Submitted by: Sanjay Kaul

Finally the results are out! Mr. Barak Hussein Obama and his family would continue to be the occupants of the White House. How India s energy sector would be impacted could be speculatively analyzed in terms of indirect influences and direct impacts.

If we look at the various factors which are likely to have indirect influence the most obvious is continuation of Obama government s environmentally conscious policies. This will provide much needed gestation for renewables. Hopefully, this will lead to incentives, wider research, successful pilots and technological breakthroughs; ultimately making them economically sustainable and scalable. The Obama administration was committed to encourage the manufacture and use of wind turbines. Production Tax Credit (PTC) has been one of the major supports for the manufacturing centers of wind turbines, Ohio, Iowa, Michigan and Detroit. Support is also there for green building technologies, especially in HVAC areas for reduction of carbon emissions thus meeting the climate change agenda.

For reducing dependency on foreign oil Obama administration had declared the target of reduction in consumption by 2.2 mbpd by 2025. Without technological breakthroughs towards fuel efficiency enhancements in road transportation, achievement of this target is not possible. Under his leadership, with a spend of $48 billion US led the world in clean energy in 2011. This would act as a strong catalyst for emerging and energy hungry economies like India to continue to bet on renewables. Patented technologies in renewables, fuel efficiencies and carbon emission reduction once proliferated around the world would benefit emerging markets like India more then the developed world. This shall also force emerging markets like India to adopt higher efficiency standards for fossil fuels, carbon emission and renewables, which are more aligned with newer evolving standards.

In terms of strategic collaboration on energy, Obama s policy has always indicated exceptional attention to India and the surrounding region. The U.S.-India Partnership to Advance Clean Energy (PACE) was signed in 2009 to work together in research & clean energy deployment for accelerated transition to low-carbon and energy secure economies. If continued, this would encourage the initiative towards tangible results beyond mobilizing more than $1.7 billion in public and private resources.

Direct impact of Obama s re-election may be more purposeful.

In a press note after the Former External Affair minister Mr. SM Krishna s visit, the US Department of State press release mentioned the United States will continue to support India s efforts, as it seeks to increase natural gas as a share of its energy mix. Through the State Department s Unconventional Gas Technical Engagement Program , the United States also agreed to share its experience and best practices in establishing the necessary environmental protection and regulatory framework as India prepares for its first shale gas bid round, scheduled for 2013 .

India s ever increasing Natural gas demand, supply gap and the uncertain outcome of RIL s KG D6 gas, has inevitably made LNG futuristically the only option to follow in near term. Majority of gas at the three active re-gasification terminals is imported from Qatar and is indexed to the oil prices. Seen in the back drop of recent GAIL contract with US s Cheniere Energy (only company permitted to export LNG), there is a possibility of having more cheaper gas from the US. This price, if continued to be linked to a U.S. hub price would be more competitive as compared to gas from Australia or the Middle East. Assuming Obama administration s continued focus on energy needs of India the gas export agreements, are likely to be driven accordingly( rather than on mere commerciality).

US security interest in Asian geopolitical situation, especially vis-a-vis China, and the building up of gas glut around the Indian Ocean, US may easily scale its gas exports to at least twice the current quantity of 3.5 mmtpa to India.

Obama is unlikely to take a hard stand on Iran as compared to Romney. In case US/EU is able to accommodate India as an exception, it would mean continuous supply of 8-9 mmtpa crude for Indian refiners. There may be a further possibility of upside to this crude import from Iran and associated opportunities of acquisition of acreage and EPC projects. However, in the event of tough sanctions India can certainly bargain for a swifter progress the US backed TAPI pipeline project signed in 2011. TAPI project if completed is expected to contribute more than 30% to Afghan Economy, therefore is an excellent option for US to strengthen Afghan economy on one hand and on other hand to balance geopolitics in terms of denying Iran the use of gas resources as a bargaining chip.

Hydrates can be another area for energy collaboration. Preliminary study shows that India has approximately 80,000 sq. Km of potential hydrate deposits in deep-water area of India like Andaman-Nicobar, Krishna-Godavari, Konkan and Kutch offshore. While research on methane hydrates has successfully completed field trial stage, this part of President Obama s all-of-the-above energy strategy, has the potential of significant new gas supplies and use of technologies developed for production of hydrates by India.

Another opportunity for Obama administration is to provide Indian manufactures of both solar and wind turbines with a level playing field opportunity in USA. This can be easily achieved by balancing import levies on renewable energy equipment from China.

There are not many success stories of US and Indian companies of working together in critical energy areas like renewables, energy conservation, low carbon technologies and HSE. A focus on trade driven by geopolitics will benefit India in terms of more success stories like GE and BHEL collaboration for power stations in India (where GE supplies most energy efficient gas turbines).

The Indo-U.S nuclear deal concluded in 2008 and further reinforced in 2010 would provide bilateral nuclear cooperation. Supported by the Nuclear Suppliers Group (NSG), it exempted India from trade restrictions on nuclear fuel and nuclear technologies. It further mandated a separate agreement to permit India to reprocess spent fuel in a new facility dedicated to reprocessing under IAEA safeguards. With the continued support of the U.S. administration under the re-elected government of Barack Obama, some of the issues holding up the reprocessing plant will hopefully be overcome. These agreements would pave the way for the establishment of nuclear plants in India which would have an estimated investment of around $130 billion by 2030.

It is also worth mentioning the evident induction effect of Indo-US nuclear partnership on other signatory to NSG like Australia, who have earlier been against the US accommodative stance on CTBT. Lately Australia has not only changed its stand but is looking forward to supplying nuclear fuel.

The ball clearly is in India s court now to strategically grab opportunities for US support, technologies, geopolitical muscle and long term collaboration solution like nuclear and hydrates in its own energy interest to make full use of Obama s second term. For more information please visit www.upes.ac.in

About the Author: Sanjay Kaul,Founder President of University of Petroleum and Energy Studies,Bidholi Campus Office Energy Acres, P.O. Bidholi Via-Prem Nagar,Dehradun-248007, Uttarakhand, India.ask@upes.ac.in

upes.ac.in

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