The closure of the Strait of Hormuz has exposed the vulnerability of oil and gas in a way that no other single incident has over the past 50 years. In Pakistan, well before the strait of Hormuz incident, people had already begun to switch to solar energy, as it is much more affordable (with one caveat: only if you can afford the initial cost).
Pakistan, today, has a unique opportunity to get ahead of the curve by shifting away from fossil fuels, at a time when this is the only smart move. Global energy generation by fossil fuels has already declined by one percent in the month of March alone.
The crisis in the strait of Hormuz may have allowed the oil and gas companies to make a killing in the short term, but in the long run, those with a better understanding of the course of this century will accelerate their shift towards renewables. While these oil companies have benefitted from the higher prices, and therefore oil-rich countries have had an increase in their overall revenue as a result (in the case of Canada, significantly reducing their budget deficit for this year), the people who have suffered are ordinary people, in the global north and the south alike. We will inevitably see more solar panels around Karachi, Lahore, New Delhi, Mumbai and elsewhere. This is, of course, the true spirit of capitalism, the cheaper, more reliable, and efficient source of energy generation should be allowed to outcompete old forms of inefficient fuel. This is, however, difficult if some governments keep the oil and gas industry on a ventilator in the form of subsidies.
A brief history
Regardless of the climate crisis, if you simply take a look at the history of energy use, the trend shows us that it is moving towards higher efficiency.
We started off with using wood for fuel, whether it was heating, cooking, or other use, which produces the most amount of pollution, by some measurements even more than coal. Then, we switched to the use of coal, which was also highly destructive for rising temperatures and also air pollution, but more efficient than wood. Around the 1960s, we began to shift away from coal and increasingly towards oil and gas, and even nuclear. The shift away from coal was particularly contentious in the United Kingdom with the infamous clashes between miners and the Thatcher government. Some European countries had successfully shifted much of their energy production to nuclear, like Germany did, but hysteria around the use of nuclear got them to reverse progress and ultimately become more reliant on Russian oil. And now, we are seeing large-scale shifts towards renewables, with some countries such as Norway and Iceland already having shifted most of their energy use towards renewables, and countries like Brazil well on their way to do so. When we look at just electricity use, then the list is even more impressive, including Canada, New Zealand, Nepal, Paraguay, Austria, Switzerland, and many more generating more than half of their electricity through renewables.
This shift did not take place because these countries became more committed to environmental protection, but simply because the need for efficiency drove them towards more efficient, and ultimately, therefore, cleaner technology.
This points us to the fact that often, even if the internal logic of capitalism could be pushing us towards more efficient energy, there are often vested interests, who would have a lot to lose in the event of a switch to alternate energy. Oil-rich countries in the gulf, Iran, Russia, United States, all would lose an edge if energy became decentralised in this way, but this is due to their political and national interests being prioritised over a natural market push away from fossil fuels.
The problem for the gulf
The gulf has enormous oil wealth but doesn’t have enough land (in most cases) to benefit from solar in a big way, and solar certainly doesn’t have the export potential of oil. We, in South Asia, have enough land to efficiently harness solar and fulfill most of our own needs.
There are NO technical constraints in principle, in becoming fully self-sufficient with a combination of solar, nuclear, and hydro-power in Pakistan.
Our energy use
Pakistan currently generates 30% of its electricity through hydropower, 18% through nuclear, 5% from other renewables, and 46% from conventional oil and gas. During certain parts of the year, effectively over half of electricity in Pakistan is generated through non-fossil fuel sources, in particular due to hydro and nuclear. During certain times of the year and peak periods, around 25% of all electricity is often generated through solar, in particular due to a household level solar boom.
Much of the shift towards solar has taken place despite the government of Pakistan and not because of it. Recently, the Sindh government granted around 2,000 rupees per motorcycle as a result of price surges following the US Iran war and the strait of Hormuz closure. However, this is a band-aid solution. What all governments should be focused on is making it easier for ordinary people to install solar panels and become self-sufficient in energy production.
In fact, subsidies of this kind can lead to more inflation.
Foresight in a changing world
Countries that have the foresight to recognise the shifting energy status quo will have an edge over many countries in the years and decades to come, despite short term difficulty.
At the moment, there is a boom in oil production in many countries, especially Canada, the US, and Russia. Oil companies are making record profits. This is only temporary. Everyone knows that what’s next is a major restructuring of the energy market (assuming there is no ideological commitment to protecting the oil sector for vested interests). This does not require the consent or support of the status quo and the governments.
Even before the crisis at the strait of Hormuz, the global solar capacity had been increasing by 20-35%. This was already being driven, in part by the Russia-Ukraine war and the energy vulnerability concerns regarding Russian oil, in addition to falling panel prices.
Stagflation in the 1970s
There was a similar surge for support for solar following the oil shocks of the 1970s, not in the form of direct purchases, but early research and development for solar energy. Then again during the 2022 gas crisis in Europe due to the Russia-Ukraine war, which led to a significant increase in contracts for renewable energy, but most significantly now, following the biggest oil shock since the 70s.
During the 1970s stagflation crisis, many countries were caught between a rock and a hard place. The 1970s oil shock was not a great depression style deflation crisis leading to a collapse in the overall demand (a demand side problem), which was successfully dealt with through massive government spending in the 1930s. The 1970s stagflation crisis was caused by supply side shocks because of oil, and injecting money in the economy through government intervention would not have helped and may have made things worse instead. We are in a similar situation today, we are facing a stagflation crisis. Granting oil and gas subsidies for motorcycles won’t help, it may only drive up inflation in the long run – through currency pressure in particular. Subsidising petrol for motorcycles will increase the import demand, reducing foreign reserves and weakening the currency. What will work better in the long run is deregulation for solar energy. The government must make it easier for people to become self-sufficient, and shift the economy off of oil and gas. Doing so would help any impacted country in reducing vulnerability to supply-side shocks and the impact of inflation in the long run.
Europe and Germany in particular has to engage in some soul searching. For mainly hysterical reasons, much of Europe abandoned nuclear energy between the 1980s and now, making them dependent on Russian oil and gas, which is astronomically worse for the climate, and made democracies dependent on a dictatorship for their energy supply. Pakistan and much of south asia too, have some soul searching they ought to engage in. Why? When we have an abundance of all renewable sources: solar, hydro, nuclear, wind, and barely any oil — why are we still dependent on the gulf for most of our energy? This has proven to be careless and inconsiderate, at the expense of the tax payer’s money.
At the end of the day, countries only ought to be accountable to their own people, above all else. The need of the people is clear: Maximum energy sovereignty before increasing economic crises caused by oil shocks leads to loss of life.
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The writer is a climate activist focusing on the mechanics of mobilisation and organisation
All facts and information are the sole responsibility of the write
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