India has the potential to initiate policies and investments to accelerate clean energy transition to support the country’s forecast largest increase in energy demand of any country over the next 20 years, according to the International Energy Agency's (IEA) India Energy Outlook 2021 report on Tuesday.
The special report in the IEA's World Energy Outlook series exams the opportunities and challenges faced by the planet's third-largest energy-consuming country as it seeks to recover from the COVID-19 crisis.
The report highlights the challenge that India will face in its ability to ensure affordable, clean and reliable energy for its growing population for the future development of its economy while avoiding the kind of carbon-intensive path previously followed by other countries.
The IEA says that this will require strong policies, technological leaps and a surge in clean energy investment at a time when the combination of a growing and industrializing economy, an expanding and increasingly urban population will drive energy use higher.
This, the IEA says, raises the question as to how best to meet this swelling energy demand without exacerbating issues like costly energy imports, air pollution and greenhouse gas emissions.
According to the report, the rapid expansion of solar power in India, together with policy-making are transforming the country's electricity sector to provide clean and reliable power.
IEA's Executive Director Fatih Birol acknowledged India’s remarkable progress in recent years to bring electricity connections to hundreds of millions of people by impressively scaling up the use of renewable energy, particularly solar.
"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," he noted.
He said that there would be challenges in developing sustainable development in the transport and industrial sectors areas like road freight, steel and cement, as is the case in other economies around the world.
India's energy future, more than that of any other major economy, depends on buildings and factories that are yet to be built and vehicles and appliances that are yet to be bought, he added.
- Fossil fuel import bill to triple in 20 years
Nearly 60% of India's CO2 emissions in the late 2030s, based on current policy settings, will come from infrastructure and machines that do not exist today.
The IEA said 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," the report read.
The required transformation in monetary terms to put India on a sustainable path over the next 20 years is $1.4 trillion, or 70% higher than in a scenario based on its current policy settings.
According to the report, based on today’s policy settings, India’s combined import bill for fossil fuels is projected to triple over the next 20 years, with oil by far the largest component. The IEA forecasts that domestic production of oil and gas will continue to fall behind consumption trends and a net dependence on imported oil will rise above 90% by 2040, up from 75% today.
The report said that this continued reliance on imported fuels would create vulnerabilities to price cycles and volatility, as well as possible disruptions to supply.
Birol said government policies to accelerate India's clean energy transition would lay the foundations for lasting prosperity and greater energy security.
"The stakes could not be higher, for India and for the world. All roads to successful global clean energy transitions go via India," he concluded.
By Nuran Erkul Kaya and Gulsen Cagatay