Why Resilience Is Becoming the New Currency of Energy 

Energy security has always been about keeping the lights on at a price the economy can bear. For decades, that meant buying energy cheaply, sourcing it from wherever the arithmetic worked best, letting markets do their job and trusting that the plumbing of globalisation would hold. That logic made sense in the world the Washington Consensus imagined. It makes considerably less sense in the one we actually inhabit.

The architecture of that older world is visibly fraying, marked by a dysfunctional World Trade Organisation, intensifying great-power rivalry and accelerating climate change. Against this backdrop, efficiency remains necessary but is nowhere near sufficient as an organising principle for energy policy. Three other dimensions now matter just as much: geopolitical risk, climate exposure and the degree to which a country can rely on itself.

The US-Israel military strikes on Iran, followed by Iran’s retaliatory targeting of Gulf military bases and allied energy infrastructure, offered a live demonstration of what geopolitical risk means in practice. When the Strait of Hormuz, through which a significant share of global oil and gas moves, came under threat, markets reacted immediately. This was not an isolated shock but another tremor in markets already unsettled by the Russia-Ukraine conflict.

Climate change operates on a slower fuse but is no less consequential. Continued fossil fuel dependence creates stranded-asset risks that will eventually have to be absorbed by someone. Renewables address both problems simultaneously, which is precisely what makes them strategically significant beyond their environmental credentials.

Portfolio Logic
Harry Markowitz developed Modern Portfolio Theory to address a deceptively simple question: how does an investor achieve the best possible return without taking on unnecessary risk? The answer, diversification across assets whose prices do not move in lockstep, translates directly into energy policy.

A country’s energy system is effectively a portfolio made up of oil, gas, coal, nuclear power and renewables such as solar and wind. The goal should not simply be to secure the cheapest energy at a given moment. It should be to build a system capable of absorbing shocks without destabilising the wider economy.

Overdependence on one geography or one fuel source may appear commercially rational during calm periods, but it becomes a liability during crises. Clean energy has a particular structural advantage here: its costs do not move in tandem with oil prices. Expanding renewable capacity therefore reduces overall volatility rather than merely replacing one exposure with another.

India imports over 85% of its crude oil requirements. Between 45% and 50% comes from the Middle East, down from more than 60% as purchases have shifted towards Russia and the United States. For gas, the Middle East supplies roughly 60% of LNG imports and around 90% of LPG. Long-term Gulf contracts have historically offered stability, geographical proximity and lower freight costs.

Middle Eastern crude also suits the configuration of Indian refineries, while domestic production has never been sufficient to alter the basic arithmetic.

What has changed is the environment in which those choices must now be made. A region that supplies nearly half of India’s crude and the large majority of its gas imports is also one where geopolitical risk remains persistently elevated. The efficiency argument for concentration has not disappeared, but the resilience argument against it has grown considerably stronger.

Strategic Lessons
Japan is worth examining closely because it sits at the opposite end of the resource spectrum from where a country might reasonably expect to build energy security. It possesses virtually no domestic fossil fuel resources. Yet its Strategic Energy Plan, revised regularly since 2014, has produced a system drawing on oil, LNG, coal, nuclear energy and an expanding renewables base, with supply sourced across multiple geographies.

After the Fukushima disaster pushed nuclear power into retreat, Japan did not narrow its options. It diversified further. LNG imports now come from Australia, the United States and South-East Asia. Strategic petroleum reserves are among the world’s largest, while overseas energy asset holdings span several regions.

Other countries have followed different routes to similar outcomes. Spain expanded wind and solar aggressively. Brazil invested heavily in biofuels. China pursued a large-scale renewable buildout and now accounts for nearly 40% of electricity generation from renewable sources.

India, too, has made significant progress in renewable energy. Much of this transition has understandably been framed around climate commitments. Yet the strategic argument for accelerating it may now be even more compelling than the environmental one.

Greater renewable capacity reduces exposure to external commodity shocks, lowers import dependence and protects foreign exchange reserves. It also creates opportunities to strengthen domestic manufacturing ecosystems.

That said, India must avoid falling into another dependency trap. Reliance on imported fossil fuels should not simply be replaced by reliance on imported clean technologies or critical minerals. China’s dominance across large parts of the green energy supply chain demonstrates how strategic vulnerabilities can quietly reappear in new forms.

India’s Production-Linked Incentive schemes are an important beginning, but long-term resilience will require far deeper investments in technology, manufacturing scale and industrial capability.

Stronger regional energy cooperation under SAARC and BIMSTEC, alongside a more deliberately diversified portfolio of overseas energy assets, would help complete the picture.

Countries that continue treating energy purely as an exercise in cost optimisation may discover, often during moments of crisis, that efficiency without resilience comes at a far greater price. 

*Views are personal