India’s energy demand could rise over 3% annually until 2030: IEA

Published on Oct 27, 2022 11:30 AM IST

IEA said India continues to make great strides with renewables deployment and efficiency policies but the sheer scale of its development means the combined import bill for fossil fuels doubles over the next two decades

The IEA warned the world is in the midst of a global energy crisis. (Twitter)
The IEA warned the world is in the midst of a global energy crisis. (Twitter)
ByJayashree Nandi

India’s energy demand could rise over 3% annually— the largest for any country—until 2030 due to urbanisation and industrialisation, the International Energy Agency (IEA) said in its World Energy Outlook released on Thursday.

IEA, which warned the world is in the midst of a global energy crisis, said India continues to make great strides with renewables deployment and efficiency policies. But the sheer scale of India’s development means that the combined import bill for fossil fuels doubles over the next two decades with oil by far the largest component. “This points to continued risks to energy security,” the analysis said.

Coal generation is projected to continue to expand but its share in electricity generation is projected to fall from just below 75% to 55% over this period. Government programmes such as the Self-Reliant India scheme and strong economics underpin robust growth in renewables and electric mobility, notably for two to three-wheelers.

Renewables meet over 60% of India’s growth in demand for power. They account for 35% of the electricity mix by 2030. Solar PV alone accounts for over 15%, the analysis said. It added coal will still meet a third of overall energy demand growth by 2030 for India.

The analysis said high gas and coal prices because of Russia’s invasion of Ukraine have stoked inflationary pressures and created a looming risk of recession as well as a $2 trillion windfall for fossil fuel producers above their 2021 net income. IEA has projected the peaking of global fossil fuel use and said the ongoing energy crisis could lead to a turning point in the global energy mix.

The share of fossil fuels in the mix has been at around 80% for decades. By 2030, this share could fall below 75%, and to just above 60% by 2050, the analysis said.

Full achievement of all climate pledges would move the world towards safer ground. But there will still be a large gap between today’s climate mitigation goals and preventing a 1.5-degree rise in global temperatures over pre-industrial levels.

The analysis shows a faster decline in emissions compared to the World Energy Outlook 2021, reflecting the additional pledges that have been made earlier this year by India and Indonesia.

“If implemented on time and in full, these additional national commitments – as well as sectoral commitments for specific industries and company targets (considered for the first time in this year’s APS) – keep the temperature rise at around 1.7 degree C,” the analysis said.

India’s updated nationally determined contributions (NDC) were submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in August.

The NDC seeks to reduce the emissions intensity of its GDP by 45% by 2030, from the 2005 level, and to achieve about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.

The second goal will be implemented with the help of the transfer of technology and low-cost international finance including from the Green Climate Fund (GCF). The NDC said this update will help achieve a long-term goal of reaching net-zero emissions by 2070.

The analysis said alongside short-term measures to try to shield consumers from the impacts of the crisis, many governments are now taking longer-term steps. “Some are seeking to increase or diversify oil and gas supplies, and many are looking to accelerate structural changes. The most notable responses include the US Inflation Reduction Act, the EU’s Fit for 55 package and REPowerEU, Japan’s Green Transformation (GX) programme, Korea’s aim to increase the share of nuclear and renewables in its energy mix, and ambitious clean energy targets in China and India.”

India has made progress towards its domestic renewable energy capacity goal of 500 gigawatts (GW) in 2030, and renewables meet nearly two‐thirds of the country’s rapidly rising demand for electricity presently.

Based on the latest policies worldwide, new measures help propel global clean energy investment to more than $2 trillion a year by 2030, a rise of more than 50% from today.

In a statement, IEA said as markets rebalance in this scenario, the upside for coal from today’s crisis is temporary as renewables, supported by nuclear power, see sustained gains. “As a result, a high point for global emissions is reached in 2025. At the same time, international energy markets undergo a profound reorientation in the 2020s as countries adjust to the rupture of Russia-Europe flows.”

IEA executive director Fatih Birol said energy markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being, but for decades to come. “Even with today’s policy settings, the energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable, and more secure energy system.”

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