NEW DELHI: The timelines for peak fossil fuel consumption—including oil and coal in both India and globally—may be delayed further amid geopolitical tensions that are pivoting the focus towards energy security and countries deviating from their climate commitments, Shell plc's chief economist Mallika Ishwaran said.
While decarbonization in road transport is under way, there is little progress in aviation, marine and steel, which would delay the energy transition journey and eventually, peak oil timelines, Ishwaran said in an interview.
"We are seeing oil persisting. Electrification of road transport happens anyway, and that displaces anywhere between 40% to 60% of oil demand in road transport, so that's the significant displacement. But what we don't see is displacement in the hard-to-abate sectors. Aviation, marine, even in the [heavy] industry, that is really sticky and difficult to move, unless you have a lot of policy effort and intent," she said.
Peak fossil fuel consumption is the point at which global demand for coal, oil and natural gas reaches its maximum level and begins to plateau or decline. It is considered a prerequisite for achieving the goals of the Paris Agreement, which seeks to reduce greenhouse gas emissions and limit global warming.
According to Shell’s 'Archipelagos' and 'Surge' scenarios, which reflect current global pressures, peak oil is expected in the early 2040s in India and globally, a few years before that in the 2030s, Ishwaran said, citing the company’s report on oil market projections, titled 'India’s energy transition in a security-focused age,' released on Thursday.
Several estimates including those by the International Energy Agency had projected peak oil globally by 2030 and in India in the mid-to-late 2030s.
The projections come when the US administration under President Donald Trump has withdrawn from global climate commitments and alliances such as the Paris Agreement and the International Solar Alliance and announced plans to move towards more hydrocarbon production.
India’s imports
India is the third-largest consumer and importer of crude oil and almost 90% of its oil requirements are met through imports. In FY25, India imported oil worth $161 billion.
The country is expected to increase its imports with its total petroleum product consumption projected to rise by 4.65% to a record 252.9 million metric tonnes in FY26. India is also the world’s fourth-largest refiner with 258.1 million tonnes per annum (mtpa) of refining capacity, which is expected to reach 309.5 mtpa by 2030.
Globally, oil demand is expected to rise going ahead. The International Energy Agency, in its latest outlook released on 12 February, said global oil demand is likely to rise by 850,000 barrels per day in 2026. Currently, global demand stands at about 105 million barrels per day.
"In India, petrol demand peaks between 2035 and 2040 and diesel demand peaks between 2040 and 2045 because trucks take longer to decarbonize, so diesel will be longer," the Shell chief economist said.
Peak demand for coal, another key fossil fuel largely used in power generation and steel manufacturing, is also expected to be delayed beyond the 2040s. India plans to expand its coal-based power generation capacity by 97 GW over the next few years in addition to the ambitious non-fossil targets.
"From a coal perspective, earlier we were thinking that the peak will be happening more around the late 2030s, 2040s. But obviously, it's more and more clear that, given security being a very primary factor, 2040 to 2050 is still stable and the decline only starts happening after 2050," Mansi Tripathy, country chair of Shell India, said, citing the latest projections.
Energy demand
Shell's latest projections, based on different scenarios, show that India’s energy demand has grown almost 40% over the past decade due to rapid economic and population growth. The country’s role in global energy is expected to expand, with demand surpassing the US in the 2040s and China in the 2060s.
However, it noted that growth in the green power front shows that the pivot from imported (fossil-based) energy to domestic (renewables-based) energy is helping deliver energy independence and security while supporting decarbonization. According to the ministry of power, the total installed generation capacity was 513.73 GW as of 31 December, of which 266.78 GW, or 51.93%, was non-fossil fuel sources.
It said that while the share of fossil fuels in the overall energy basket will decline during the energy transition, the absolute volume of fossil fuels will continue to increase under the 'Archipelagos' and 'Surge' scenarios.
Shell has outlined three scenarios that are influenced by geopolitics, digitalisation and climate needs: Archipelagos, Surge and Horizon.
The Archipelago scenario depicts a world reacting to geopolitical and economic tensions, leading to new global alignments and collaborations. This creates new opportunities for India, supported by its manufacturing capacity, young workforce and dynamic economy.
In the Surge scenario, AI and digitalization will boost productivity, but India is likely to adopt a measured approach to avoid rapid job displacement and allow time to build the needed digital infrastructure, skills and governance.
Horizon is a normative or ideal scenario that reflects on climate and environmental security. It illustrates a possible pathway to bring the world in line with the goal of the Paris Agreement and achieve net zero emissions globally by 2050 and in India by 2070. Emphasizing the need for curbing carbon emissions and carbon removal, Shell said in the report that carbon removal becomes essential across all scenarios, whether through geological storage or natural sinks.
"Even in the Horizon scenario, achieving decarbonization requires significant carbon removal capacity by 2050," it said.