India’s economy will rank third in the world by 2028

The world’s third-largest oil importer and consumer, India, will require nearly two million more barrels of oil per day by 2035, predicts the IEA. According to the IEA, India will add more than 12,000 cars every day over the next ten years, expand its built environment to match that of South Africa, and use more electricity for air conditioning than Mexico does for its whole population. According to the International Energy Agency (IEA), demand for all types of energy, including coal, electricity, renewable energy, and oil and gas, is expected to rise through 2035, making it the global growth engine for energy demand.

By 2035, India, the third-largest oil consuming and importing country in the world, will have increased its oil consumption by nearly 2 million barrels per day, making it the primary driver of global oil demand growth. By 2028, the nation’s economy is expected to rank third in the world, according to IEA projections. In 2023, its output increased by 7.8%, making it the fastest growing major economy and the fifth largest in the world. India surpassed China in 2023 to take the top spot in terms of population worldwide, despite the fact that its fertility rate fell below that of replacement.

Other booms to happen soon

India is expected to have the largest increase in energy demand growth of any country over the next ten years due to its sizable population and the rate at which demand is growing across all sectors, according to the IEA. According to the policies scenario (STEPS), “India is expected to add more than 12,000 cars per day to its roads by 2035.” More built space will be created each year than there is currently in South Africa, with an increase of over 1 billion square meters, according to the IEA.

It is projected that by 2035, the production of iron and steel will increase by 70%, cement output will rise by almost 55%, and the stock of air conditioners will grow by more than 4.5 times. As a result, the electricity demand from air conditioners in 2035 will exceed Mexico’s total expected electricity consumption that year,” the report stated. According to IEA projections, under specified policies (STEP), India’s energy supply would increase from 45.4 exajoule (EJ) in 2023 to 60.7 EJ in 2025 and 70.5 EJ in 2050. Under stated commitments, this is moderated to 52 EJ in 2035 and 62 EJ by 2050 (APS). 

By 2035, it is anticipated that the daily oil demand would increase from 5.2 million to 7.1 million barrels. By 2035, refineries’ capacity to convert crude oil into fuels like gasoline and diesel will increase from 5.8 million barrels per day to 7.1 million barrels per day. By 2050, the demand for natural gas is expected to increase from 64 billion to 172 billion cubic meters. The amount of coal produced is predicted to decline from 721 million tonnes in 2023 to 645 million tonnes in 2050.

According to the STEPS, India’s total energy consumption will rise by almost 35% by 2035, and the country’s electricity generation capacity will almost triple to 1,400 GW by that same year. Over the next few decades, coal is expected to continue holding a significant position in India’s energy mix. By 2030, the STEPS adds about 60 GW of net new coal-fired capacity and increases coal-based electricity generation by more than 15%. Due to the lower capacity factor of solar installations, coal generation continues to be over 30% higher than that of solar PV, even after a decade in which solar PV accounted for twice as much capacity.

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Ecology vs Economy 

With coal providing 40% of industry’s energy needs in 2023, it has been a major contributor to meeting energy demand. By 2035, industry’s use of coal would have increased by 50%, while its proportion of overall industry demand would stay the same. Looking ahead, the IEA stated that India faces a number of challenges on the energy front, including managing the effects of climate extremes, particularly heat waves and floods, addressing high levels of air pollution, boosting the reliability of the power sector and the financial performance of distribution companies, and ensuring universal access to clean cooking. 

India has committed to achieving net zero emissions by 2070, and the APS (announced pledges scenario) accounts for this commitment. By 2030, India will have installed the third-largest battery storage capacity in the world to accommodate the growing share of variable renewable energy. Clean power generation will also be nearly 20% higher than in the STEPS. As industrial use of electricity and hydrogen rises steadily, the IEA noted that “there is also a rapid rise in electric mobility, and this contributes to oil consumption peaking in the 2030s.” Coal use in industry also peaks in the 2030s.

India’s total annual carbon dioxide emissions reach 2.5 billion tonnes in 2035, 25% less than the level in the STEPS, as it continues on its trajectory to achieve net zero emissions by 2070. India is the fourth-biggest market for passenger cars and one of the biggest worldwide markets for two- and three-wheelers. According to the report, “India adds over 75 million two- and three-wheelers and over 37 million cars to its roads in the STEPS over the next ten years.” While the number of electric vehicles sold is rising, the concurrent increase in internal combustion engine vehicles means that oil demand from road transportation will rise by 40% in the STEPS by 2035, increasing the region’s reliance on imported oil. 

According to the report, “India’s daily car population growth of over 12,000 adds substantial strain to the country’s already inadequate road infrastructure, deteriorates the country’s already low air quality, and will increase CO2 emissions from all forms of road passenger transportation by 30% by 2035.”

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