India’s gas demand will soar to 100 billion cubic metres (bcm) by 2033, driven by industry and city distribution expansion. But low-carbon hydrogen is less likely to see a boom in demand due to more competitive fossil fuel-based technologies and gaps in transport and storage infrastructure.
These are among the key findings of global business consultancy Wood Mackenzie’s just-released “Eye on the tiger: how higher Indian economic growth could impact global energy markets” report.
An additional 10 million tonnes per annum (mtpa) of Indian LNG demand will come at a time when global gas prices are expected to soften. With the market set to absorb more than 200 mtpa of LNG supply growth, equal to around 50% of current supply, LNG price upside will be limited, the report states. Middle Eastern LNG suppliers are set to benefit from their proximity.
India’s energy industry and the growth in its economy – which is forecast to triple to just under $9trn by 2033 – will put strains on its ability to tackle carbon emissions.
By 2033, CO2 emissions are expected to rise by 1.2 billion tonnes (BtCO2), reaching 5.3 BtCO2, compared with the base-case level of 4.1 BtCO2 ‒ a 25% increase that will increasingly focus global attention on India. For all the sustainability push, power demand is set to surge to almost 4,000 TWh, with significant increases in coal as well as renewable generation.
The Indian Government recently awarded three-year subsidy payments to nine companies for green hydrogen production projects, with AM Green Ammonia and Waaree Clean Energy Solutions emerging as the biggest recipients. It has allocated ₹22.39bn crores ($258.84m) to support 450,000 tonnes per year of green hydrogen production – the maximum allowable under the Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme.
However, the high-growth scenario sets the stage for the rapid development of low-carbon supply chains by the mid-2030s, positioning India to achieve its Net Zero emissions goal by 2070 ‒ or potentially sooner. This is an outcome not achieved in the base case.
Source: Wood Mackenzie
The report notes that India’s decade of growth “will not mirror that of China in the 2000s,” even if many fundamentals remain the same. India’s industrial sector is less energy-intensive, and the country is better positioned to adopt efficient, low-carbon technologies compared with China 20 years ago.
“In addition to rising imports, higher growth cannot be achieved without massive investment in domestic energy production, oil refining, steel making and low-carbon supply chains,” it concludes. “The growing need to rein in emissions will also spur huge demand for decarbonisation technologies, including carbon capture and storage.”
The muted forecasts for low-carbon hydrogen come amid intense policy activity and optimism surrounding the sector.
Speaking at the recent India Energy Week, HE Hardeep Singh Puri, Minister of Petroleum and Natural Gas for the India government, said green hydrogen is becoming a “mainstream narrative” in India, and the five million tonnes green hydrogen production target by 2030 is “very conservative”.
