Active Stocks
Fri Mar 01 2024 15:59:51
  1. Tata Steel share price
  2. 150.00 6.46%
  1. State Bank Of India share price
  2. 769.30 2.67%
  1. Tata Motors share price
  2. 977.20 2.78%
  1. ITC share price
  2. 409.50 0.74%
  1. ICICI Bank share price
  2. 1,086.90 3.18%
Business News/ Opinion / Five charts that show how India’s dependence on fossil fuels will increase

Five charts that show how India’s dependence on fossil fuels will increase

The IEA expects India's oil demand to rise the fastestby 6 million barrels per day to 9.8 mb/d in 2040

The IEA expects global energy demand to grow by a third from the current levels by 2040. Photo: Reuters Premium
The IEA expects global energy demand to grow by a third from the current levels by 2040. Photo: Reuters

China has driven the world energy market in recent years. However, the International Energy Agency’s (IEA) World Economic Outlook (WEO) 2015 projects that India will see the fastest growth in energy demand by 2040 as China effects structural changes to its economy, such as moving towards services.

The IEA expects global energy demand to grow by a third from the current levels by 2040. India’s is expected to double even after energy efficiency gains—the overall energy intensity of India’s economy is expected to reduce from 0.11 tonnes of oil equivalent (toe) per $1,000 of gross domestic product (GDP) in 2013 to 0.05 toe per $1,000 of GDP in 2040. Then, India’s energy use will more than double to reach 1,900 million tonnes of oil equivalent (Mtoe). Led by coal, the share of fossil fuels in India’s energy mix will rise to 81% by 2040 from 72% in 2013.

India’s coal consumption will reach 1,300 million tonnes of coal equivalent (Mtce) in 2040. This will be 50% more than the combined demand of all Organisation for Economic Cooperation and Development (OECD) countries and second only to China. Power generation and industrial usage will account for most of this consumption.

The IEA expects India’s oil demand to rise the fastest—by 6.0 million barrels per day to 9.8 mb/d in 2040. It projects that oil production will fall behind demand, pushing oil import dependence above 90% by 2040.

The transport sector alone is expected to account for two-thirds of the rise in oil demand with 260 million additional passenger cars, 185 million new two- and three-wheelers and nearly 30 million new trucks and vans being added to the vehicle stock. The shift from fuelwood to LPG for cooking in households will also drive this demand.

Although India’s energy mix won’t change much, renewables and nuclear will grow very fast, albeit from a very small base. Within renewables, solar and wind will emerge as a major provider of energy.

What are the key factors that will drive this rise in energy use?

Urbanisation is one factor. The IEA expects an extra 315 million people to move to towns and cities by 2040. The agency also factors in India becoming the most populous country by 2040 and its economy growing by five times by 2040.

The construction industry will expand with the rise in urbanization: its constituent sectors such as steel and cement are particularly energy intensive. The infrastructure investment called for by programmes such as the Smart Cities programme will also hike energy usage. A shift to manufacturing, as envisaged by the Make in India programme, will also have an impact, as manufacturing industries consume more energy than services sectors.

The IEA report warns that India must prepare for the fallout of the rise in energy consumption, chiefly air pollution and water stress.

To what extent will India’s emission reduction pledges help reduce energy demand?

If there is no change from current policies, India’s total primary energy demand would rise to 2,091 Mtoe in 2040. But under the so-called New Policies scenario (which is IEA’s baseline scenario and the basis for the numbers in this story), it will be 1,908 Mtoe, mainly because of gains in energy efficiency.

As part of its emission reduction commitments, India has promised to ensure that renewables would account for 40% of electricity generated in the country by 2030. At this rate, the IEA calculations show that renewables will account for 43% of all power generated in India in 2040.

Still, under all scenarios, India’s energy-related carbon dioxide (CO2) emissions are higher in 2040 than in 2013 and the country will be the single-largest contributor to the rise in emissions over this period. By then, India’s emissions per capita will converge towards the global average of 3.2 tonnes per capita versus a global average that edges downwards to 4.1 tonnes of CO2 per capita.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
More Less
Published: 13 Nov 2015, 12:25 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App