India’s $9 Trillion Growth By 2033 Set To Reshape Global Energy Markets And Drive Energy Demand Surge – Report

India’s economy is undergoing rapid transformation, attracting significant foreign investment and advancing infrastructure and manufacturing development. This surge is boosting trade, mobility, and household incomes. As a result, India’s position in the global economy is becoming more prominent. The country’s economic growth is expected to accelerate significantly over the next decade. This higher growth will drive a sharp increase in energy demand. Wood Mackenzie’s base-case Energy Transition Outlook anticipates Indian energy demand to grow by about a third over the coming decade. If India’s economy outperforms expectations, the demand growth could be even more substantial.

In comparison to China’s economic surge in the early 2000s, India’s growth will not be an exact copy. While India’s current energy demand is similar to China’s two decades ago, the Indian economy is less energy-intensive. Gains in energy efficiency, the rollout of low-carbon technologies, and a greater emphasis on high-value-added manufacturing are setting India on a different trajectory. These factors are expected to temper India’s energy demand relative to its economic growth.

In Wood Mackenzie’s high-growth scenario, India’s economy nearly triples from US$3.2 trillion in 2023 to almost US$9 trillion by 2033. This scenario reflects ambitious reforms initiated by the Indian government, including the “Make in India” platform, and significant investment in manufacturing and infrastructure. India’s economic strategy aims to attract global supply chains relocating from China. However, the global trade environment poses challenges, especially with increasing protectionism.

India’s energy demand in the high-growth scenario brings opportunities and challenges. Coal demand nearly double to 2.2 billion tonnes by 2033, despite an increase in renewable energy adoption. Oil demand increases to 8.2 million barrels per day, driven by greater car ownership, air travel, and industrial freight. Petrochemicals also see a significant rise as demand for plastics and packaging grows.

The power sector is set to expand substantially. Total power demand is expected to approach 4,000 TWh by 2033. Coal generation increases by 38% compared to the base case, while wind and solar energy production grows by 45%. Gas demand also rises, especially in city gas distribution and industry. India’s 25 GW of gas-fired capacity will require more fuel to balance intermittent renewable generation.

Steel production increases steadily, although it will not match China’s rapid growth. Steel demand will rise by 9% annually to 317 million tonnes by 2033, which is 40% higher than the base case. India’s ambitions for low-carbon hydrogen are also notable. By 2030, India is expected to have one of the lowest electrolytic hydrogen production costs in Asia, yet adoption remains slow due to infrastructure constraints.

India’s goal of energy independence by 2047 faces significant tests. Domestic production of oil and gas remains limited, and refinery capacity expansion is slow. The Open Acreage Licensing Policy has opened new areas for exploration, but progress is sluggish. To meet demand, India will rely more on imports, including oil, gas, coal, and renewable energy components like solar modules.

Coal production could ramp up to 1,800 million tonnes by 2033. India’s crude steel output must more than double from 150 million tonnes in 2024 to over 340 million tonnes by 2033. Scaling up solar and wind manufacturing is also a challenge, as India currently imports 70% of its solar modules, mainly from China.

India’s reliance on imports for crude oil, gas, coal, and renewable components will remain high. Crude imports are expected to reach 7.8 million barrels per day by 2033. LNG imports will increase to 54 million tonnes per annum. Thermal and metallurgical coal imports are projected to rise significantly.

Despite these challenges, India’s biomass resources present an opportunity to reduce import dependency. Increased use of biomass in cement production, co-firing, and waste-to-energy plants could offset some coal and oil demand.

India’s rising energy demand will have a modest impact on global energy prices. Brent crude prices may increase by US$1-3 per barrel, while LNG prices will remain stable due to global supply expansion. Thermal coal prices might rise slightly to US$110 per tonne by 2033.

Carbon emissions are projected to increase by 30% by 2033, reaching 5.3 billion tonnes of CO2. However, India’s commitment to net-zero emissions by 2070 remains intact, with potential for earlier achievement if low-carbon supply chains scale rapidly.

The high-growth scenario creates opportunities for energy and natural resource suppliers. Countries like Russia, the Middle East, and Australia are poised to benefit. However, India must balance energy security, emissions reduction, and economic growth. The country’s ability to attract investment, expand domestic production, and build low-carbon industries will shape its future role in global energy markets.