For India’s Non-Renewable Energy Demand, Things Will Get Worse Before They Get Better: Report

Kochi: India’s energy requirements are increasing and will peak in the coming decade despite a growth in renewables, as per the World Energy Outlook (WOE) report for 2022, published on October 27 by the International Energy Agency (IEA).

However, governmental policies across the world – including in India – offer hope and, if implemented in full and on time, could possibly limit global warming to around 1.7 degrees Celsius by the year 2100.

Commenting on the report, energy scientists in India noted that while there could be a rise in the demand for coal and gas in the short term, high prices could force countries to build cheap, clean energy alternatives. Continuing to invest in clean energy while also ensuring that the transition is just and equitable will be important, as will finance, they added.

Climate pledges and energy

Countries have to announce climate pledges to rein in global warming to 1.5°C as part of the internationally binding Paris Agreement, 2015. These pledges are usually in the form of Nationally Determined Contributions (NDC), which are long-term goals such as, for example, providing clear timelines on achieving ‘Net Zero’ (when carbon emissions produced are balanced, or compensated, by emissions that are sequestered by activities such as increasing forest cover).

These goals detail how countries plan to decrease their carbon emissions and adapt to climate impacts. NDCs are implemented on the ground through governmental policies that help transition to cleaner alternatives, such as shifting from fossil fuels to cleaner energy sources, including solar or wind power.

The IEA, an autonomous intergovernmental organisation, analyses data on energy use and requirements and provides policy recommendations and solutions to countries for sustainable energy growth. The IEA’s World Energy Outlook report, published annually, captures the world’s energy trends and transitions and predicts future trajectories.

The report takes into account current policy measures on energy (called the Stated Policies Scenario; or STEPS), which shows the trajectory implied by current settings. Its ‘Announced Pledges Scenario’ (APS) assumes that all aspirational targets announced by governments are met on time and in full, including their long‐term net zero and energy access goals. The Net Zero Emissions by 2050 (NZE) Scenario analyses how nations will limit global warming to 1.5°C, together with universal access to modern energy by 2030.

This year’s report, published on October 27, says that while Russia’s invasion of Ukraine has caused a global energy crisis and is being seen as a setback to tackle climate change, it may also be an opportunity because of the governmental responses that have followed, such as the US’s Inflation Reduction Act which promotes clean energy, and India and China’s ambitious clean energy targets.

India promised to reduce the emissions intensity of its Gross Domestic Product by 45% from 2005 levels by the year 2030, and achieve about 50% cumulative non-fossil fuel electric power by 2030 as part of its updated NDC in August this year.

India’s steps towards establishing a carbon market and boosting the energy efficiency of buildings and appliances will also help, the report said. Such changes in governmental policies across the world are “fast‐tracking the emergence of a clean energy economy”, as per the report. Renewable energy, supported by nuclear power, is seeing “sustained gains”.

“It is encouraging to see that renewable energy being blamed for the current energy crisis situation has been debunked,” said Vibhuti Garg, director, South Asia, Institute for Energy Economics and Financial Analysis, commenting on the report. “While there could be short term hiccups leading to [the] rise of coal and gas, but (sic) high prices will force countries to build cheap, clean energy alternatives.”

India, coal and energy

As per the report, there is an increase in energy demand, primarily in India, Southeast Asia, Africa and West Asia. India will have the highest population by 2025. This, along with urbanisation and industrialisation, will spur a huge rise in energy demand of more than 3% per year from 2021-2030, as per the STEPS scenario. India will witness the “largest increase in energy demand of any country”.

With just over 10% of global coal consumption, India is also the world’s second largest coal consumer today, the report said. “Coal demand in India rose rapidly between 2010 and 2019, mainly as increases in electricity demand were largely met through coal fired power. Coal use in India dropped by 7% in 2020 due to the pandemic, but increased by 13% in 2021, therefore already surpassing 2019 levels,” it noted.

In India, the demand for coal will continue to rise, as per the report. This demand will peak anywhere between the late 2020s and early 2030s. However, the peak will be followed by a steep decline in coal demand as the deployment of renewables in the power sector picks up.

Government programmes such as the Gati Shakti National Master Plan and the Atmanirbhar Bharat Abhiyaan could promote a “robust growth” in renewables and electric mobility, notably for two/three wheelers. And by 2030, renewables will meet more than 60% of the growth in demand for power, and account for 35% of the electricity mix, with solar PV alone accounting for more than 15%.

However, coal will still meet a third of overall energy demand growth by 2030, and oil, mainly for transport, another quarter, the report said. As per the APS, more rapid progress in deploying low emissions alternatives in power, industry and transport sectors in particular means that India could be within reach of its goal to achieve net zero emissions by 2070.

“The fact that the STEPS scenario shows a peak or plateau for global demand for fossil fuels is a good sign to hold onto in this important decade for climate action,” said Deepak Krishnan, associate director, energy, World Resources Institute (WRI), India.

“At the same time, it is not going to be enough. The WEO also acknowledges that. All stakeholders need to now work in a concerted manner to achieve at the very least the Announced Pledges Scenario (APS) pathway and ideally the Net Zero Emissions (NZE) scenario,” he said.

This also means that multiple pieces of the puzzle have to fall in place, he added. These include secure and sustainable supply chains for energy transition technologies such as batteries, electrolysers, as well as “consistently rising investment in clean energy while ensuring that the transition is just and equitable”.

Implementing pledges is crucial

According to the WEO, 2022, while achieving all climate pledges would “move the world towards safer ground”, there still remains a huge gap between the climate pledges made currently and their ability to limit global warming to 1.5°C by 2100. However, additional pledges made over the past year, “notably by India and Indonesia”, will show a faster decline in emissions by 2050, as per the report.

If national commitments, including these additional pledges along with sectoral targets for specific industries, are implemented fully and on time, the temperature rise could be kept at around 1.7 °C. But the report also noted that “it is easier to make pledges than to implement them”. And even if countries achieve these pledges, there is still a long way to go to curb emissions to 23 Gt by 2030 and achieve net zero by 2050 in order to limit global warming to 1.5°C

Currently, low‐emissions sources account for around 40% of electricity generation, with 30% coming from renewables and another 10% from nuclear, as per the report. But with an accelerating deployment of solar PV and wind power, these renewables will account for 45% as per the STEPS.

“​​Within ten years, if countries are taking the necessary action to deliver on their climate pledges, the world will be deploying around 210 gigawatts (GW) of wind capacity each year and 370 GW of solar,” the report noted.

Updated NDCs and net zero emissions pledges made over the last year mean a bigger reduction in emissions than the World Energy Outlook report of 2021 predicted. As per the report, “the most significant” of these is India’s announcement of a 2070 net zero emissions target (announced by Prime Minister Narendra Modi at the Glasgow COP26 last year). Such additional commitments would help to reduce emissions by 2.1 gigatonnes, as per the report.

“While the supply chain and the policies to encourage a larger share of renewable energy needs to be fixed, what is critical is the need for finance,” noted Garg. “The need for finance is set to increase by 50% in the STEPS scenario, but for the NZE scenario, it needs to increase by 200%.”

Steps such as the US Inflation Reduction Act are positive, “but we need a more diverse set of funds,” she added.