India's energy demand set to soar by 2040

Outlook

Over the next two decades, India's energy demand growth is expected to outpace that of all other members of the BRICS grouping, with its energy demand rising 87% between 2020 and 2040, compared with only 18% in China.

In line with the demands of the fast-growing economy, Prime Minister Narendra Modi's government has advanced ambitious targets for domestic production, especially in the coal and renewables sectors by 2020. Although nearly all of the targets will prove unrealistic, India is likely to see a dramatic rise in coal production and electricity generation from renewables (particularly solar).

Given India's weak domestic resource base on oil, and infrastructural and price constraints in upstream gas development, it will continue to rely heavily on imports. This will make India a crucial international market for oil and gas exporters, and nuclear operators, while also increasing its impact on global price movements.

Impacts

• The oil slump has helped India reduce energy subsidies, but for political reasons subsidies may need to rise when oil prices pick up.
• India's coal reliance is unshakeable on current trends.
• The government will cite its renewables achievements, especially on solar, to appease climate activists.
• As energy consumption rises, the government will fail to cut air and noise pollution to acceptable levels.