power and energy efficiency.
It is a positive development that the United States (like many others) is paying attention to India’s energy needs. With a growing middle class and a population of 1.27bn people, 50% of whom are under age 25, India is expected to have some of the fastest-growing energy needs that are certain to dramatically impact the global economy and its energy market. With this in mind, here are five key things to know about energy in India.
1. Coal production remains key to energy mix
India produced 557m tonnes (metric tons) of coal in 2012-13, and India’s rapidly growing power industry consumed the majority of it. Coal production has steadily increased since the industry was nationalized in the 1970s. The trend is likely to continue, with production goals aiming for an increase to 795m tonnes by 2016-2017.
Owing to summer heat, frequent labour strikes, and natural disasters, India has had a harder time meeting growing market demands and faces the likelihood of growing coal imports. Coal remains an essential staple to India’s energy needs and will remain so for the foreseeable future.
2. Fourth-largest consumer of oil and petroleum in the world
A trend almost certain to accelerate as the country faces growing urbanisation and an expanding middle class. India has a high dependence on imports for its petroleum needs and is the world’s fourth largest importer of crude oil. Most imports come from the Middle East, but growing investments in South America, the Caspian Sea, and elsewhere look to diversify and potentially increase oil to India.
The oil industry has slowly but steadily opened up since major reforms were enacted in 1991. Subsequent reforms are ongoing. Two state-owned companies, Oil India Limited and Oil and Natural Gas Corporation, have long dominated the production and refining in the sector. However, reforms in the last decade have increased competition and exhibit potential signs of growing foreign investment in a sector long dominated by domestic players.
3. Relies on imports to meet growing demand for gas
Perhaps more so than other areas in the energy sector, geopolitical issues have influenced attempts to meet demand with gas. Various plans for pipelines with Myanmar, Iran and Pakistan, and Turkmenistan and Afghanistan have fallen apart over border disputes and other issues.
Domestic natural gas production has fallen in recent years, with further drop-offs expected in 2014-15. Given the growing demand and reliance on natural gas for power, issues with obtaining natural gas from other countries, and its own falling production, satisfying natural gas needs is one of India’s the most urgent challenges.
4. Electricity shortages hurt industrial output
India meets its electricity demands with 65% use of non-renewables, 19% of that demand is met with hydropower, 12% from renewables, and 2% from nuclear power.
Demand is far outpacing supply in meeting the rapidly growing electricity needs of the country. Electricity shortages have resulted in loss of profits for many companies, loss in productivity as plants and businesses have been forced to shut down for a few days a month or slow down manufacturing, and added operational costs as some businesses have been forced to pay for power back up units.
While growing demand is part of the problem, poor infrastructure equally contributes to electricity shortfalls that have hindered recovery in India’s industrial sector and hurt its overall economic growth.
5. Energy poverty and inequality spreads
Access to energy is a tremendous problem in India and major inequalities of access plague the subcontinent. According to one census, 77m households in India still use kerosene for lighting. The problem is even more acute in rural India where up to 44% of households lack access to electricity.
While India has undertaken various programs and initiatives to address energy poverty, they have been faced with logistical problems and inadequate implementation locally. In the case of rural villages, access issues and geographical hindrances make addressing the issue extremely costly and difficult.
India faces exploding demand and insufficient supply. As the country's population and needs continue to grow rapidly, it will also need major reforms in infrastructure and efficiency.
While many analysts point to developing solar and nuclear capabilities as essential, India will need greater capacity and efficiency in all sectors to meet India's energy needs. How and if India chooses to confront this pressing problem will have ramifications for the country and the world. Starting a dialogue and drawing greater attention are a good start.
