India will be the main driver of rising demand for energy over the next two decades, accounting for 25 per cent of global growth, and is set to overtake the European Union as the world’s third-biggest energy consumer by 2030, the International Energy Agency (IEA) said.
India’s energy consumption is expected to nearly double as the nation’s gross domestic product expands to an estimated $8.6 trillion by 2040 under its current national policy scenario, the IEA said in its India Energy Outlook 2021 released on Tuesday.
“This is underpinned by a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040,” said the IEA, the energy agency and policy adviser for members of the Organisation for Economic Co-operation and Development.
India’s growing energy needs will make it more reliant on fossil fuel imports as its domestic oil and gas production has been stagnant for years despite government policies to promote petroleum exploration and production and renewable energy.
India’s oil demand is expected to rise to 8.7 million barrels per day (bpd) in 2040 from about 5 million bpd in 2019, the IEA said, while its refining capacity will reach 6.4 million bpd by 2030 and 7.7 million bpd by 2040, from 5 million bpd.
It will be the world’s third-biggest energy consumer, behind China and the United States, by 2030.
The world’s second-biggest net oil importer, behind China, currently imports about 76 per cent of its crude oil needs. That reliance on overseas oil is expected to rise to 90 per cent by 2030 and 92 per cent by 2040, the IEA said.
Rising oil demand could double India’s oil import bill to about $181 billion by 2030 and nearly treble it to $255 billion by 2040 compared with 2019, the IEA said.
India, a signatory to the Paris climate accord, wants to boost power generation through renewables, mainly solar, and raise the share of natural gas in its energy mix to 15 per cent by 2030 from 6.2 per cent currently.
The share of solar energy in India’s power generation could equal coal-fired output by 2040, the IEA said. Coal currently dominates India’s electricity sector, accounting for over 70 per cent of overall generation with only about 4 per cent produced through solar.
The world’s fourth-largest LNG importer, which ships in about half of its natural gas needs by tanker currently, is spending billions of dollars to build infrastructure to boost use of the cleaner fuel.
Liquefied natural gas (LNG) imports are expected to quadruple to 124 billion cubic meters (bcm), or about 61 per cent of overall gas demand by 2040, IEA said. That would be up from imports of 76 bcm, or about 58 per cent of gas consumption by 2030.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.