The International Energy Agency (IEA) recently unveiled the India Energy Outlook 2021 Report, shedding light on the energy landscape throughout the country. This report uncovers both opportunities and challenges that India may encounter as it strives to meet the energy needs of its growing population, while maintaining affordability and sustainability.
The Rise of India as a Major Energy Consumer
By 2030, India is projected to overtake the European Union and become the world’s third-largest energy consumer. Today, India ranks fourth behind China, the United States, and the European Union. As India’s GDP potentially expands to an estimated $8.6 trillion by 2040, its energy consumption is set to nearly double. Due to the global pandemic, however, a previous prediction of a 50% increase in energy demand between 2019 and 2030 has now been revised to approximately 35%.
Industrialisation as a Major Driving Force
India has contributed to 10% of the world’s Industrial Value Added growth over the last three decades. By 2040, this contribution is expected to double to 20%, with India leading global growth in industrial final energy consumption, particularly in steelmaking.
Increasing Dependence on Energy Imports
Despite the governmental efforts to promote petroleum exploration and renewable energy production, India’s domestic oil and gas production has remained relatively stagnant. This, combined with growing energy needs, implies that India will inevitably become more dependent on fossil fuel imports. Specifically, the country’s rising oil consumption could cause its oil import bill to double, reaching about $181 billion by 2030, and nearly triple to $255 billion by 2040.
Trends in Oil, Gas, and Coal Demand
India’s oil demand is expected to increase by 74% by 2040, mainly driven by a significant increase in per capita car ownership. Consequently, India’s net dependence on oil imports could increase from 75% currently to over 90% by 2040. Similarly, India is forecasted to become the fastest-growing market for natural gas as demand is expected to triple by 2040. On the other hand, despite the dominant role of coal in India’s energy sector at present, the country may witness a gradual shift towards renewable energy sources.
Growing Role of Renewable Energy
Following China, India has the second-largest share in global growth in renewable energy. As such, India is poised to play a pivotal role in the transition towards cleaner energy resources.
The Role of the International Energy Agency (IEA)
Established in 1974, the IEA is an intergovernmental organisation based in Paris, France. The agency primarily focuses on policies related to economic development, energy security, and environmental protection, also known as the 3 E’s of the IEA. Though India became an associate member only in 2017, it has been collaborating with the IEA for much longer and recently signed a Strategic Partnership Agreement to bolster cooperation in areas of global energy security, stability, and sustainability.
Progressing Towards a Sustainable Energy Future
India is uniquely positioned to lead the way for developing economies in charting a path towards low-carbon, inclusive growth. Already a global leader in solar power, India has immense potential in harnessing solar energy combined with batteries for its future energy needs. However, to fully realise this potential, India must implement a suite of technologies and policies, while ensuring job creation in new industrial sectors and inclusivity, even in regions that heavily rely on coal today.
