Energy shocks should accelerate, not delay, climate action, economist Stern says

What did economist Nicholas Stern say the current energy shock should mean for climate action?

The current energy shock shows why climate action is also economic and national-security policy. Stern says reliance on oil and gas leaves countries exposed to wars, supply disruptions and sudden price increases. Delaying clean investment would therefore deepen the risks that governments are already facing.

The article points to the US-Iran war, which pushed up commodity and energy prices. That increase adds to worldwide inflation and threatens economic growth. Stern’s solution is faster investment in cleaner technologies, including wind, solar and hydropower. These sources can reduce dependence on imported fuels while cutting pollution.

This matters especially for India, which imports energy and spends about 5% of its GDP on oil and gas purchases. Stern argues that domestic renewable energy can improve energy security and support cleaner, more productive cities. He also says India should treat the transition as investment in its future, not as a burden.

Why does dependence on imported oil and gas make India vulnerable to wars, price increases and energy disruptions?

Imported oil and gas expose India to events it cannot control. When conflict threatens producing regions, shipping routes or energy supplies, international prices can rise quickly. India must then pay more for the same fuel, even if domestic demand has not changed. That can weaken energy security and strain the economy.

The article uses the US-Iran war as an example. It pushed up commodity and energy prices, adding to inflationary pressures worldwide and threatening growth. For India, higher fuel costs can increase transport, electricity and production expenses. Those costs can spread through the economy and reduce purchasing power.

Stern says India spends about 5% of its GDP on oil and gas purchases. A steady shift toward domestically available wind, solar and hydropower would reduce exposure to foreign shocks. It could also support cleaner cities and make long-term growth more resilient.

How much of India's GDP is spent on oil and gas purchases, according to Stern?

Stern estimates that oil and gas purchases account for about 5% of India’s gross domestic product. GDP measures the value of goods and services produced in the economy, so this figure shows how significant imported energy is relative to India’s overall economic activity.

The number matters because fuel prices are shaped by global events. The article says the US-Iran war pushed up commodity and energy prices, increasing inflationary pressures and threatening growth. If imported fuel becomes more expensive, India must devote more national income to energy, leaving fewer resources for households, businesses and development.

Stern therefore argues for a steady move toward energy sources available within India, especially wind, solar and hydropower. Reducing the import bill could strengthen energy security while supporting cleaner air and more productive cities. The 5% figure makes the economic case for that transition especially clear.

What are renewable energy sources, and why can wind, solar and hydropower improve India's energy security?

Renewable energy comes from sources that are naturally replenished, including sunlight, wind and flowing water. Solar panels use sunlight, wind turbines use moving air, and hydropower plants use water flow to generate electricity. Unlike finite fossil fuels, these resources do not depend on extracting and importing coal, oil or gas.

Their security benefit comes from location. Stern says wind, sun and hydropower are internal resources available to India. Using more of them can reduce the need to buy fuel from overseas. That limits exposure to wars, disrupted supply routes and sudden international price increases. Renewable electricity can also reduce pollution.

India remains a net energy importer and spends about 5% of GDP on oil and gas purchases. Expanding domestic renewables could therefore support both energy security and cleaner cities. Stern presents the shift as an investment in India’s future, not merely an environmental expense.

What alternatives to fossil-fuel dependence does Stern recommend for India's cities and electricity system?

Stern’s alternative is a connected clean-energy system rather than continued dependence on imported oil and gas. It includes domestic wind, solar and hydropower, supported by smart electricity grids. These technologies can make power systems work better while reducing exposure to fuel-price shocks and supply disruptions.

For cities, he recommends smart public transport and infrastructure that makes low-carbon travel practical. His examples include metros, electric buses, and facilities for cycling and walking. Such systems can reduce pollution and congestion. They can also help people move more efficiently, improving urban productivity and quality of life.

The article links these investments to India’s broader development goals. More than 90 of the world’s 100 most polluted cities are in India, Stern says. Cleaner power and transport could therefore advance both climate objectives and Viksit Bharat. He adds that financial markets will be needed to fund infrastructure with long construction periods.

Why does Stern believe India and the European Union could provide greater global climate leadership?

Stern says climate leadership need not disappear when a major country retreats. With uncertainty over US climate commitments, other influential actors can step forward. He identifies India and the European Union as especially important because cooperation between them could combine political influence, economic capacity and climate action.

The article refers to a meeting where India’s external affairs minister, S. Jaishankar, appeared alongside European leaders. Both sides agreed to work together on climate action and other areas. Stern says an India-EU partnership around climate leadership is possible and would be valuable. It could encourage investment in India’s clean-energy transition.

This opportunity comes as India faces serious pollution and energy-import risks, while China is also moving rapidly on climate action. Stronger India-EU cooperation could support renewable energy, cleaner cities and sustainable infrastructure. Stern presents that partnership as both a diplomatic signal and a practical route to more investment.

How can dependence on oil and gas turn a geopolitical conflict into higher inflation, slower economic growth and pressure on household incomes?

Oil and gas are traded globally, so a conflict that threatens production or transport can affect countries far from the battlefield. If supplies appear less secure, prices rise. Importing economies then pay more for fuel, even when their own consumption has not increased. That is how geopolitical risk becomes an economic shock.

Higher energy costs raise expenses for transport, electricity, farming and manufacturing. Businesses may pass those costs to consumers through higher prices. Households then spend more on essentials, leaving less money for other needs. The article says the US-Iran war has already pushed up commodity and energy prices, adding to inflationary pressure.

At the same time, expensive energy can reduce business activity and household demand, slowing growth. Import-dependent countries also face larger external payments. Stern says this pattern shows why oil and gas dependence is risky. Domestic renewables can reduce exposure to such disruptions over time.

Key Facts:

📌 Stern says energy turmoil strengthens, rather than weakens, the case for climate action.

📌 The US-Iran war has raised commodity and energy prices.

📌 Delaying green investment would be a mistake, according to Stern.

📌 India imports energy and is vulnerable to global energy shocks.

📌 Conflict can sharply increase the cost of imported fuel.

📌 India spends about 5% of GDP on oil and gas purchases.

📌 Oil and gas purchases equal about 5% of India’s GDP.