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India takes centre stage in energy economy, to drive demand growth: IEA

The developing countries in Asia account for two-thirds of global energy growth, with the rest coming mainly from Middle East, Africa and Latin America

BS Reporter  |  New Delhi 

India takes centre stage in energy economy; to drive demand growth: IEA

With slowing energy demand growth in China, India will account for almost one-third of global growth by 2040, according to the latest (WEO) of the (IEA).
 
The report says a resurgence of oil and gas production in the United States (US), deep declines in the cost of renewables, and growing electrification are changing the face of the global energy system and upending traditional ways of meeting energy demand.
 
Oil demand, it says, is slowing down, but it will not be reversed before 2040, even as electric-car sales rise steeply.
 
“Electric vehicles (EVs) are in the fast lane as a result of government support and declining battery costs, but it is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keeps pushing demand higher,” says Fatih Birol, executive director,
 
“The US will become the undisputed leader in oil and gas production for decades, which represents a major upheaval for international market dynamics,” Birol adds.
 
The boom years for coal were over in the absence of large-scale carbon capture, utilisation and storage (CCUS). Since 2000, coal-fired power generation capacity has grown by nearly 900 gigawatts (Gw), but net additions from today to 2040 are only 400 Gw and many of these are plants already under construction, the report says. In India, the share of coal in the power mix will drop from three-quarters in 2016 to less than half in 2040.
 
Over the next two decades, the global energy system would be reshaped by four major forces: the US, as it becomes the global oil and gas leader; rapid deployment of renewables; growing share of electricity in the energy mix; and China’s new economic strategy, taking it on a cleaner growth path.
 
According to the IEA, China overtakes the US as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day (mb/d) in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift that sees one-in-four cars being electric by 2040, mean that China is no longer the main driving force behind global oil use – demand growth is larger in India post-2025.
 
Over the next 25 years, the world’s growing energy needs are met first by renewables and natural gas, as fast-declining costs turn solar power into the cheapest source of new electricity generation. Global energy demand is 30 per cent higher by 2040 - but still half as much as it would have been without efficiency improvements.
 
The developing countries in Asia account for two-thirds of global energy growth, with the rest coming mainly from the Middle East, Africa, and Latin America. The largest contribution to demand growth – almost 30 per cent – would come from India, whose share of global energy would rise to 11 per cent by 2040, it says. Solar photovoltaic (PV) would lead capacity additions, pushed by deployment in China and India, it adds.
 
In the new policies scenario, global energy needs to rise more slowly than in the past but will still expand by 30 per cent till 2040. This is the equivalent of adding another China and India to today’s global demand.
 
As regards to access to electricity and clean cooking, the report highlights that progress in India and Indonesia has been “particularly impressive”, and in sub-Saharan Africa, electrification efforts outpaced population growth for the first time in 2014.
 
The report says 80 per cent of the projected growth in gas demand takes place in developing economies, led by China, India and other countries. “Much of the gas needs to be imported (and so transportation costs are significant), and infrastructure is often not yet in place.”
 
The shale oil and gas revolution in the US continues because of the ability of producers to unlock new resources in a cost-effective way. By the mid-2020s, the US is projected to become the world’s largest LNG exporter and a net oil exporter by the end of that decade.
 
“This is having a major impact on oil and gas markets, challenging incumbent suppliers and provoking a major reorientation of global trade flows, with consumers in Asia accounting for more than 70 per cent of global oil and gas imports by 2040. LNG from the US is also accelerating a major structural shift towards a more flexible and globalized gas market,” it says.

First Published: Tue, November 14 2017. 19:24 IST
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