Tag: fossil fuel

Written by Priyanka Kishore on Digilah (Tech Thought Leadership).

For three straight years global oil prices have averaged above $70 per barrel, bringing an end to the period of stable and low oil prices that prevailed over 2014-20. The evolving conflict in the Middle East threatens to keep prices elevated for even longer.

Historically, this would have been a cause of great concern for the global economy. In the 1970s, oil price shocks resulted in sharp increases in inflation and large decline in outputs. However, this is not the case anymore. The global economy has taken the latest jump in oil prices in its stride.

What explains this?

The resilience of global growth to high oil prices is not newfound. The real economic effects of oil prices have been diminishing since the early 2000s as major economies have become more energy efficient. This is demonstrated by their falling oil intensities, which means it takes less oil to produce a unit of GDP than before. In fact, much lesser.

This is true for India too. Its energy intensity has fallen 33% over the last twenty years and it is one of the least oil-intensive nations globally. While this is generally viewed as a positive development, it’s important to understand the underlying dynamics to ensure that the low intensity is sustained.

Government policies aimed at conserving energy and promoting energy efficient technologies such as LED lighting and high-efficiency appliances have contributed to this. India passed the Energy Conservation Act in 2001 and constituted the Bureau of Energy Efficiency a year later.

But India has also been less oil-intensive because of structural factors such as coal-based electricity generation, a relatively small manufacturing sector, low rate of urbanisation, high usage of biomass amongst rural households and low ownership of combustible engine vehicles.

With the government pivoting towards manufacturing and rising incomes leading to a transition towards a more urbanised economy, more automobile purchases and wider adoption of more efficient fuels like diesel and LPG, India’s per capita oil consumption has been on an uptrend and if left unchecked, could eventually result in higher oil intensity levels as well.

Economic development is essential. But it shouldn’t come at the cost of energy efficiency, given the negative impact of rising fossil fuel consumption on climate and India’s pledge to achieve net-zero carbon emissions by 2070. Keeping oil-intensity low is vital to the decarbonisation strategy.

So, what is the way forward?

Clean tech can play an important role in balancing India’s growth and environmental targets, while keeping oil demand in check. Here are some ways it can do so:

Enabling lower fuel consumption:

Wider adoption of electric and hybrid vehicles can significantly cut down oil demand. The government aims to have electric vehicles (EVs) make up 30% of new vehicle sales by 2030.

Improving efficiency:

Data analytics and AI can help end-users better manage their energy use and reduce their fuel bills. For example, AI can analyze data to predict traffic patterns and improve route planning, ensuring quicker and more fuel-efficient transport of people, as well as, goods.

Producing cleaner fuels:

Biofuels, which are produced from renewable organic materials, have emerged as a viable alternative to fossil fuels in the power and transport sectors. Consumption of ethanol-blended petrol consumption is on the rise in India. The country’s ethanol blending rate has jumped from 0.67% in 2012 to 12% currently and is targeted to rise to 20% by 2025.

Developing stable sources of alternate energy supply:

India has made good progress in incorporating renewables in its energy strategy. Non-fossil sources now account for 41.4% of installed power capacity. However, they account for just 26% of the electricity generated as renewable sources like solar and wind are weather dependent. Deploying battery storage solutions that store excess energy during peak production times for use when production is lower will help narrow this gap.

Aiding compliance:




Technology also aids in the enforcement of policies and regulations aimed at conserving energy and lowering demand. Digital monitoring systems can track emissions and energy use, ensuring compliance with environmental standards and supporting government efforts to transition away from fossil fuels.

In sum, the advantages of clean technology are undeniable and widely recognized. However, the path to adopting such solutions faces significant financial barriers. These challenges include high costs and limited availability of financing, which hinder the rapid adoption of these technologies and raise questions about the feasibility of the government’s targets.

For example, with EVs currently making up less than 5% of vehicle sales in India, increasing this to 30% by 2030 will require a monumental effort.

Despite these obstacles, it’s important not to overlook the progress being made. The International Energy Agency (IEA) estimates that the rise in EV sales and improvements in energy efficiency could reduce India’s oil demand by 40% over 2023-2030 compared to a scenario without these changes.

In the end, the strong political commitment to decreasing fossil fuel dependency, supported by ambitious targets and favourable policies, suggests that India is on a steady path toward a cleaner energy future and managing its oil consumption effectively.

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