New Delhi: South Africa criticized the US and the European Union (EU) for not consulting the major importers of Iranian energy supplies such as India and South Africa before imposing sanctions on the country for its nuclear programme.
When such decisions having geopolitical implications are taken, it is the poorest of the poor having the lowest per capita energy consumption who suffer because they don’t have an alternative, Elizabeth Dipuo Peters, South Africa’s energy minister, said in an interview in New Delhi. She’s in India to attend the Clean Energy Ministerial (CEM) meeting.
Iran has the world’s second largest oil and natural gas reserves. While the average worldwide oil consumption is 14 barrels per person per year, in developing countries it is three barrels per person per year. In India, the per capita consumption is 1.2 barrels per person per year.
“When decisions are made at bilateral or unilateral level that have serious geopolitical consequences, we need to engage seriously,” Peters said. “Our ministries of foreign affairs as well as finance must be able to engage and deal with this particular issue when they meet at different processes. While we are fighting energy poverty, we are exacerbating it by creating areas of inaccessibility for countries like ours.”
In India, for instance, per capita electricity consumption, at 700 kilowatt hours, is less than one-third the global average; yet it faces a 9% shortage during the peak hours.
“When we had to look for crude of the kind we got from Iran, it came at a premium,” Peters said. “It has a multiple knock-on effect, especially on the poorest. When these decisions are taken, they must always consider the impact and consequences of their decisions at the geopolitical level. Or at least involve other countries so that when the decision is made they can say South Africa is taking it consciously. They have calculated the impact on them but not on others,” she said.
US secretary of energy Steven Chu on Tuesday didn’t respond to a question about his country’s sanctions on Iran affecting energy supplies to countries such as India, which can ill afford such bans. Instead, he said that it was in India’s best interest to ensure higher energy efficiency as financial resources shouldn’t go abroad.
Curbs imposed by the West on Iran for its suspected nuclear weapons programme have affected crude oil sales by the country, which has the world’s second largest oil and natural gas reserves. In April-December 2012, India imported 9.69 million tonnes (mt) of crude from Iran valued at Rs.24,814 crore. After the sanctions, Iran slipped to seventh as a supplier of crude oil to India for the April-December 2012 period from the second spot in 2009-10.
“The challenge with Iran is that the petroleum industry is a victim of financial sanctions,” Peters said. “Bulk of the sanctions are on the financial sector—US sanctions on dollar-denominated trading and EU sanctions on insurance for shipping companies. We had to get an exemption from the US for 18 months but it didn’t benefit us because of the EU sanctions which don’t have an exemption. We have been engaging with the EU commission but we have not been able to get to a solution as we speak,” she said.
India is the world’s fourth largest oil importer and a major customer for Iran’s 1.7 million barrels per day of oil exports. India has been facing difficulty in accessing Iranian energy supplies due to the sanctions. Taking a cue from the US, the EU has banned the purchase, transport, finance and insuring of Iranian oil. Iran says it’s developing nuclear energy for peaceful purposes not to make weapons.
Peters also said not enough has been done by the West to keep its clean energy commitments and added that the proposed BRICS (Brazil, Russia, India, China, South Africa) development bank would have clean energy as one of its major focus areas and help in reducing emissions.
“It is for us as developing countries to do the little we can do for ourselves,” Peters said. “The bank will focus on infrastructure and energy generation, transmission and distribution is key infrastructure of an area.”
The International Energy Agency (IEA) expressed concern over energy inequality.
“I feel very concerned and ashamed that 1.4 billion people have no access to energy and 2.4 billion people are cooking in a very traditional way,” Maria van der Hoeven, IEA executive director, told reporters. “One out of five people doesn’t have a switch to turn on a light. One out of five children can’t study because there is no light.”
Peters also expressed concern over the slow pace of climate change initiatives.
Her concerns were echoed by India’s Prime Minister Manmohan Singh who, in his inaugural speech on Wednesday at CEM, said that international negotiations to tackle the global challenge of climate change were making “painfully slow” progress.
An acceptable global strategy for mitigation of climate change must be based on equitable sharing of the burden, Singh said and added that the industrialized countries have to bear a large share of the burden.
India needs to import fuel given the limited nature of domestic energy sources. Its dependence on imports is as high as 80% for crude and 25% for natural gas. India’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) now to around 1,500 mtoe, according to the oil ministry.
IEA, in a note to the CEM, said progress has not been fast enough and large market failures are preventing clean energy solutions from being adopted. It added that considerable energy efficiency potential remains untapped and policies need to better address the energy system as a whole.
“Energy efficiency and technology for it is not used as it should be and that goes for both emerged and emerging market countries. But it is the emerging economies which are making progress faster, but they are starting from a different level than the emerged economies,” van der Hoeven said. Van der Hoeven said she was disappointed about the EU rejecting the carbon permit plan, also referred as the Emission Trading Scheme (ETS).
“It could have been a solution but they tried something and it failed. I can’t forecast a scenario on this, it is too fresh,” she said.