India’s influence on global energy trends in the next 25 years will be significant.
According to a recently published International Energy Agency report titled “India Energy Outlook” approximately 20% of the world’s population calls India home and it is expected that the country will be responsible for the largest percentage (25%) of the projected rise in global energy demand between now and 2040. Given that energy use in many developed countries is decreasing and China is fueling its development with lower energy intensity, India will significantly influence global trends.
India’s energy needs will be heavily influenced by the additional 315 million people that will live in cities by 2040. Such an increase is likely to accelerate the switch to modern fuels, the increase in vehicle and appliance ownership and the demand for construction materials. The residential construction sector in particular will transition from solid biomass (66% of the current total) to electricity and oil which are projected to constitute 45% and 15% of the 2040 total respectively.
Given the sheer volume of building construction needed to house 315 million more people by 2040, India has a fantastic opportunity to expand and tighten energy efficiency standards and ensure that future needs (particularly cooling) are met without unduly stressing energy supply infrastructure. The Smart Cities program which was launched this year emphasises integrated planning and the provision of urban services (eg. power, water, waste, public transport) although it has to confront the reality of delivery across a variety of branches and levels of Government if it is to be successful.
The need for new infrastructure in India will underpin strong demand for goods that are largely energy intensive, and the rise in vehicle ownership will ensure that the demand for transport continues to increase rapidly. Industry is predicted to be the heaviest user of energy in India by 2040, consuming more than half of the total energy use in India as a result of the growth in construction materials including steel, cement and bricks. While an innovative energy efficiency certification program can decrease the growth of energy intensive industries, raising awareness and financing improvements in other sectors such as the brick industry (which currently consists of in excess of 100,000 small producers) is a significant challenge.
Adding more than 250 million passenger vehicles, 185 million two and three wheelers and 30 million trucks and vans to the Indian vehicle fleet by 2040 will account for an anticipated 66% increase in oil demand. Policy challenges with respect to transport include improving road infrastructure while still encouraging rail transport (via dedicated freight corridors) and providing effective public transport systems (such as Delhi’s metro rail system).
By 2040 India’s power infrastructure will need to virtually quadruple to keep pace with electricity demand that is increasing by approximately 5% each year. The current financial standing of many distribution companies in India as a result of low average end user tariffs, technical losses in the network and frequent non payment for electricity is a significant structural weakness.
This has created uncertainty for generators and resulted in much needed investment in network infrastructure being withheld. Regular load shedding in many parts of India results in those individuals and families that can afford back up options having to invest in them, whilst those who can’t afford such options are subjected to poor levels of service. Over the next 25 years, it is anticipated that approximately 600 million more people will consume electricity in India.
More than half of the new electricity generation capacity in India by 2040 will be sourced from renewables and nuclear energy. To keep pace with electricity demand, nearly 900 GW of additional capacity will be required, and there will be a strong reliance on solar and wind power (representing 340 GW in total) on the basis of uncertainty regarding the pace at which large dams or nuclear plants can be built. Decentralised rooftop solar and off grid projects area anticipated to account for another 90 GW.
By 2040 India is expected to be the world’s second largest coal producer, however within 5 years India will become the world’s largest coal importer. Coal production growth in India is constrained by a number of issues including land use and permitting and infrastructure bottlenecks. Coal demand by 2040 in India is expected to grow by 250% from 2015 levels, and this is expected to be the main reason that energy related carbon dioxide (CO2) emissions will rise to 5 Gigatonnes within 25 years. However, relative to the size of the Indian economy, CO2 emissions from energy usage will align with India’s INDC pledge to reduce its emissions intensity by 33-35% below 2005 levels by 2030. On a per capita basis, India’s emissions are anticipated to be 20% below the world average by 2040.
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