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Monday, June 27, 2011

Rethinking the myth that we cannot make energy independence financially feasible


By NANDAKUMAR JANARDHANAN
Special to The Japan Times

Human beings' inalienable fascination with fossil fuels and their lack of political confidence in driving the nation through a careful energy transition process have often put the energy independence dream in the backseat among national priorities.

While complete energy independence can only be an ideal scenario in the globalized world, the term refers to a much more practical situation where a country eventually reduces the dependence on external sources and rely more on the domestic supply capabilities.

Unfortunately for the political leadership, the term energy independence has so far only been a sweetener in their high-calorie political speeches despite its strategic importance in the national security.

Today with the increasing challenges to energy security, the idea of "energy independence" is set to evolve to be the most critical guiding force to meet the national security goals.

As often heard, the most serious challenge to energy independence is the lack of financial feasibility for transition to domestically available sources including new and renewable energy.

However, a dissection of this mysterious challenge of financial feasibility would reveal that the root causes shaping this perception are the choice of fuels that the political leadership make and the lack of political will for energy transition.

It is not wrong to say that choice of fuels that countries have made in the past has been more of a short-term political decision than a long-term realistic approach.

The first oil shock in the early 1970s was one of the most crucial turning points in the choice of fuels for the countries worldwide. However, the perception of energy security continued to orbit around fossil fuel supply among major economies primarily due to the over-reliance of their domestic economic activities on the same.

Although reliance on fossil fuels was encouraged by governments more because of the short-term economic conveniences, this eventually led them to be locked in to conventional fossil fuel sources, which are inherently vulnerable to supply security challenges and climate risks.

A common fear was that any transition may affect the economic activities with an ultimate adverse impact on the countries' race in the international political front. Many argued that exploring domestically available unconventional sources will not be financially feasible.

Though the affordability of energy transition undeniably varies between the rich and the poor countries, it is political reluctance that has always played a key role in preventing active steps forward.

If for the rich, energy transition was a matter of blending technological capabilities with financial resources guided by political willingness, for the poor the process was seen as a liability due to their technological and financial limitations. But interestingly, such differences in the economic status of countries have never been a determining factor in energy transition.

For example, Brazil's pro-alcohol policy since the early 1970s encouraged domestic ethanol production that eventually helped them reduce its reliance on external oil supplies. But many other countries that were financially stronger did not make any significant progress in developing and implementing a long-term energy transition policy.

This indicates that a serious lack of political willingness has always played a bigger role than the financial capabilities of countries.

As for political leaders, who are serving a four or five years term in power, it is natural that there would be more interest to invest their attention into policies that show quick economic and political results . Such a decision could possibly secure them another term in power rather than planning a long term energy transition policy which may be against the immediate interest of various pressure groups such as industry.

A careful accounting of national expenditures would reveal that financial resources can be spent in much more constructive ways for the well-being of citizens than it is currently handled in many countries.

Immediate attention would go to the military expenditures of countries which have always been prioritized by many governments.

According to Stockholm International Peace Research Institute, world military expenditure in the year 2009 was estimated to be about $1.54 trillion, which is nine times more than the global new investment for sustainable energy development in the same year, estimated at $162 billion according to a UNEP-Bloomberg study.

While this comparison may not make any logic to those who prefer to attribute greater importance to conventional security threats a nation faces, it highlights the fact that the concern about economic feasibility is not uniformly applied by governments on various issues of strategic importance.

With energy importing countries vulnerable to price fluctuations in the international market, there can also be an unavoidable impact on their GDP due to any surge in energy bill.

To many political leaders, conventional security perception tends to dominate the overall national security interests while the idea of energy independence has often been ignored or remained only as an element giving cosmetic appeal to their political speeches.

Today the world is at the crossroads of a new energy order, where the two most important energy-supply systems, namely fossil fuels and nuclear energy, are undergoing serious challenges.

While the ongoing Arab uprisings have made the already volatile Persian Gulf region a cause of permanent concern to the global energy market, nuclear sector worldwide is facing increasing criticism about the safety and security following the tsunami-triggered accidents at the Fukushima No. 1 nuclear plant in Japan.

Germany's plans for a nuclear phaseout may also have a rippling impact on other nuclear power-based economies in the world.

In this context, countries across the world should re-examine the myth of financial feasibility for tapping domestic supply capabilities by giving greater emphasis for energy transition to domestically available new and renewable sources.

Nandakumar Janardhanan is an energy policy researcher at the Institute for Global Environmental Strategies, Japan. The opinions expressed in this article are his own. He can be reached at nanduj123@gmail.com


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