The International Energy Agency has released the India Energy Outlook 2021 report which examines the opportunities and challenges faced by the planet’s third-largest energy-consuming country as it seeks to recover from the COVID-19 crisis.
The ability of India to ensure affordable, clean and reliable energy for its growing population will be vital for the future development of its economy, according to the report.
Avoiding the kind of carbon-intensive path previously followed by other countries will require strong policies, technological leaps and a surge in clean energy investment, states the report.
India is set to experience the largest increase in energy demand of any country worldwide over the next 20 years as its economy continues to develop and bring greater prosperity to its citizens. The combination of a growing and industrialising economy and an expanding and increasingly urban population will drive energy usage up significantly. This raises the question of how best to meet that swelling demand without exacerbating issues like costly energy imports, air pollution and greenhouse gas emissions.
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Dr Fatih Birol, IEA executive director: “India has made remarkable progress in recent years, bringing electricity connections to hundreds of millions of people and impressively scaling up the use of renewable energy, particularly solar. What our new report makes clear is the tremendous opportunity for India to successfully meet the aspirations of its citizens without following the high-carbon pathway that other economies have pursued in the past. The energy policy successes of the Indian government to date make me very optimistic about its ability to meet the challenges ahead in terms of energy security and sustainability.”
While expanding solar in India is transforming the electricity sector, transport and industrial sectors drag down sustainability efforts
The rapid expansion of solar power combined with smart policy-making are transforming India’s electricity sector, enabling it to provide clean, affordable and reliable power to a growing number of households and businesses, the report finds. However, as is the case in economies around the world, the transport and industrial sectors – areas like road freight, steel and cement – will prove far more challenging to develop in a sustainable manner.
More than that of any other major economy, India’s energy future depends on buildings and factories not yet built, and vehicles and appliances yet to be bought. Based on India’s current policy settings, nearly 60% of its CO2 emissions in the late 2030s will come from infrastructure and machines that do not exist today. This represents a huge opening for policies to steer India onto a more secure and sustainable course.
If India follow this path, it would need to address the critical challenge of the industrial sector through efforts like more widespread electrification of processes, greater material and energy efficiency, the use of technologies like carbon capture, and a switch to progressively lower-carbon fuels. Electrification, efficiency and fuel switching are also the main tools for the transport sector, alongside a determined move to build more sustainable infrastructure and shift more freight onto India’s soon-to-be-electrified railways.
India’s energy plans are future glimpse of what could happen across the world
These transformations – on a scale no country has achieved in history – require huge advances in innovation, strong partnerships and vast amounts of capital. The additional funding for clean energy technologies required to put India on a sustainable path over the next 20 years is $1.4 trillion, or 70%, higher than in a scenario based on its current policy settings. But the benefits would be huge, including savings of the same magnitude on oil import bills.
India faces a range of evolving energy security challenges. Based on today’s policy settings, India’s combined import bill for fossil fuels is projected to triple over the next two decades, with oil by far the largest component. Domestic production of oil and gas continues to fall behind consumption trends and net dependence on imported oil rises above 90% by 2040, up from 75% today. This continued reliance on imported fuels creates a vulnerability to price cycles and volatility, as well as possible disruptions to supply. Energy security hazards could arise in India’s domestic market as well, notably in the electricity sector in the absence of significant increases in system flexibility, improvements to the financial health of many electricity distribution companies, and other reform efforts.
“Government policies to accelerate India’s clean energy transition can lay the foundation for lasting prosperity and greater energy security. The stakes could not be higher, for India and for the world. All roads to successful global clean energy transitions go via India,” said Birol.
Learn more about the report.