Context: India's Energy Outlook for the year 2021. According to the International Energy Agency, India will overtake the European Union as the world’s third-largest energy consumer by 2030.

• At present, India is the fourth-largest global energy consumer behind China, the United States and the European Union. On Discussion Today, we will try and understand from experts the opportunities and challenges ahead for India as it seeks to ensure reliable, affordable and sustainable energy to its vast population.

Key Points

• India will overtake the European Union as the world's third-largest energy consumer by 2030, the International Energy Agency (IEA) said on Tuesday as it forecast India accounting for the biggest share of energy demand growth over the next two decades.
• In its India Energy Outlook 2021, IEA saw primary energy consumption almost doubling to 1,123 million tonnes of oil equivalent as the Gross Domestic Product (GDP) expands to USD 8.6 trillion by 2040.
• India at present is the fourth-largest global energy consumer behind China, the United States and the European Union.

According to the Report

• India accounts for nearly one-quarter of global energy demand growth from 2019-40 -- the largest for any country. Its share in the growth in renewable energy is the second-largest in the world, after China.
• "By 2040, India's power system is bigger than that of the European Union, and is the world's third-largest in terms of electricity generation; it also has 30 per cent more installed renewables capacity than the United States.
• Underpinned by "a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040", India will overtake the European Union by 2030 to move up to the third position.

Reason behid this increase in demand

• A five-fold increase in per capita car ownership will result in India leading the oil demand growth in the world. Also, it will become the fastest-growing market for natural gas, with demand more than tripling by 2040.
• "India's continued industrialisation becomes a major driving force for the global energy economy. Over the last three decades, India accounted for about 10 per cent of world growth in industrial value-added (in PPP terms).
• By 2040, India is set to account for almost 20 per cent of global growth in industrial value-added, and to lead global growth in industrial final energy consumption, especially in steelmaking. The nation accounts for nearly one-third of global industrial energy demand growth to 2040.
• India's oil demand is seen rising by rise by 74 per cent to 8.7 million barrels per day by 2040 under the existing policies scenario. 
• The natural gas requirement is projected to more than triple to 201 billion cubic meters and coal demand is seen rising to 772 million tonnes in 2040 from the current 590.

Impact on India's Import

• To meet its energy needs, India will be more reliant on fossil fuel imports as its domestic oil and gas production stagnates.
• Its net dependence on oil imports -- taking into account both the import of crude oil and the export of oil products -- increases to more than 90 per cent by 2040 from the current 75 per cent as domestic consumption rises much more than production.

Natural gas import dependency increased from 20 per cent in 2010 to almost 50 per cent in 2019 and is set to grow further to more than 60 per cent in 2040.

• "The dynamics look quite different for coal, where India's demand for imported coal barely gets back to pre-crisis levels over the next decade".

India currently accounts for 16 per cent of the global coal trade and many global coal suppliers were counting on growth in India to underpin planned export-oriented mining investments.

• "These expectations are now running up against India's determination to boost domestic production, leaving relative certainty only over India's requirement to import coking coal for its rising steel production, together with steam coal for those coastal power generation plants that have been designed to receive imported grades".

IEA has forecast combined import bill for fossil fuels tripling over the next two decades.

• "Energy use (in India) has doubled since 2000, with 80 per cent of demand still being met by coal, oil and solid biomass,".

On a per-capita basis, India's energy use and emissions are less than half the world average, as are other key indicators such as vehicle ownership, steel and cement output.

• "As India recovers from a COVID-induced slump in 2020, it is re-entering a very dynamic period in its energy development. Over the coming years, millions of Indian households are set to buy new appliances, air conditioning units and vehicles,".

What need to be done?

• India will soon become the world's most populous country, adding the equivalent of a city the size of Los Angeles to its urban population each year.
• "To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now".
• Prior to the global pandemic, India's energy demand was projected to increase by almost 50 per cent between 2019 and 2030, but growth over this period is now closer to 35 per cent.
• "An expanding economy, population, urbanisation and industrialisation mean that India sees the largest increase in energy demand of any country".

Initiatives Taken
PLI Scheme: The Production Linked Incentive Scheme (PLI) scheme is an excellent initiative of the Government of India with respect to enhancing the manufacturing sector.

• The scheme proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including electronic components and semiconductor packaging.

Pradhan Mantri- Kisan Urja Suraksha evam Utthaan Mahabhiyan: PM- KUSUM aims to provide financial and water security to farmers through harnessing solar energy capacities of 25,750 MW by 2022.

• Solarisation of water pumps is a step in distributed power providing at the doorstep of the consumer.
• The Ministry of New and Renewable Energy on its website also hosts Akshay Urja Portal and India Renewable Idea Exchange (IRIX) Portal.
• IRIX is a platform that promotes the exchange of ideas among energy conscious Indians and the Global community.

Decarbonising Transport in Emerging Economies (DTEE)

• It supports transport decarbonisation across different world regions.
• Current participants: India, Argentina, Azerbaijan, and Morocco.
• Implementation: The DTEE is collaboration between the International Transport Forum (ITF) and the Wuppertal Institute, supported by the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety.

India’s Key Focus for Next Five Years

The Twin Challenge: India has a twin challenge of providing more energy as well as cleaner energy to the masses in India.

• It should focus on getting into the manufacturing of the solar panels under the Atma Nirbhar Bharat initiative as the demand is to create jobs as well as supply decentralised energy to all the households in India.
• Look and develop the entire supply chain of all the components beside the manufacturing sector.

Methanol and Biomass: Looking for other alternatives such as methanol based economy and biomass.

• Bio-CNG vehicles with 20% blending in petrol is also a target the government has been chasing.
• Conversion of energy from Biomass is a considerable option as it will clean the cities as well as reduce our energy dependence.
• Fuels produced from biomass have a high calorific value and are cleaner than traditional biomass.

Hydrogen based FCV: Hydrogen in technology is likely to change the landscape of renewables, shifting towards Hydrogen Based Fuel Cells Vehicles (FCV) is another area of focus.

• Grid Integration: It is the practice of developing efficient ways to deliver variable renewable energy (RE) to the grid.

Identifying the demands which are in tune with the characteristics of the renewables, focussing on characteristics of renewables mainly solar and wind and considering their variability as strength rather than weakness.