Why India Will Drive Global Energy Demand Over Next Decade

India is poised to experience more energy demand growth than any other country over the next decade due to its large population and rising demand from all sectors, according to a new report by the International Energy Agency.

The World Energy Outlook 2024 report also said that coal will remain a major part of India’s energy mix for the next few decades, with the country projected to add about 60 gigawatts of new coal-fired power capacity by 2030, even though some older coal plants will retire.

India overtook China in 2023 to become the most populous country in the world, even as its fertility rate dropped below the replacement level.

“The population size and the scale of rising demand from all sectors mean that India is poised to experience more energy demand growth than any other country over the next decade,” the IEA report said.

According to the Stated Policies Scenario (STEPS), the report said that India is on track to add over 12,000 cars daily to its roads from now until 2035. Built space is expected to increase by over 1 billion square metres annually, which is larger than the total built space in South Africa today.

India’s iron and steel production is on track to grow by 70 per cent by 2035, cement output is set to rise by nearly 55 per cent, and the number of air conditioners is projected to increase by more than 4.5 times, resulting in electricity demand from air conditioners exceeding Mexico’s total expected electricity consumption by that year.

The total energy demand in India is projected to increase by nearly 35 per cent, and its electricity generation capacity is likely to triple to 1,400 GW by 2035.

The IEA said while India is committed to achieving net zero emissions by 2070, coal will continue to play a significant role in the energy mix for the next few decades.

India is expected to add about 60 gigawatts of new coal-fired power capacity by 2030, even though some older coal plants will retire. Coal-based electricity generation is projected to increase by over 15 per cent, the report stated.

Coal provided 40 per cent of the energy used in industries like steel, cement, and manufacturing in 2023. By 2035, coal use in industry is expected to grow by 50 per cent, according to the report.

India, the world’s second-largest consumer of coal for electricity generation after China, saw the share of coal-fired power generation rise to 75 per cent in 2023-24, up from 71 per cent in 2019-20.

According to the IEA, while coal consumption fell in Europe and the US in 2023, it rose by 8 per cent in India and 5 per cent in China.