India and the energy transition

Translated by Michela Scappaticci

In 2023, India became the most populous country in the world and, with its 1.4 billion inhabitants, overtook even China. According to United Nations estimates, this population growth trend is set to remain positive for decades, with estimates indicating that the population will increase until around 2064, when the peak of 1.7 billion will be reached.

In line with population growth, economic development is also at a high level. In fact, India's economy is the fastest growing of the world's top twenty, growing by 7.8% in the second quarter of 2023. Even the most conservative forecasts predict that the country will continue at this pace in the coming years.

India's GDP, which in the past year has surpassed that of the old colonial power, the United Kingdom, is set to grow strongly in the coming years, with forecasts placing India in third place among the world's major economies in 2030, behind the US and China, but surpassing Germany and Japan.

Coal and oil have so far been the mainstays of the country's industrial growth and modernisation, giving a growing number of Indian citizens access to modern energy services. However, the rapid growth in fossil energy consumption has also meant that India's annual CO2 emissions have risen to become the third highest in the world.

It is precisely because of this sad record that in 2023, the Indian government promoted an ambitious project aimed at fostering the development of renewable energy sources, contributing to the reduction of pollutant emissions and the use of fossil fuels (The International Energy Agency, IEA, has shown that India currently produces 75% of its electricity from coal).

In particular, Indian Prime Minister Narendra Modi has unveiled a new programme that aims to have half of India's annual electricity production from renewable sources by 2030, to cut emissions by 45% by the end of the decade, and to achieve net zero emissions by 2070.

The government actually wants to turn India into the leading powerhouse in renewable energy, focusing mainly on wind, photovoltaics, and hybrid plants.

Renewable generation capacity has almost doubled in the five years until last November, from 72 gigawatts (gw) to 133 gw, while the importance of coal is heavily declining.

India's pioneer states in clean energy production, mainly from solar energy, are Rajasthan and Gujarat, which together account for about one third of the entire national clean energy production. In the coming years, these two states plan to further implement their production capacities, promoting the installation of new advanced plants and consequently pursuing considerable economic growth.

The situation, however, is not so rose-tinted for all Indian states. While Rajasthan and Gujarat can count on the availability of renewable raw materials, the poorer regions of the peninsula are rich in fossil fuels, and, with a greater energy transition opted for renewable, they risk seeing their economic situation worsen even further.

Indeed, while the energy transition supports new economic activities and new centres of energy production, it can also exacerbate the economic vulnerabilities of communities dependent on fossil fuel supply chains or increase the financial insecurity of those involved in the extraction of non-renewable raw materials, which are nonetheless fundamental to the regions' economic growth.

Despite the inconsistencies, New Delhi wants to pursue energy transition projects in order to achieve its goals.

In its ambitions, it must therefore deal with the development of a plan that does not leave behind a large segment of the population, which is employed in fossil energy production. In a country where coal is still an important part of electricity and contributes to economic growth, the issue that the Indian government will have to resolve concerns the way in which it can improve the welfare levels of the population while pursuing a shift towards the renewable.

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