An LNG carrier, a key asset for India's energy future (illustration)
India, a giant on the rise
Back in April, a U.N. report projected that India’s population of 1.428 billion would surpass China’s 1.425 billion this year. While the UN did not specify a date for the demographic crossover, a U.N. spokesperson told TIME magazine that its Department for Economic and Social Affairs estimates this shift would take place by the end of July. The obvious effect of India’s booming population and exceptional demographic growth has been real economic growth (7.2% for fiscal year 2022-2023). India is now the fastest-growing economy in the G20 since 2014. With the Chinese economy stalling, there is a real opportunity for India to fill the void.
Despite a 70% rural population, and with over half of the working population engaged in agriculture - which accounts for 16% of GDP - India is also a giant when it comes to industrialisation: the secondary sector accounts for 29% of GDP and employs 22% of the working population, and the country is the world's 2nd largest producer of coal, cement and steel, and the third largest producer of electricity.
What’s boosting economic projections in the coming decades for India is the fact that 650 million Indians are under 25. Indeed, this signals what Poonam Muttreja, the executive director of the Population Foundation of India (PFI), is calling “paradigm shift” for India’s development. This underlines the country’s younger population’s potential to boost the economy—a phenomenon often referred to by economists at the “demographic dividend.” With India also internationally recognised for the quality of its production of complex, skill- and capital-intensive goods, the economic potential of this demographic dividend is massive.
With the "Make in India" plan launched in 2014 by Prime Minister Narendra Modi to attract foreign investment, India is experiencing an unprecedented economic boom. The reduction of customs barriers in the 1990s and the expansion of IT have also helped create a sizeable services market that is constantly attracting new foreign investment. Saudi Arabia, for example, is looking to invest $100 billion in India across a number of sectors. This boom has of course led to a rise in living standards; electricity has been extended to 900 million people in the space of two decades by 2019. Projects such as the Smart Cities Mission and Housing for All illustrate the Indian government's determination to reinvest the gains from economic growth to transform Indian society.
India’s efforts to reduce energy poverty can therefore be understood in this context, with the production of locally produced energy being in sync with efforts to both boost the country’s energy independence and infrastructure, and lift millions out of extreme poverty through affordable electricity. The high concentration of people in certain urban areas also makes it urgent to make the transition to cleaner energy sources that emit less greenhouse gas and particulate matter.
India turns to gas
“India continues to be the global bright spot in a world stricken with pandemic and war,” said Prime Minister Narendra Modi at the India Energy Week 2023 in Bengaluru back in February. Referring to India’s ambitious plan to transform its energy sector in the decades to come, the PM stated that “we are working on mission mode to increase natural gas consumption in our energy mix by 2030”. He also highlighted how this expansion of the Indian energy sector was creating new opportunities for foreign investment and collaboration, thoughts he echoed at the G20 summit five month later, when he stated that “energy impacts development at all levels, from individuals to nations.”
The world's 3rd largest coal producer, India still derived 44% of its energy from coal in 2021. A further 38% came from oil and biomass. India's large coal reserves certainly enable it to secure a significant proportion of its energy supply, but at the expense of the environment and the health of its population. India is also forced to import hydrocarbons on a massive scale - the country is the world's 2nd largest importer of fossil fuels. This makes the country the world's third largest consumer of energy, and the world's 3rd largest emitter of energy-related greenhouse gases. The Indian government has therefore been taking concrete steps to change this trend. Its energy transition is well underway.
The government announced that it aims to reach net zero emissions by 2070, derive 50% of its energy from renewables by 2030 and reduce a billion tonnes of CO2 emissions, a very ambitious target for a such a huge country with an expanding population and energy demand. The country therefore focusing on its energy autonomy, hoping to reduce its external dependence while limiting the secondary effects on the environment. The aim is to rely on an energy mix that encourages the rapid deployment of low-carbon energies, combined with oil and natural gas imports to support growth, with a view to gradually reducing the country's dependence on fossil fuels, all in the framework of its 2070 net zero target.
On June 22nd, Prime Minister Narendra Modi told the G20 summit, of which India currently holds the rotating presidency, that India was "the only G20 country to keep the promises it made in Paris on climate change". This statement is borne out by the fact that the country has quadrupled its solar and wind power capacity between 2015 and 2022 as it accelerates its transition.
But nuclear and renewable solutions require a great deal of time and investment. To meet its targets for reducing carbon emissions in industry and transport, the country is logically turning to natural gas, considered to be a transitional energy in that it emits half as much carbon dioxide as coal and a third less than oil. Of all the hydrocarbons, natural gas emits the least greenhouse gases and the fewest particles, while having an energy yield comparable to that of coal. This is why the OPEC is projecting that the share of gas in India’s energy mix will reach 10.6% by 2045, a little lower than the government’s target of 15% by 2030.
The country currently has 20,000 km of gas pipelines and intends to extend its infrastructure by a further 14,000 km, which should come on stream within three years. It also has a large infrastructure for liquefied natural gas (LNG), particularly on its west coast, and plans to build up strategic gas reserves to ensure its energy security.
Another milestone was reached in January, when Petroleum Minister Hardeep Singh Puri announced "an investment of $58 billion for the exploration and production of oil and natural gas in 2023”. A month later, Ghana called on India to invest in the exploration and exploitation of the country's hydrocarbon resources, particularly gas. At the beginning of July, it was the turn of the Minister of External Affairs, Subrahmanyam Jaishankar, to visit Tanzania to discuss the possibility of a long-term partnership involving India in the exploitation of Tanzanian natural gas.
India is also interested in newcomers to the gas market, taking part in the mega-project to exploit deposits discovered in Mozambique. The relative geographical proximity of Mozambique, its need for foreign investment, its growing need for natural gas and the scale of the reserves to be exploited give this project a strategic importance for India. 3 Indian companies are participating in the Mozambique LNG consortium, making the country the largest contributor to the project, alongside French, Japanese and Thai energy companies, while 90% of future production has already been acquired, mainly by the European Union and Asian countries. However, access to this resource is not definitively assured, as the Cabo Delgado region is in the grip of serious unrest, which has frozen work since 2021. As a result, India is paying close attention to the security dimension, contributing in particular to the surveillance of the Mozambique Channel, which the country has made one of its priority defence zones. As Foreign Minister S. Jaishankar pointed out during a visit to Maputo in April: "Our defense ties have also taken giant strides in the past few years and we are again cooperating very effectively, especially when it comes to dealing with the challenges of terrorism.”
African countries are not the only ones keen to capitalise on India's appetite. In June, a meeting between India and Iraq aimed to encourage Indian investment in the Middle Eastern country in order to capture natural gas that is currently being flared due to a lack of infrastructure. The news has just come in that India is indeed going to build an LNG terminal in Iraq to export Iraqi natural gas to its shores.
Back in April, a U.N. report projected that India’s population of 1.428 billion would surpass China’s 1.425 billion this year. While the UN did not specify a date for the demographic crossover, a U.N. spokesperson told TIME magazine that its Department for Economic and Social Affairs estimates this shift would take place by the end of July. The obvious effect of India’s booming population and exceptional demographic growth has been real economic growth (7.2% for fiscal year 2022-2023). India is now the fastest-growing economy in the G20 since 2014. With the Chinese economy stalling, there is a real opportunity for India to fill the void.
Despite a 70% rural population, and with over half of the working population engaged in agriculture - which accounts for 16% of GDP - India is also a giant when it comes to industrialisation: the secondary sector accounts for 29% of GDP and employs 22% of the working population, and the country is the world's 2nd largest producer of coal, cement and steel, and the third largest producer of electricity.
What’s boosting economic projections in the coming decades for India is the fact that 650 million Indians are under 25. Indeed, this signals what Poonam Muttreja, the executive director of the Population Foundation of India (PFI), is calling “paradigm shift” for India’s development. This underlines the country’s younger population’s potential to boost the economy—a phenomenon often referred to by economists at the “demographic dividend.” With India also internationally recognised for the quality of its production of complex, skill- and capital-intensive goods, the economic potential of this demographic dividend is massive.
With the "Make in India" plan launched in 2014 by Prime Minister Narendra Modi to attract foreign investment, India is experiencing an unprecedented economic boom. The reduction of customs barriers in the 1990s and the expansion of IT have also helped create a sizeable services market that is constantly attracting new foreign investment. Saudi Arabia, for example, is looking to invest $100 billion in India across a number of sectors. This boom has of course led to a rise in living standards; electricity has been extended to 900 million people in the space of two decades by 2019. Projects such as the Smart Cities Mission and Housing for All illustrate the Indian government's determination to reinvest the gains from economic growth to transform Indian society.
India’s efforts to reduce energy poverty can therefore be understood in this context, with the production of locally produced energy being in sync with efforts to both boost the country’s energy independence and infrastructure, and lift millions out of extreme poverty through affordable electricity. The high concentration of people in certain urban areas also makes it urgent to make the transition to cleaner energy sources that emit less greenhouse gas and particulate matter.
India turns to gas
“India continues to be the global bright spot in a world stricken with pandemic and war,” said Prime Minister Narendra Modi at the India Energy Week 2023 in Bengaluru back in February. Referring to India’s ambitious plan to transform its energy sector in the decades to come, the PM stated that “we are working on mission mode to increase natural gas consumption in our energy mix by 2030”. He also highlighted how this expansion of the Indian energy sector was creating new opportunities for foreign investment and collaboration, thoughts he echoed at the G20 summit five month later, when he stated that “energy impacts development at all levels, from individuals to nations.”
The world's 3rd largest coal producer, India still derived 44% of its energy from coal in 2021. A further 38% came from oil and biomass. India's large coal reserves certainly enable it to secure a significant proportion of its energy supply, but at the expense of the environment and the health of its population. India is also forced to import hydrocarbons on a massive scale - the country is the world's 2nd largest importer of fossil fuels. This makes the country the world's third largest consumer of energy, and the world's 3rd largest emitter of energy-related greenhouse gases. The Indian government has therefore been taking concrete steps to change this trend. Its energy transition is well underway.
The government announced that it aims to reach net zero emissions by 2070, derive 50% of its energy from renewables by 2030 and reduce a billion tonnes of CO2 emissions, a very ambitious target for a such a huge country with an expanding population and energy demand. The country therefore focusing on its energy autonomy, hoping to reduce its external dependence while limiting the secondary effects on the environment. The aim is to rely on an energy mix that encourages the rapid deployment of low-carbon energies, combined with oil and natural gas imports to support growth, with a view to gradually reducing the country's dependence on fossil fuels, all in the framework of its 2070 net zero target.
On June 22nd, Prime Minister Narendra Modi told the G20 summit, of which India currently holds the rotating presidency, that India was "the only G20 country to keep the promises it made in Paris on climate change". This statement is borne out by the fact that the country has quadrupled its solar and wind power capacity between 2015 and 2022 as it accelerates its transition.
But nuclear and renewable solutions require a great deal of time and investment. To meet its targets for reducing carbon emissions in industry and transport, the country is logically turning to natural gas, considered to be a transitional energy in that it emits half as much carbon dioxide as coal and a third less than oil. Of all the hydrocarbons, natural gas emits the least greenhouse gases and the fewest particles, while having an energy yield comparable to that of coal. This is why the OPEC is projecting that the share of gas in India’s energy mix will reach 10.6% by 2045, a little lower than the government’s target of 15% by 2030.
The country currently has 20,000 km of gas pipelines and intends to extend its infrastructure by a further 14,000 km, which should come on stream within three years. It also has a large infrastructure for liquefied natural gas (LNG), particularly on its west coast, and plans to build up strategic gas reserves to ensure its energy security.
Another milestone was reached in January, when Petroleum Minister Hardeep Singh Puri announced "an investment of $58 billion for the exploration and production of oil and natural gas in 2023”. A month later, Ghana called on India to invest in the exploration and exploitation of the country's hydrocarbon resources, particularly gas. At the beginning of July, it was the turn of the Minister of External Affairs, Subrahmanyam Jaishankar, to visit Tanzania to discuss the possibility of a long-term partnership involving India in the exploitation of Tanzanian natural gas.
India is also interested in newcomers to the gas market, taking part in the mega-project to exploit deposits discovered in Mozambique. The relative geographical proximity of Mozambique, its need for foreign investment, its growing need for natural gas and the scale of the reserves to be exploited give this project a strategic importance for India. 3 Indian companies are participating in the Mozambique LNG consortium, making the country the largest contributor to the project, alongside French, Japanese and Thai energy companies, while 90% of future production has already been acquired, mainly by the European Union and Asian countries. However, access to this resource is not definitively assured, as the Cabo Delgado region is in the grip of serious unrest, which has frozen work since 2021. As a result, India is paying close attention to the security dimension, contributing in particular to the surveillance of the Mozambique Channel, which the country has made one of its priority defence zones. As Foreign Minister S. Jaishankar pointed out during a visit to Maputo in April: "Our defense ties have also taken giant strides in the past few years and we are again cooperating very effectively, especially when it comes to dealing with the challenges of terrorism.”
African countries are not the only ones keen to capitalise on India's appetite. In June, a meeting between India and Iraq aimed to encourage Indian investment in the Middle Eastern country in order to capture natural gas that is currently being flared due to a lack of infrastructure. The news has just come in that India is indeed going to build an LNG terminal in Iraq to export Iraqi natural gas to its shores.
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