More fuel for India's tank at this stage

India is rapidly raising energy consumption from fossil fuels and complementing it with renewables as its economy enters a sustained growth phase. The driving force behind this is the low per-capita energy consumption and expectations that some of its future growth will be driven by manufacturing exports, which essentially constitutes energy demand from the rest of the world.

There is historical precedent to both arguments. Most economies have used an all-sources approach to energy use during their growth surge. In India’s case, the energy transition era, when cleaner sources substitute fossil fuels, is some decades away as per-capita energy use climbs up from 15% of that in OECD countries.

Capacity addition to oil refining and thermal power generation should, thus, evoke no special alarm. India has ambitious self-imposed targets for renewables and the fact that these are being outpaced by the growth of fossil fuels consumption is part of the industrialisation playbook.
If India has to grow at twice or thrice the rate of developed economies, calls for premature substitution will be misguided and self-harming. Energy substitution will take place only after India’s growth stabilises. This will first have to play out in China where economic growth is slowing down but is still drawing energy from all available sources. India’s current need for reliable and affordable energy is as intense as that of its northern neighbour.

The need will be reinforced as India increases its share of global manufacturing trade. It is already the world’s second-biggest exporter of refined petroleum, and some of the capacity it is setting up is meant for rising international demand.

It will also need more coal-based electricity to make domestic manufacturing competitive. The capacity coming on stream is similarly geared for an export push. At some point, India will draw attention as the world’s biggest polluter. There is no way to avoid the label if living standards are to be improved rapidly.


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