NIC “Global Trends 2025″ Report: Great Environmental Challenges Ahead

A new report prepared by the National Intelligence Council has projected that the world would be witnessing severe water and food shortages by 2025 and the changing climate would further strain the already fast depleting natural resources. In an attempt to boost the economic growth countries would put immense pressure on highly strategic and essential resources like energy, water and food.

Depletion of Natural Resources

The new report paints a very grim picture of our future. While it states that the world would see “unprecedented economic growth” it also states that it would come at a hefty cost. The demand would outstrip supply and easily available natural resources would be stretched to the limits of their carrying capacities.

The already stressed resource sector will be further complicated and, in most cases, exacerbated by climate change, whose physical effects will worsen throughout this period. Continued escalation of energy demand will hasten the impacts of climate change.

The report also warns of the hasty and forceful transition from fossil fuels to renewable energysources. Although the developed countries like US and Europe might succeed in partial transition it would adversely effect the economic growth of developing countries like China and India, more so because their populations would largely comprise of middle class which would seek to emulate western lifestyles.

Nicaragua Plans to Reduce Dependence on Oil-based Energy

Few decades ago the share of renewable energy in Nicaragua’s power generation was 70 percent but with growing ties with Venezuela and availability of cheap oil that number declined and now the country gets just 34 percent of its energy from renewable sources. But with the rising oil prices and increasing blackouts the government now seems to be falling back on the locally available and reliable renewable energy sources.

Having close diplomatic relations with Venezuela assured Nicaragua of sufficient oil supply for years but with oil peaking to $147 it became more and more difficult to shoulder the burden of rising energy costs. Although oil-based energy was cheaper than the energy produced from non-conventional sources, the fluctuation in oil prices started hurting the economy of the nation. The government of Nicaragua soon realised that oil-based energy sector is not sustainable in the given circumstances.

Is Russia Looking for Greater Control in the Carbon Credit Market?

It seems that after using oil & gas as tool to punish the East European nations for their closeness to United States and showing Europe how dependent it is on its supplies, Russia is further trying to wield power by what seems is an intent to control a major share of the carbon credits market.

Russia has declared that it will not sell surplus carbon emission permits to other countries and will stockpile about $58 billion worth of the Kyoto carbon credits. It plans to use these surplus emission permits under the next climate treaty.

According to an official representing Russia at the climate talks in Poland, Russia has more emission permits than it requires but is not willing to sell them to any other country. The official argued that by stockpiling the surplus emission permits Russia is only securing its future economic growth.

Ukraine too has surplus carbon credits and it too intends to save them for use under the climate treaty that would succeed the Kyoto Protocol. But there is a difference between the two cases. Russia has the world’s largest gas reserves. By controlling a major portion of the carbon credits market Russia could indirectly control the control a major part of the global gas supplies.

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World Needs To Move Out Of OPEC’s ‘Oil Claw’

With the oil crisis straining economies of even the most financially stable nations it’s time that the world formulates & rethinks its energy security policies. For decades the western countries & the developing countries of Asia have been dependent on oil supplies from OPEC nations which have a total monopoly over world’s oil reserves. The need of a sound energy security policy arises from the fact that the oil producing nations, barring Saudi Arabia, have clearly refused to increase production even after repeated pleas from the world leaders.

With election season in full flow in the US & sharp decline in popularity of his government, President Bush & Prime Minister Brown are seeking deals with Middle east countries to make them increase oil production thus help cooling off the boiling oil prices. British PM Gordon Brown wishes to present a new proposal to the Middle east countries through which they would be entitled to hold majority stakes in the renewable energy projects in the western countries. According to the two-point ‘New Deal’:

Saudi Arabia and other oil producers, who are worried about the unpredictability of oil prices, which fell to $10 a barrel a decade ago, would be given the chance to take a major financial stake in the more stable market of renewable energy power in the west.

Britain and other western countries would help to improve the supply of oil in the long term by being given greater chances to invest in oilfields and oil refineries in Opec countries.

But the Prime Minister forgot that the deal would do nothing to end OPEC’s virtual oil monopoly. Brown plans to do the same thing which the US Congress voted against few years back. Refusing to give operational control of major seaports to a middle east company the decision caused a global diplomatic row. If even the new energy projects are placed under the financial controls of the middle east countries how will they be able to achieve the so called ‘energy independence’.

Iran, Israel, Turkmenistan: India Going Places In Search Of Energy

Trilateral talks for Iran-Pakistan-India gas pipeline have started again and construction work on this project will commence in 2009. India has joined the Turkmenistan-Afghanistan-Pakistan pipeline project construction for which is scheduled to start in 2010. India is also looking to get oil & gas from the Black Sea and Caspian sea through an Israeli pipeline.

All these developments show the desperation of the Indian government which is fighting the skyrocketing inflation. Energy import bill is swelling as the international crude oil prices are touching new high everyday. India with rapidly growing economy is looking for energy wherever it could find it.

Gas from Bangladesh seems a far fetched dream given the sour relations between the two countries because of the continuous infiltration of terrorists into India through the Indo-Bangladesh border. It would be difficult for the Indian government to escape international scrutiny if it overlooks the situation in Myanmar and forges an energy deal – it would be something similar to what China is doing in Sudan. Plus China commands a strategic hold over the region.

The Iran Pipeline Dilemma

The project which was conceptualized by the current IPCC chief, Rajender Pachauri, has been delayed several times due to various reasons. The project would supply natural gas from the South Pars gasfield in Iran on a 50-50 sharing basis between India and Pakistan and would supply 2.06 billion cubic feet of gas per day.

Participation of India in the project is essential for it to be a profitable one. Due to the US pressure India had to put the pipeline on the backburner but Iran threatened to include China if India wasn’t interested. This is the reason given for the resumption of the trilateral talks however India’s Petroleum Minister cites economic reasons for the same. Lack of consensus over the nuclear deal and the rising oil prices added with possibility of losing to China on the energy front, once again, made the government rejoin the trilateral talks.

Pricing of the gas and the transit fees in addition to the security threat from the Baluchistan Liberation Army are some of the tricky issues that the three parties are currently trying to solve. Transit fees increase the gas  price by 42% and given the history of attacks on Pakistan’s pipelines in the region, India is finding it difficult to go by the high price.

The TAPI Solution

India enjoys some leverage over this project. The Asian Development Bank has long been pitching for India’s participation in this pipeline since it is essential for the profitability of the project. Although India can have its way, to some extent, over the pricing of the gas but the threat of sabotage by Taliban is a serious issue one that hasn’t been dealt with yet.

The TAPI pipeline has the backing of the US government which happily presents it as an alternative to the IPI pipeline.  Moreover there is a low possibility of China nudging India out of this project give the friction between the two countries. The issue of contention between the two countries is the the East Turkestan Independence Movement which advocates for the establishment of an independent and self-governing Xinjiang. Currently the area is an autonomous region in China.

Oil Through Israeli Pipeline

India has been approached by Eliat-Ashkelon Pipeline Company to participate in a multi-billion dollar crude oil pipeline. The company once used to be a joint venture between Israel and Iran. Once this project is completed India would get access to the vast oil reserves of the Black Sea and Caspian Sea. India hasn’t had access to these reserves since heavy oil & gas carriers cannot  pass through the Suez  Canal.

This pipeline, although costlier, would be more secure than the other options. It would also open up oil reserves of the Algeria and Libya where the state-owned company ONGC has been trying to acquire oil fields. A pipeline through the region is preferable since it is a major choke point in global oil routes and would obviate the high shipping costs bringing down the oil import bill.

On the face of it India seems to have plenty of options to get the crucial energy supply for its booming economy but each of these option pose serious problems – economic, strategic or security related. India, being a big geo-political player and a huge consumer of energy, should take whatever legitimate leverage it could get to ensure a cheap, secure and uninterrupted energy supply.

Race for ‘New Energy’: US, Russia go North Pole, China off to the Moon

The thirst of energy has made the ‘biggies’ to go to the ends of the world & out of it. Russia has put claims over the North Pole & its unexplored natural reserves, so has Canada which recently sent a ship to the North Pole to make its presence felt.

On August 6, the US Coast Guard icebreaker Healy left Seattle on a mission to map the sea floor off the coast of Alaska. Although officially this is a ‘science’ mission but it is clear that now USA also wants a piece of the pie. Russia recently, in a sort of show of power, symbolically planted a flag at the sea floor under the North Pole (I personally found it bit funny). Under the international law all these countries including Denmark have rights over the region.

The Middle East is becoming highly unstable & there are genuine fears that somewhere in the future the terrorists could use oil as a tool to increase their influence over the region or even worse try to hijack the pace of the global economy by creating a bottleneck in the oil supplies. Then there are leaders like Hugo Chevez who would almost everything to hurt America’s interests which could in turn affect the global economy.

So these countries are out to find newer areas from where they could get easy & secure supply of energy. One of these areas is the moon. China plans to launch a lunar orbiter called “Chang’e One” in the second half of 2007 to take 3D images & map every inch of the moon. Now the Russian, American & European space agencies have already done that so there’s nothing new that the Chinese will find.

The former Indian President APJ Abdul Kalam had put forward the idea that the various space agencies of the world should collaborate with each other to tap the huge Helium-3 reserves present on the moon and China seems to have paid attention to it. Likewise India is also working on a similar program.

With so many big players involved in the ‘race for the New Energy’ some serious diplomatic clashes are very much expected and it would be interesting to see who gets how much of the energy pie.