India is set to experience the largest increase in energy demand in the world over the next 20 years as its economy continues to develop, according to a report by International Energy Agency.

The India Energy Outlook 2021 — a special report in the IEA’s World Energy Outlook — 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 combination of a growing and industrialising economy and an expanding and increasingly urban population will drive energy use higher, raising the question of how best to meet that swelling demand without exacerbating issues such as costly energy imports, air pollution and greenhouse gas emissions.

Opportunity to boost clean energy

“India has made remarkable progress in recent years, bringing electricity connection to hundreds of millions of people and impressively scaling up the use of renewable energy, particularly solar,” said Dr Fatih Birol, IEA Executive Director. “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 rapid expansion of solar power combined with smart policy-making is 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.

Based on India’s current policy settings, nearly 60 per cent of its CO2 emissions in the late 2030s will be coming 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.

The road ahead

The country would need to address the critical challenge of the industrial sector through efforts such as 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.

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 per cent higher than in a scenario based on its current policy settings. But the benefits are huge, including savings of the same magnitude on oil-import bills.

“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,” said Birol. “All roads to successful global clean-energy transitions go via India.”

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