IEA membership of India
- June 15, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
IEA membership of India
Subject : International Relations
Section: International organization
Context: International Energy Agency (IEA) to review all its membership conditions for India’s inclusion. (Comment by IEA Executive Director)
Key Points:
Why important for IEA:
- India’s entry into IEA is likely to boost global energy security and also increase the IEA’s international leverage in its dealings with the Organization of Petroleum Exporting Countries (OPEC)
- IEA has been trying to get large energy consuming nations, including India, China and Russia, which are not OECD members to act in concert to counter supply disruptions
- Energy and oil demand will increasingly come from non-OECD countries, leading to a shift in geo-political interests, thus making India’s participation important.
- The high oil imports India is getting from Russia after the Russia-Ukraine war are a cause of concern for OECD countries like the USjl., UK.
Significance for India:
- IEA membership will help India present its point of view in international forums.
- With India’s strong economic growth energy demand will also rise.
- Oil price policies have significance for growth of emerging market economies (EMEs) like India.
- US’s Inflation reduction Act is a challenge for India where IEA could prove an appropriate forum to find a solution. (the subsidies are likely to distort capital allocation, and taxes hurt green transition efforts of other countries)
Why membership is a challenge for India?
- There are two pre-conditions for IEA membership that India currently does not fulfill.
- First is membership in the OECD (Organisation for Economic Co-operation and Development), and
- Maintaining oil stocks equivalent to at least 90 days of net imports (at present the capacity is around 74 days of reserves)
- Further there will be expectations from the global energy industry that India will implement much-needed reforms in the energy industry in India.
- At present India is a IEA Association country. In 2021 India signed Framework for a Strategic Partnership committing to strengthening collaboration and engagement.
International Energy Agency International Energy Agency is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector. The 31 member countries and 11 association countries of the IEA represent The conditions to join IEA are: 1. Being member of OECD. 2. Reserves equivalent to 90 days of the previous year’s net imports 3. Legislation and organization to operate the Co-ordinated Emergency Response Measures (CERM) on a national basis; 4. Legislation and measures to ensure that all oil companies under its jurisdiction report information upon request; 5. Measures in place to ensure the capability of contributing its share of an IEA collective action. (in event of global supply disruption, each member contributes to oil supply in proportion of their consumption share. |