International Energy Agency (IEA) says India is expectedto see the largest jump in energy demand of any country over the next 20 years.The path followed previously where they were dependent upon carbon or fossilfuel use has to be shunned by India.
A special report in the IEA's World Energy OutlookSeries, India Energy Outlook 2021, examines the challenges and opportunitiesfor India as the third largest energy consumer in the world. Dr Fatih Birol,the executive director of IEA in a press release said, “India has maderemarkable progress in recent years, bringing electricity connections tohundreds of millions of people and impressively scaling up the use of renewableenergy, particularly solar.”
Dr Birol added, “What our new report makes clear is thetremendous opportunity for India to successfully meet the aspirations of itscitizens without following the high-carbon pathway that other economies havepursued in the past. The energy policy successes of the Indian government todate make me very optimistic about its ability to meet the challenges ahead interms of energy security and sustainability.”
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The rapid expansion of solar power combined with smartpolicy-making are transforming India’s electricity sector, enabling it toprovide clean, affordable and reliable power to a growing number of householdsand businesses, the report finds. However, as is the case in economies aroundthe world, the transport and industrial sectors – areas like road freight,steel and cement – will prove far more challenging to develop in a sustainablemanner.
More than that of any other major economy, India’s energyfuture depends on buildings and factories that are yet to be built, andvehicles and appliances that are yet to be bought. Based on India’s currentpolicy settings, nearly 60% of its CO2 emissions in the late 2030s will becoming from infrastructure and machines that do not exist today. Thisrepresents a huge opening for policies to steer India onto a more secure andsustainable course.
If India goes down this path, it would need to addressthe critical challenge of the industrial sector through efforts like morewidespread electrification of processes, greater material and energyefficiency, the use of technologies like carbon capture, and a switch toprogressively lower-carbon fuels. Electrification, efficiency and fuelswitching are also the main tools for the transport sector, alongside adetermined move to build more sustainable infrastructure and shift more freightonto India’s soon-to-be-electrified railways.
These transformations – on a scale no country hasachieved in history – require huge advances in innovation, strong partnershipsand vast amounts of capital. The additional funding for clean energytechnologies required to put India on a sustainable path over the next 20 yearsis $1.4 trillion, or 70%, higher than in a scenario based on its current policysettings. But the benefits are huge, including savings of the same magnitude onoil import bills.
India faces a range of evolving energy securitychallenges. Based on today’s policy settings, India’s combined import bill forfossil fuels is projected to triple over the next two decades, with oil by farthe largest component. Domestic production of oil and gas continues to fallbehind consumption trends and net dependence on imported oil rises above 90% by2040, up from 75% today. This continued reliance on imported fuels createsvulnerabilities to price cycles and volatility, as well as possible disruptionsto supply. Energy security hazards could arise in India’s domestic market aswell, notably in the electricity sector in the absence of significant increasesin system flexibility, improvements to the financial health of many electricitydistribution companies, and other reform efforts.
“Government policies to accelerate India’s clean energytransition can lay the foundation for lasting prosperity and greater energysecurity. The stakes could not be higher, for India and for the world,” said DrBirol. “All roads to successful global clean energy transitions go via India.”
“The IEA is committed to supporting India as it makes itssovereign choices on how to build a brighter energy future,” he added. “We arefortunate to have a close working relationship, which is growing stronger bythe day thanks to the recent historic decision by the Government of India andIEA members to enter into a Strategic Partnership less than four years afterIndia joined the IEA family as an Association country. This new major milestonecould eventually lead to full IEA membership for India, which would be agame-changing moment for global energy governance.”