India to become the biggest growth centre of global energy demand overtaking USA by 2040

India’s energy sector is set to become the center of world growth, accounting for over 25% of the world’s incremental energy demand in the next 25 years and will eclipse all other countries. India will require more than $100 billion in energy investments every year, as hundreds of millions of people gain access to modern energy. India will not only massively increase its renewable energy capacity to 40% of its overall capacity by 2040, but also large amounts of fossil fuel capacity. Coal, oil and gas will also contribute heavily towards India’s energy demands going forward.

While the western countries are expected to see a decline in their energy demand, India, SE Asia and Africa will continue to see a sharp increase. China’s growth will flatten out substantially as its economy orients towards the service sector, instead of the industrial sector. China’s overall growth rate is also expected to go below 5%, even as India’s GDP growth rate sustains to over 6-7% for a long period of time. India’s urbanization and manufacturing sector growth will be the main contributors. Large sections of the Indian population will gain access to electricity, with the increasing penetration of power grid. India’s 24/7 power pledge to most of its population will drive the energy demand.

IEA which has made India the focus of its World Energy Outlook 2015, also sees India’s import dependency of oil growing from 80% to 90% due to the high coal deposits found in India. The oil prices are also expected to increase to $80/ barrel by 2020, from around $45 now. The research agency thinks that even with 150 countries pledging to reduce carbon emissions, the world will see its average temperature increase by 2.7 degrees as India continues to grow rapidly. Coal has probably seen its best days gone, with China’s consumption and production decreasing by 3-4% this year and will continue to go down. Only India will the main growth driver for coal, with all regions seeing a decline due to pollution and global warming effects. The expansion of coal supply will make India not only the second-largest coal producer in the world, but also the world’s largest coal importer, overtaking Japan, EU and China by 2020. OECD countries will see their coal demand going down by 40% going forward. Asia will remain the only major user accounting for 80% of global coal demand by 2040.

Gas supply increases will mostly be driven by unconventional gas, read shale gas supply growth in different regions of the world. China and Middle East will be the main growth drivers. Read more at IEA.