India set to see largest energy demand spike: IEA

Business |  IANS  | Published :

New Delhi, Feb 9 (IANS) 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, a new report by the International Energy Agency (IEA) said on Tuesday.

The India Energy Outlook 2021, a special report in the IEA's World Energy Outlook series, 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 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 IEA Executive Director Fatih Birol.

"What our new report makes clear is the 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."

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, the report finds.

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.

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 per cent 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 $1.4 trillion, or 70 per cent, 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.

India faces a range of evolving energy security challenges. Based on today's policy settings, India's combined import bill for fossil fuels is projected to triple over the next two decades, with oil by far the largest component.

Domestic production of oil and gas continues to fall behind consumption trends and net dependence on imported oil rises above 90 per cent by 2040, up from 75 per cent today.

This continued reliance on imported fuels creates vulnerabilities to price cycles and volatility, as well as possible disruptions to supply.

Energy security hazards could arise in India's domestic market as well, notably in the electricity sector in the absence of significant increases in system flexibility, improvements to the financial health of many electricity distribution companies, and other reform efforts.

Responding to the IEA's India Energy Outlook 2021, Ashish Fernandes, CEO, Climate Risk Horizon, told IANS: "The IEA report, coming on the heels of the glacial flood disaster in Uttarakhand, shows that India can and must aggressively kick its fossil fuel dependence, to rein in import dependence and mitigate the damage being done by climate change.

"The good news is the IEA confirms that we now have cost-effective technologies to decarbonise large parts of the economy by 2050. The bad news is that India is still building new coal power plants (approximately 30 GW under construction today), and keeping old, inefficient and expensive ones running, at a cost to health and economic competitiveness."








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