Blake C Clayton, an energy expert with the New York-based think tank Council on Foreign Relations (CFR), says that the challenge before India is not providing cheap energy to the wealthiest but to those living in rural areas. Clayton, who has a doctorate from Oxford University, says that if India is to become self-sufficient in the energy sector, it has to embrace new technologies.

In New Delhi to deliver a lecture, Clayton spoke with Trithesh Nandan. Edited excerpts from the interview:

What are your predictions for global energy trends?
There are interesting trends. In many ways, there will be more growth in energy and power demands around the world, especially in the developing world. India and China are at the heart of that story. The energy company BP came out with statistical projections a few months back, which show that India and China alone will contribute as much as 50 percent of the power demand growth between now and 2030. So, it is a very exciting time for India simply because the decisions made here by consumers, by businesses and the power sector will have a tremendous impact on energy trends.

India faces a shortage of energy. It is even hurting economic growth. What would be your prescription for India?
There are a few lessons for India. The demand for energy or growth of energy is a good thing. When the economy and the population are growing, demands for energy grow. My hope is that the kind of robust energy growth that was seen in India in the last one decade will continue to grow. It does pose challenges, though.

Will you elaborate?
It poses challenges for people of India; especially for the poor (and the) middle class (in terms of affordable energy). It is a challenge for policymakers — how to develop the right kind of regulations that will allow energy economy to grow in a responsible, affordable and secure way. Energy efficiency and finding ways to embrace modern technologies are the key areas. They are developed outside India: bring them to the country and deploy it on a large scale. The other important component is trade. India like other countries is dependent on imported or exported goods. And when it comes to energy, finding ways like bringing natural gas (to the country) will be an important part.
But I also think that too much reliance on imported energy can be a bad thing. One way of achieving energy security for the countries is to find what they can produce domestically. So, the challenge for India from the policy perspective is how to create the level of competition. When it comes to exploring and producing energy sources like coal, natural gas and oil, enable the market to help and provide.

But India doesn’t have enough oil reserves. How can it take up exploration in a major way?
I think it is likely that India has much greater natural gas resources than it currently realises. However, there are infrastructure issues in exploiting the country’s energy resources.

New technologies should have been developed and deployed on a large scale. Hydraulic fracking* combined with horizontal drilling have enabled countries like the US, Canada, the UK, Russia, Argentina and others to find a vast quantity of oil and natural gas from shale reserves that they did not know existed before and to extract profitably. When it comes to India, my sense is that much of shale reserves are relatively unexplored. That means on a practical level in years and decades to come, there is a good reason to explore. The quantity of shale resources may be estimated at much higher than expected today. That’s the trend happening in the UK, China and other countries. Once companies go outside and actually kick the tyres, explore well, they find it.
There are much more oil and gas in different parts of the world than we had realised. And, India is no exception to that trend.
The US and Canada have a vast oil and gas infrastructure. It is more limited over here. Also, there are issues regarding the pipeline infrastructure and rail and road network connectivity with the resources. The other thing is that in the US, there are many small-scale companies involved in oil exploration, while in India only big companies dominate this sector. The Chinese are inviting big oil and gas companies so that they (China) can learn technologies from them. If oil and gas production is not regulated carefully, it will be dirty.

Given the great energy boom in the US in the last couple of years after the new findings, do you see cooperation between Washington and New Delhi evolving in this area?
The cooperation is already under way. Washington and New Delhi signed an agreement in 2009 that called for greater technological cooperation in the area of shale exploration and production, not to mention other critical areas like development of renewable energy and energy efficiency. So, the North American gas boom is a good thing for India. In the US and Canada, in shale production, there are supply side gains. That is a good thing for importing countries in other parts of the world. Since 2006, 3 million barrels a day of oil imported by the US is being circumscribed because the US is able to provide for its own needs. India and other countries are major importers of oil. That means more energy leftover for these countries, which means lower prices worldwide. Also, in future the equation will change as there will be more energy cooperation.

Do you think the discovery of shale resources will take geopolitical focus away from West Asia?
When it comes to geopolitics, the relationship between the US and other countries in the Middle East, many analysts ask what is now in store for the US. The US is much less reliant on Middle Eastern oil imports than it used to be. It is also much less reliant on oil from the other parts of the world. Policymakers, whether in Moscow, New Delhi, Brussels or Washington, do tend to care about who they trade energy with. It is a global market and people are free to buy from and sell to whoever they want. The fact that the US is becoming more energy self-sufficient means that its traditional relationship with the Middle East at least on energy perspective is changing and it is changing very dramatically.
Will this lead the US to reshape its role in the Middle East? No, I don’t think it will happen. I think there are many interests that will take Washington to that part of the world – whether it is nuclear proliferation, support for Israel and other allies or for humanitarian objectives. There are many ways that the US would like to pitch in the region.

How should India revamp its energy governance?
Officials here at the highest level are interested in that issue. What change should India make in order to provide more secure energy future? There are a couple of lessons. Finding ways to get energy to those who don’t have it or have very little of it; that is the key. It is not just a question of energy efficiency for major cities or cheaper energy for the wealthiest people but for those people who are living in rural areas and providing energy to help them. Embracing technologies and best practices from all over the world also matters.
I think leading energy companies are bringing them to India. It also matters to increase global competition when it comes to production of vital energy resources: oil and natural gas. More bidding of these resources will tend to produce more efficiency and production gains are possible.