It’s been a year since the Russian invasion of Ukraine which has had far-reaching effects on the security architecture of Europe and has been linked to the slowing of global economic development.

Since then, the topic of energy diversification away from Russian oil products has gained attention, but no significant action has been taken yet.

Well, the G7 has taken a number of measures against Russian seaborne petroleum and oil, but all of these appear insufficient to restrict the price to $60 per barrel.

Any form of cutting off Russian oil has no deeper meaning in the absence of necessary alternatives.

Following Russia’s restrictions on energy supply as a part of its war strategy, many energy-intensive businesses, such as steel plants in Europe, started to close their doors, leading to a series of industrial declines.

The development of a 400 KV transmission line from Ratamate-Rasuwagdhi-Kerung, which is 70 KM long and capable of carrying 5,000 MW, is already being discussed by Nepalese and Chinese authorities.

There have already been discussions in Europe about “green hydrogen,” which is produced via electrolysis from renewable sources by splitting water molecules (H2O) into oxygen (O2) and hydrogen (H2). For instance, Norway is a global pioneer in renewable energy, with an electrical infrastructure that is 95% renewable of which 92% comes from hydropower.

Similar to how Europe is struggling with energy diversification due to excessive reliance on Russian oil, the Middle East is also discussing economic diversification at a time when countries like Saudi Arabia are making huge profits gained from oil supply amid the Russia-Ukraine war.

The vision known as Saudi Vision 2030 was even impacted by the COVID-19 epidemic since Saudi Arabia’s economy grew at the weakest rate.

This vision is now beginning to accelerate because Saudi Aramco reported a $48.4 billion profit for the second quarter of 2022, an increase of 90% over the same period last year.

The moves toward economic diversification have been promoted even by Saudi Crown Prince Mohammad Bin Salman with his distinctive goal of Saudi Vision 2030; investing in health, education, infrastructure, recreation, and tourism. As such oil incentives situation may not continue uninterruptedly in the future. A vision like Saudi 2030 is pivotal

Trade war between EU & the US over IRA

The US had already started a $3.6 billion Inflation Reduction Act (IRA) in 2022, which focuses on American US-based American companies for financing and deployments of new clean energy products targeted to underrepresented communities in general.

According to several assessments, the climate is deteriorating, and there has to be a larger reduction in greenhouse gas emissions from human-caused activities.

This act is in line with clean and energy, whose noble goals are to reduce greenhouse gas emissions. The EU felt threatened by such unilateral action taken by the US and demanded a tit-for-tat response.

This IRA in general only encouraged American companies to clean energy developments; which had irritated the EU.

In this particular IRA issue, the EU specifically does not want to support one side in the larger China-US confrontation, against which the IRA is directed, but rather wants to cooperate in overcoming this common challenge of climate change. The IRA problems between the US and Europe have been even contested in geopolitics.

Geopolitics on a transmission line in Nepal

The development of a 400 KV transmission line from Ratamate-Rasuwagdhi-Kerung, which is 70 KM long and capable of carrying 5,000 MW, is already being discussed by Nepalese and Chinese authorities.

This will undoubtedly lead to increased geopolitical tension between our northern and southern neighbors.

This has been proven in several ongoing instances. In contrast to the ten hydroelectric projects with India that Nepal and India utilize to carry energy, this is the first transmission line between Nepal and China.

The transmission line between Nepal and China was originally intended to be erected from the Trishuli base substation, but it has since been switched to the Ratamate substation, which will of course be constructed under the MCC-funded project.

This MCC transmission line, which also has strings attached to the Nepal-China Cross border transmission line, runs on five segments: north-east of Kathmandu at Lapsephedi, which will be extended to the west of Kathmandu near Ratamate; second division from Ratamate to the industrial town of Hetauda; third from Ratamate to Damuali in the west; from Damauli to Butwal in the south-west; and finally from Butwal to the Indian border.

However, both India and China are keeping themselves isolated from the projects or products generated by each other’s funding and loan.

For example, India’s refusal to purchase electricity produced by Chinese investment or contractors was previously discussed with Nepal’s independent power producers.

Second, the newly constructed Bhairahwa International Airport was worth $76 million and was funded by the Asian Development Bank and the OPEC Fund for International Development, but it was built by the Northwest Civil Aviation Airport Construction Group of China.

In May 2022, Indian Prime Minister Narendra Modi flew to Lumbini from a nearby Indian airport without landing there. Such incidences are alarming for Nepal as we are planning to engage our both neighbors in our development.

The major watersheds in Nepal will be impacted by the predicted climate change, which would ultimately interfere with energy production during both the wet and dry seasons.

But due to asymmetrical positions on global and regional issues blended with several ambitions and aims—India & China aren’t on the same plane in Nepal’s development.

Looking ahead in climate-induced risk in energy

According to several assessments, the climate is deteriorating, and there has to be a larger reduction in greenhouse gas emissions from human-caused activities.

If action is not done now, Nepal’s desire to rely on hydropower to provide electricity would suffer in the future.

The unnatural drought, floods, or glacial lake outburst floods may hinder our plans to produce 5,000 MW of hydropower by 2030, which is integrated into our Nationally Determined Contribution.

Secondly; according to our climate change modeling, Nepal’s average annual precipitation is projected to increase by 2–6% in the short term (2030) and by 8–12% (2050) in the long term.

For Nepal, a bifurcate of strategies( probably in green hydrogen) towards immediate, short and long-term strategies in dealing with energy constraints is required.

A rise in mean annual temperatures of 0.9 to 1.1 degrees Celsius is anticipated in the near future (2030) and 1.3 to 1.8 degrees Celsius in the long future (2050).

The major watersheds in Nepal will be impacted by the predicted climate change, which would ultimately interfere with energy production during both the wet and dry seasons.

Climate Expert Subhash Pandey writes in TKP, “Electricity output from hydropower is projected to decline with rising temperatures, even if there is no accurate record and evidence on the consequences of climate-induced extended hot seasons or drought on electricity generation in Nepal. When hydropower doesn’t operate at its best, experiences from other nations have shown us that sooner or later, we will also be dealing with a major power deficit”.

At last, Nepal is poised under geopolitical pawns and climate-induced risk for its energy diversification and resilience.

From energy diversification issues in Europe due to over-reliance on Russian energy blended with the Russia-Ukraine war, economic diversification issues in the Middle East and IRA by the US to initiate a major trade war against Chinese clean energy products–Energy is becoming a geopolitical instrument in and of itself, with both a stick and a carrot features.

For Nepal, a bifurcate of strategies( probably in green hydrogen) towards immediate, short and long-term strategies in dealing with energy constraints is required.