India to see Largest Increase in Energy Demand in the World by 2040: IEA

India is set to experience the largest increase in energy demand of any country over the next 20 years as its economy continues to develop

India’s ability to ensure affordable, clean and reliable energy for its growing population will be vital for the future development of its economy, but 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, according to a new report released today by the International Energy Agency (IEA). The ‘India Energy Outlook 2021’ report 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. 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 report highlights that 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 like costly energy imports, air pollution and greenhouse gas emissions.

“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,” said Dr. Fatih Birol, IEA Executive Director. There “is a 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.”

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The report goes on to add that 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. 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.

The report suggests that more than that of any other major economy, India’s energy future depends on buildings and factories that are yet to be built, and vehicles and appliances that are yet to be bought. Based on India’s current policy settings, nearly 60 percent 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.

If India goes down 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.

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 USD 1.4 trillion, or 70 percent, 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.