India needs a more vibrant debate on how it will meet its growing energy needs. And this debate has to be delinked from the current politics of confrontation about the future of the Indo-US nuclear deal.
A lot depends on the answer to this question: Are high oil prices here to stay? Or will they decline soon? Reserve Bank of India governor Y.V. Reddy said on Monday that the spike in oil prices might not necessarily be a temporary one. He added, “The whole economy and indeed our society is better off adjusting” to this new reality.
Illustration: Jayachandran / Mint
Other influential voices have been saying similar things. Congress president Sonia Gandhi said earlier this month in Guwahati that nuclear power would be the key to meeting India’s growing demand for energy.
And here’s what Prime Minister Manmohan Singh said at a recent conference on nuclear disarmament in New Delhi: “Our energy needs will continue to rise in the foreseeable future. We do not have the luxury of limiting our options of energy sources. We, therefore,?wish to create an international environment in which nuclear technology is used not for destructive purposes, but for helping us meet our national development goals and our energy security.”
Nuclear energy is part of the answer, but not the only one. We would also like to draw attention to a presidential speech given by A.P.J. Abdul Kalam on 14 August 2005, where he gave a clear call to shift from the current dependence on fossil fuels to other forms of energy. Kalam had then said that India should generate a quarter of its energy from renewable sources by 2030.
What we need is not grand and utopian plans to reach such a target. Rising fossil fuel prices will create incentives for research into newer forms of energy. There are already signs that the price per unit of alternatives such as wind and solar power is dropping because of better technology. The way to bolster these incentives is by pricing oil at market rates (rather than subsidizing it) and finding ways to tax carbon emissions (either through a carbon tax or a cap-and-trade global agreement). Nuclear energy is also a good first line of defence.
A lot of the talk about alternative forms of energy has been fuelled by good intentions from environmentalists. But most alternatives are not yet viable in terms of costs. A combination of markets and public policy should help get around this problem.
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