"Greatest cost-of-living crisis of the century" and Adani's climate think tank — Issue #8

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Energy Trends Weekly
"Greatest cost-of-living crisis of the century" and Adani's climate think tank — Issue #8
By Energy Trends Weekly • Issue #8 • View online
Seen up close, India’s energy sector presents a bewildering picture. Headlines about fresh investments in the country’s EV space, to take one instance, rub shoulders with those on coal-mining expansions. In this granularity, deeper trends and larger directions get missed.
And so, from the Climate Trends team, a new weekly bulletin that seeks to provide an overview of the significant developments in the country’s energy/climate sector. Energy Trends will land in your inbox every Tuesday. We hope you find it useful. Do share your thoughts.

The Big Picture
Much of the developing world is sailing into two big shocks.
The first is about energy. We have been reading about it in the context of countries like Pakistan.
In the last month, when the heatwave gripped South Asia, Pakistan’s towns and cities went without power for 4-6 hours a day. Rural areas fared even worse – they didn’t have electricity for as much as 8 hours a day.
The reasons for the protracted and frequent outages are fairly straightforward. Over the years, Pakistan’s dependence on imported fuels like gas has increased. As the Dawn wrote in its previous tenure, the PML-N government further compounded matters. “(It) attempted to overcome the power shortages… by inviting foreign investors and lenders to help establish a series of power projects which would offer them guaranteed returns.” Most of these plants, it wrote, mainly run on imported fuel.
The downsides are not hard to spot. In recent months, not only has the dollar strengthened against other currencies, the Pakistani rupee has fared particularly badly, losing as much as 30% of its value against the dollar in the last 40 months.
Among other things, this pushed up power generation costs. Discoms fuelled the spiral further, wrote Dawn, “failing to contain line losses and improve recoveries”. Then came the post-pandemic economic rebound and Russia’s invasion of Ukraine – both of which pushed up oil and gas prices, making power generation increasingly unaffordable for the country. As Bloomberg reported, “(Pakistan’s) energy import costs doubled in the ten months ended April.”
Things got so bad that, despite their scale, even the power cuts proved insufficient. The country needed further reductions in power consumption. And so, last week, not only did the new government roll back its decision to boost its work week from five days to six, it said Friday might become a work-from-home day.
Stephen Stapczynski
Time for a history lesson 👇

Nearly a decade ago, Pakistan took specific steps to insulate itself from these violent energy price spikes that are roiling the market today

It made investments in LNG import infrastructure and signed long-term contracts with suppliers, like Qatar https://t.co/q3pxljuYVY
Versions of this story have played out elsewhere in the world as well. High gas prices have resulted in India reneging on its commitments to gas distributors. Or take Sri Lanka. Under the Rajapaksas, the country saw a budget shortfall (as earnings dipped much lower than expenditure, greater borrowings ensued) and a current account deficit (the country imports more than it exports). Then came the self-goals, like the huge tax cuts promised by Gotabaya Rajapaksa during the 2019 election campaign. The pandemic only worsened – the government’s other revenues (from tourism and remittances) dried up.
And yet, that is just half the story. This week’s book review shows that the world is also sailing into a food crisis.
In essence, ours is a time when both energy and food prices are rising – even as people’s financial conditions tighten. This is, said a UN report released this month, “the largest cost-of-living crisis of the twenty-first century to date.”
This crisis comes at a time when, in several countries, democracy itself is in trouble. In his 2018 book, Aeron Davis described a rising number of politicians as “reckless opportunists” – people who came to power seeing sectarian causes/hatreds as a way to acquire power. Their capacity to govern is limited. Take Rajapaksa. To reduce Lanka’s import bill, he abruptly banned chemical fertilisers in 2021, and it ended up hitting the farm sector.
As Adam Tooze showed in Crashed, economic insecurity spawned by the subprime crisis is a big reason for the rise of populist demagogues worldwide. They came to power riding on the disenchantment of that moment.
One wonders what happens this time around.
📰 News of the Week
What made news this week?
Russia’s invasion of Ukraine has come as good news for India’s oilcos, trapped between rising oil prices and a government already getting the flak for high oil prices. For these firms, which have not changed the retail price of petrol and diesel for some weeks now, the losses incurred there are being offset by gains from cheaper hydrocarbons from Russia.
Oil made headlines for a couple more reasons this week. BJP spokesperson Nupur Sharma’s comments about Prophet Muhammad threatened to disrupt India’s energy ties with the middle-east. All activities pertaining to the Indian government’s stake sale in Bharat Petroleum have now been discontinued. According to The Economic Times, the government said: “Owing to prevailing conditions in the global energy market, the majority of QIPs (qualified interested parties) have expressed their inability to continue in the current process of disinvestment of BPCL.”
This is rapid change. Just two years ago, even as most oil/gas majors stayed out, a clutch of private equity funds and pension funds had been interested.
In other news, as Delhi’s air quality dropped, the Commission for Air Quality Management banned the use of coal by industrial, domestic and other users. It, however, said thermal power plants could continue using low-sulphur coal. Elsewhere in the country, Great Eastern Energy Corporation said it would try to produce shale gas at its Raniganj South block in West Bengal. India is still deciding what to do with its coal reserves – mine more? Leave it in the ground? Or convert it into a liquid/gas form and use it?
From fossil fuels to renewables. One more company, GreenZo, announced plans to set up a hydrogen electrolyser factory in the country. India will get its cheaper electric car – it costs Rs 4 lakh – next month. It claims a driving range of 200 kilometres per charge. The country will hold offshore wind auctions in 3-4 months. Prime Minister Modi has set the country a target of 30 GW of offshore capacity by 2030 – it’s one more in the long list of India’s ambitious energy targets, spanning renewables and fossil fuels, for 2030.
You call them start-ups, I call them upstarts: Rajiv Bajaj on EV firms
This week also saw industrialist Rajiv Bajaj speak his mind. When asked about electric two-wheeler fires, he said: “You call them start-ups; I call them upstarts. I am amazed that people with no R&D, no engineering, nothing more than half-an-assembly facility are importing stuff that has not really been validated for the marketplace and are putting it out there.” As he says in the interview, something about the EV landscape is converting a market into a gold rush where “people with no business in EVs (are) trying to be in the EV business. This must be fixed and understood.”
Last but not the least, the Adani Group is setting up its climate change think tank.
🎙️ Podcast of the Week
Elsewhere in the world, cellphone maker Foxconn, which makes iPhones and their ilk, told Bloomberg it wants to produce all the key components of an EV.
📖 Climate Long-Reads
📚 Book(s) of the Week
The world is about to see more than just an energy shock. A similar surge in food prices is expected as well.
In South Asia, the heatwave had already affected the wheat crop. Now, the Russian invasion of Ukraine is making things worse. The latter is a leading exporter of foods like wheat. Given Russia’s blockade, its supplies are not getting out. This, as historian Timothy Snyder warned, could well be a deliberate move by Putin. His thread is worth reading.
Timothy Snyder
Russia has a hunger plan. Vladimir Putin is preparing to starve much of the developing world as the next stage in his war in Europe. 1/16
His book, Bloodlands, is our book recommendation this week. Ukraine has had a very painful 20th century. It saw farm collectivisation and famine under Stalin, who wanted agrarian surplus to build the USSR up as an industrial powerhouse. The consequent targets were so high that little was left for the locals. Between 1931 and 1934, as many as 3.9 million Ukrainians are said to have perished.
Then came Hitler. Seeking Lebensraum (living space) for the Germans, he and his Nazis embarked on similar starvation and mass murder strategy in the country. Both were, as Snyder writes, dictators who wanted to control food supplies. Hunger politics, he calls it. This book is worth a read. See a review here.
Also, see Snyder’s Black Earth: The Holocaust as History and Warning. He uses the holocaust to talk about the conditions in which countries start seeing denizens of other nations as expendable – especially when posited in terms of national survival. The book’s description says: “By overlooking the lessons of the Holocaust, Snyder concludes that we have misunderstood modernity and endangered the future. The early twenty-first century is coming to resemble the early twentieth, as growing preoccupations with food and water accompany ideological challenges to global order.
The book is a must-read. If you are pressed for time, read his essay in the Guardian.
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