Launch of India Energy Outlook

Context:

• Recently, India Energy Outlook 2021 has been published by the International Energy Agency (IEA).

About:

• IEA in its forecast highlighted that underpinned by “a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040”, India will overtake the European Union by 2030 to move up to the third position.
• India accounts for nearly one-quarter of global energy demand growth from 2019-40 — the largest for any country.

• Its share in the growth in renewable energy is the second-largest in the world, after China.
• IEA saw primary energy consumption almost doubling to 1,123 million tonnes of oil equivalent as the Gross Domestic Product (GDP) expands to USD 8.6 trillion by 2040.
• India at present is the fourth-largest global energy consumer behind China, the United States and the European Union.
• By 2040, India’s power system is bigger than that of the European Union, and is the world’s third-largest in terms of electricity generation; it also has 30 per cent more installed renewables capacity than the United States.
• By 2040, India is set to account for almost 20 per cent of global growth in industrial value-added, and to lead global growth in industrial final energy consumption, especially in steelmaking.
• A five-fold increase in per capita car ownership will result in India leading the oil demand growth in the world.
• It will become the fastest-growing market for natural gas, with demand more than tripling by 2040.
• India’s continued industrialisation becomes a major driving force for the global energy economy.
• Over the last three decades, India accounted for about 10 per cent of world growth in industrial value-added (in PPP terms).

Oil demand:

• India’s oil demand is seen rising by rise by 74 per cent to 8.7 million barrels per day by 2040 under the existing policies scenario.
• The natural gas requirement is projected to more than triple to 201 billion cubic meters and coal demand is seen rising to 772 million tonnes in 2040 from the current 590.
• To meet its energy needs, India will be more reliant on fossil fuel imports as its domestic oil and gas production stagnates.
• Its net dependence on oil imports — taking into account both the import of crude oil and the export of oil products — increases to more than 90 per cent by 2040 from the current 75 per cent as domestic consumption rises much more than production.

Fossil fuels and coal:

• Natural gas import dependency increased from 20 per cent in 2010 to almost 50 per cent in 2019 and is set to grow further to more than 60 per cent in 2040.
• The dynamics look quite different for coal, where India’s demand for imported coal barely gets back to pre-crisis levels over the next decade.
• India currently accounts for 16 per cent of the global coal trade and many global coal suppliers were counting on growth in India to underpin planned export-oriented mining investments.
• These expectations are now running up against India’s determination to boost domestic production, leaving relative certainty only over India’s requirement to import coking coal for its rising steel production, together with steam coal for those coastal power generation plants that have been designed to receive imported grades.
• IEA has forecast combined import bill for fossil fuels tripling over the next two decades.
• Energy use (in India) has doubled since 2000, with 80 per cent of demand still being met by coal, oil and solid biomass.

ELECTRICITY:

• India will soon become the world’s most populous country, adding the equivalent of a city the size of Los Angeles to its urban population each year.
• To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now.

CONCLUSION:

• As India recovers from a COVID-induced slump in 2020, it is re-entering a very dynamic period in its energy development. Over the coming years, millions of Indian households are set to buy new appliances, air conditioning units and vehicles.
• An expanding economy, population, urbanisation and industrialisation mean that India sees the largest increase in energy demand of any country.