India: Cars, cars, everywhere... but energy policy?

At the beginning of 2006, India was one of the hottest car markets on planet earth. Korean car maker Hyundai considers India one of its fastest growing car markets and is planning to double its production in India. Hyundai offers a range of cars that appeal to a wide spectrum: from the middle class salaried worker to the rich elite. Top Hyundai models are seen as a status symbols.

Writing in BBC News Online on February 16, 2006, Karishma Vaswani reported that Ford was the fastest growing automotive firm in India in January 2006, outpacing General Motors and domestic auto producer Maruti Udyog. The auto assembly machines at Mahindra & Mahindra’s auto manufacturing plant just outside of Mumbai were humming all shifts, churning out SUVs and more.

India, however, is heavily reliant on imported petroleum. The country imports almost three quarters of its energy to meet the demands of its population of more than a billion people. This proportion is set to rise as energy demand is expected to double in the next five years. By 2020, the country may have to import all of its energy needs.

Indian petroleum companies are scrambling globally in their quest for crude oil resources. The country has been in talks with Iran and Pakistan to build a US$17billion natural gas pipeline from Iran, via volatile regions of Pakistan, into the booming markets of India. Concerned with Iran’s intransigence in its nuclear program, the United States is pressuring India to step away from such a deal.

While cars and two-wheelers cater to the massive and rising middle class, the poor -- still the largest segment of India's population -- also need petroleum derivatives. Kerosene is used by over 80% of India's people for cooking and heating of homes.

Massive government subsidies hold the prices of gasoline and kerosene at affordable levels. With escalating global petroleum prices, how long can this go on? Some observers estimate India's 3% share of global oil demand would rise to 10% by 2030.

While the consumer revolution is on, full blast, in India; there is scant evidence of a sound energy policy in place. The policies of aggressive oil field acquisitions abroad and of a Iran-Pakistan-India pipeline are fraught with all manners of geopolitical risks.

By contrast, Brazil has a well-developed sugar cane-based ethanol fuel policy in place (see the item "Brazil's Green Fuel Revolution" in this blog). Japan -- with near 100 percent dependence on imported petroleum -- has such a comprehensive national energy conservation policy that energy consumption has stayed at the 1975 levels. In Israel, solar energy has been used for heating water, for over four decades, even in the smallest of village homes.

For India, the time for formulating a comprehensive energy program -- based on alternative energy and conservation -- is running out. It is not that alternative energy initiatives are not in evidence in India (see the Unisun link in the sidebar of this site), but for a country of more than a billion people, even thousands of energy initiatives would not add up to make much national level impact. The epicenter for an energy policy in India has to be in New Delhi.

Nik Dholakia
University of Rhode Island
USA