The impact of geopolitical tensions is already visible in global energy markets. Energy importing nations are feeling its heat. The Strait of Hormuz, responsible for nearly 25% of the world’s seaborne oil trade and about 20% of global LNG flows, has been blocked by Iran, preventing ships carrying these energy supplies from passing through. This disruption has pushed crude prices sharply higher. The price of crude oil which was trading at around $ 73/barrel in February, before the war, surged to ~$117 in a week. This deems a wake-up call for nations to realise the fragility of their existing energy supply chains and their vulnerability to oil price shocks. Historically, every $10 increase in oil prices is associated with around a 0.2% reduction in global GDP, a 0.3% rise in inflation, and about $1 billion per day added to the global oil import bill. If prices remain near $100 per barrel, the world could see close to a 1% reduction in GDP growth, over 1% higher inflation, and an additional $1.4 trillion annually in oil import costs.
Energy importing nations such as India may need to turn inward, eventually, building energy self-sufficiency. For more than a decade, the primary argument for renewable energy (RE) has been to achieve net-zero. That argument still stands true today. But now, in the increasingly volatile geopolitical environment, we need to start looking at RE with a geo-strategic worldview.
Renewable energy (RE) becomes the bedrock of all such energy security plans. More focus on energy self- sufficiency is pushing countries towards indigenous sources of energy. And clean energy is the bedrock of most of such energy security plans.
India’s total primary energy consumption is approximately 1.1 Giga tonne of oil equivalent (Gtoe) of which coal contributes nearly 47%; oil 27%, natural gas 6% and remainder from other sources. Transportation accounts for ~20% of energy consumption and responsible~50% of oil consumed. Industry accounts for ~40% of overall energy consumption and responsible for ~70% of natural gas consumption. Electricity accounts for ~18-20% of energy consumption and is responsible for ~74% of coal consumption. India imports more than 85% of its crude oil, 50% of its natural gas and 20% of its thermal coal.
Fortunately, India is also blessed with 365 days of sunshine and substantial wind resources which complement solar energy. India’s 500 GW renewable energy target is critical not just to meet the climate commitments but also for its energy security and economic future. Estimates suggest that adding around 50 GW of renewable capacity annually could eliminate thermal coal imports by 2029, generating foreign exchange savings of about $66 billion between 2025 and 2029, and over $170 billion across the decade.
{{/usCountry}}Fortunately, India is also blessed with 365 days of sunshine and substantial wind resources which complement solar energy. India’s 500 GW renewable energy target is critical not just to meet the climate commitments but also for its energy security and economic future. Estimates suggest that adding around 50 GW of renewable capacity annually could eliminate thermal coal imports by 2029, generating foreign exchange savings of about $66 billion between 2025 and 2029, and over $170 billion across the decade.
{{/usCountry}}With abundant RE sources, India must increase electricity’s share in its energy consumption as much as it can. The rapid adoption of electric vehicles (EVs) alone could reduce oil imports by around 1–1.5 million barrels per day, translating into a meaningful decline in the country’s oil import bill. For sectors that are harder to electrify, green hydrogen and its derivatives are an important pathway to decarbonization.
They can substitute fossil fuels across several hard-to-abate sectors:
- Fertilisers and refineries: replacing grey hydrogen with green hydrogen.
- Steel: using green hydrogen as a reductant in the Direct Reduced Iron (DRI) process in place of coking coal. India imports ~54 million tonnes of coking coal, about one-fifth of total coal imports.
- Shipping: e-methanol as an alternative to heavy fuel oil.
- Aviation: Sustainable Aviation Fuel (SAF) in place of conventional jet fuel.
- Long-distance trucking: green hydrogen-based fuels as a substitute for diesel
RE will stabilise energy prices, resulting in lower susceptibility to global fossil fuel shocks.
RE is advanced and mature enough to contribute to a nation’s energy self-sufficiency. At the same time, nuclear technology is also back in contention with India announcing its goal of reaching 100 GW of nuclear capacity by 2047. However, our immediate pathway is clear: Wind, solar and energy storage are already proven, scalable and increasingly affordable. Aggressive targets have been set for green hydrogen and derivatives. For nations seeking both energy security and decarbonisation, the opportunity lies in accelerating RE, phasing out thermal steadily, while steadily preparing the ground for the technologies of tomorrow.
As far as India is concerned, 500 gigawatts was the ambition of yesterday. It must now set its sights on the next terawatt- and begin building it today. The promise of Atmanirbharta will only be fulfilled when India becomes Atmanirbhar in energy.
This article is authored by Rahul Munjal, founder chairman, Hero Future Energies.