5 Problems
1. 1. Energy and Natural Resources Supply and Demand
- This happens when the flat, connected world meets the crowded, highly populated world.
- The demand increases by the emerging economies who are now well connected to know the kind of ‘American Lifestyle’.
- 2004: The reason behind the sudden spike in Oil Prices
o Outside the wars, oil shortages were generally cushioned by spare refining capacity, spare crude oil and spare oil products inventory. All these acted as shock absorbers.
o After late 90s and into early 2000’s the demand kept rising steadily and the shock absorbers kept on absorbing without increasing their absorbing capacity.
o In 2004, all these shock absorbers disappeared. Secondly there was huge increase in demand due to China. (It was estimated that the global increase in demand of oil barrels would be around 1.5 billion. Actually it increased by 3 billion - 1 billion for China alone.
o Further the cushioning could not take place due to:
§ Shortage of equipment and skilled labor
§ Russia squeezed out foreign producers – discouraging global and professional oil companies to carry out operations
- Increase in Cost of Food due to rising oil prices
- The energy and food demand has been artificially high and prices artificially Low in many countries like India. This has led to market distortions.
2. 2. Petro-Dictatorship
- Huge wealth is being transferred from energy consuming nations to energy producing nations.
- Many of these energy producing nations are headed by people who have not earned the leadership by building economies or educating people. Many are hardliners
- E.g. Russia closed down natural gas supplies to Europe to show its power. Russia didn’t get more educated, more efficient, and more productive. Instead Europe got more dependent on Russia.
- Latest EU gas Crises:
o Gas row flares as supplies to Europe cut
o Russia is testing the limits of its powers
3. 3. Climate Change
- Earth’s temperature has risen and carbon dioxide levels are increasing day by day.
- IPCC (which got the Nobel prize recently) says: Without a dramatic reduction in human induced carbon dioxide emissions, climate change may bring abrupt or irreversible effects.
- Mantra for ECE – “Avoid the unmanageable and manage the unavoidable”
4. 4. Energy Poverty
- Electricity: even more important now because of the need to be connected to collaborate
- E.g. In South Africa, the increase in sales of generators has been enormous. Businesses are failing and the lack of electricity is the biggest threat for starting up new businesses.
5. 5. Bio Diversity Loss
- Loss of flora and fauna is rampant in all parts of the world, especially in emerging economies. There will always be a struggle between growth (which you cannot prevent) and the natural resources.
- Extinction of the #1 endangered species – Baiji (River Dolphins) in China was the tipping point for the author.
- In addition, around 90% large predator fish and 20% corals are gone.
The current situation is like the proverbial frog in the pan whose temperature is being slowly increased.
After World War II, 3 main aims were:
- Peace and security – for which UN was formed
- Economy development – GATT was formed
- Human rights – Uns declaration of Human rights
There was and still is blindness about environment despite Rio, Kyoto and Montreal Protocols. The need of the hour is to focus on these issues at top priority.
