India faces a significant challenge to transition to a low carbon energy future. The world’s sixth largest economy is still dependent on fossil fuels for nearly 90% of its primary energy needs.

India overtook China as the world’s most populous country in 2023 and its energy consumption is forecast to nearly double by 2040. The steep growth curve reflects a continued rise in energy needs per capita as wealth grows with development. Currently, India’s per capita energy use is around one third of the global average.

The country has the world’s fifth largest reserves of coal which continues to dominate the country’s primary energy mix (56%), mainly used for power generation – coal supplied nearly 75 per cent of India’s electricity in 2023.

India’s Energy Mix

Oil provides about 30% of the mix, mostly imported and used principally for transport and industry. Biomass is used for residential heating and cooking in villages. Natural gas at nearly 7% is primarily consumed by industry and used for power generation. About half of gas volumes come from rapidly growing imports of LNG and the rest from domestic production.

Electricity Production

India's energy & climate goals in brief

  • 2070 target for net zero
  • Coal provides 75% of electricity
  • Gas to supply 15% of primary energy by 2030
  • Industry to drive gas demand growth to 2050

Natural Gas Usage

India has outlined an ambition to have natural gas make up 15% of its energy mix in 2030, a goal that has brought both a renewed focus on domestic production and also increased investment in LNG import infrastructure. India currently has eight LNG import terminals in operation, with capacity of more than 50 million tonnes per annum – and ambitions to raise this to more than 66mtpa by 2030. Multiple new terminals are being planned on the country’s east and west coasts.

India does have gas reserves, with the largest being in its Western and Eastern Offshore Areas. Indian gas production is notably lower than it was in 2012 and has fluctuated in recent years but it is expected to increase again over the next three decades to meet rising demand.

The US Energy Information Administration has projected that India’s gas demand could triple by 2050. Much of the increase in demand is forecast to be driven by industrial use, particularly for fertiliser production that supports India’s food security.

Use of gas for power generation in India is often price-driven. In 2022 and 2023, amid global LNG price elevation following Russia’s invasion of Ukraine, coal demand growth in India accelerated and investment in coal power plants continues. A total of 13.9GW of coal-fired generation capacity was planned for addition over the course of 2024, with India strongly focussed on energy security that will sustain economic growth. Coal power is expected to increase from 210GW in 2025 to more than 300GW by 2035.

Reducing the Indian power sector’s reliance on coal will be an incremental process. As investments in renewable energy continue to grow, there will be increased opportunity for gas-fired power to support intermittent solar and wind. Ongoing investment in LNG infrastructure and distribution networks, along with policy support, can help India make greater use of its existing gas-fired generation capacity.

Climate Policy

India’s target of net zero emissions by 2070 was announced at COP26 in 2021 by Prime Minister Narendra Modi, as part of a Five Point Action Plan that went beyond the country’s existing National Energy Policy (NEP) and set four goals to be met by 2030:

  • Half of India’s energy requirements would be met by renewable energy – subsequently clarified by an updated National Determined Contribution (NDC) published in August 2022 that outlined a goal for “about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.”
  • Cut carbon intensity to less than 45% of 2005. Previous commitments from 2015 under the Paris Agreement were for a 33-35% reduction over the same period.
  • Cut another 1 billion tonnes of carbon emissions from the current total projected emissions by 2030. This was not contained in the updated NDC.
  • Increase its non-fossil capacity to 500 GW by 2030, a 50GW increase on the previous target of 450GW. Likewise, this was not contained in the updated NDC.

India’s 2025 update to its NDC is yet to be submitted.

India’s Long-term Low Greenhouse Gas Emission Development Strategies (LT-LEDS) document – published as part of COP 27 – provides further insights into the country’s future energy mix and decarbonisation plans. It points towards growing investments in renewable energy (accompanied by grid strengthening), gradual reduction in use of coal, a three-fold increase in nuclear power by 2032 and the potential of green hydrogen as a long-term alternative for transport and shipping. The LT-LEDS emphasises the value of natural gas as a transition fuel and references co-firing opportunities for both ammonia and hydrogen in Indian power generation.

India’s most recent National Electricity Plan, covering the period 2022 to 2032, envisions the share of non-fossil based power generation capacity increasing to 57.4% by the end of 2026-27 and further to 68.4% by the end of 2031-32.

India’s existing National Energy Policy announced in 2017 had been regarded as thorough, although critics suggested it did not adequately acknowledge implementation challenges and other risks and had overly optimistic objectives without a clear roadmap for delivery. It will require updating in light of the myriad of energy and climate-related policy announcements in the seven years since it was published.

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