Look out for the Energy Outlook

This article looks at the India picture of the recently released annual World Energy Outlook of IEA. The central scenario in this year’s outlook is “New Policies Scenario” in place of the usual Reference scenario.

Every November, the International Energy Agency brings out the World Energy Outlook, which becomes the staple reference for numbers and charts in many a presentation around the world. While most of those presentations rely on the readymade charts that adorn the text, the numbers given in the annexure tables bring out several insights.

Outlook Summary: 140 characters and 140 words

One could 'tweet' the central scenario of this year’s Outlook in 140 characters as follows: Oil & coal-led energy/power demand globally grows@1.2/2.2% pa, Non-OECD has 93% of upsurge; 2035 world emissions 35.4 GtCO2; Need >$1tn p.a.

A bit more verbose, with 140 words, could be as follows:

In the central case, the world will continue on its path of energy consumption, growing 1.2 percent per year for next 25 years. Developing Asian regions will contribute 93% to the additional energy use, oil will hold the largest share in the primary energy mix. There is little to substitute oil in transportation, electricity demand will grow at 2.2 percent annually and more than 80% of growth in electricity would happen in non-OECD countries, Coal will be the dominant fuel in electricity, non-hydro renewable energy technologies would register fastest rate of increase and financing needs would be of the order of  a trillion+ dollars per year. Rapidly increasing dependence on fossil fuels will have alarming consequences for climate change and energy security. CO2 emissions would reach 35.4GtCO2 in 2035, growing at an average annual rate of 0.7%, all on account of non-OECD countries.

India numbers
Behind the projection, the main assumptions are about population and GDP growth. In the first 12 years of the projection timeframe, i.e., between 2008 and 2020, population is projected to grow at 1.2%, while in the later part of 2020-2035 it is projected to grow at 0.7%. This yields an average growth of 1.0% per year during 2008-2035.

Real GDP growth in the corresponding periods is 7.4% and 5.6%, yielding 6.4% during 2008-2035.
India’s Total Primary Energy Demand is projected to grow from 620 million tons of oil equivalent (Mtoe) in 2008 to 1,405 Mtoe in 2035, a CAGR of 3.1%. Share of coal is projected to drop slightly from 42% to 39%, while share of oil increases slightly from 23% to 26% between this period. Share of gas also increases from 6% to 11%.

For electricity, IEA’s central scenario projects generation to increase from 830 Billion Units in 2008 to 3,106 Billion Units in 2035, which means an increase at a rate of 5% per year during 2008-2035.
Correspondingly, electricity generation capacity is projected to increase from 163 GW in 2008 to 722 GW in 2035, a CAGR of 5.7%.

While share of coal-based capacity is projected to remain the dominant one, its share would fall from 52% in 2008 to 43%, or a drop by 9 percent points, by 2035. Share of Hydro is also projected to fall from 24% in 2008 to 18%, or a drop by 6 percent points, by 2035. The ones to increase their share are Gas-based, Wind, Solar PV, CSP capacity. Nuclear also gains a percentage point over its share of ~3% in 2008.

Energy related CO2 emissions are projected to increase from 1,428 MtCO2 in 2008 to 3,371 MtCO2, at a rate of 3.2% per year. Coal share drops from 68% to 61% in the total energy-related CO2 emissions, even as the total CO2 emissions on account of coal increase from 978 MtCO2 to 2,050 MtCO2.
CO2 emissions in Power generation are projected to increase from 804 MtCO2 in 2008 to 1,553 MtCO2, at a rate of 2.5% per year.

Understanding the India numbers
There are at least two ways to look at the India numbers. One is from external viewpoint, i.e., what these numbers mean in relation to numbers for the World and other big countries like the US, China, Brazil, Russia and South Africa. The other is from internal viewpoint, i.e., do these numbers make sense compared to other India-centric projections.

Here, let us take the second way and quickly see a few things.

  • Given the projection of 6.4% GDP growth over 2008-2035, primary energy demand growth of 3.1% translates into an elasticity of 0.48 for the full period. Elasticity of energy demand appears to be on the lower end than the average numbers for countries in development stage that one would find in the empirical literature. Indeed the empirical exercises themselves are fraught with the data and methodological issues. Nonetheless, it would not be wrong to conclude that in general the India-centric projections for total energy demand by 2035 are much higher than projected by IEA.


  • A similar conclusion comes out in case of electricity demand. The growth rate of electricity demand at 5% implies an elasticity of 0.78, which again is lower than the empirical estimates. Even with such projection of coal-dominated energy demand growth, the resultant CO2 emissions growth translates into an increasing carbon intensity of energy: 2.3 kg CO2/kgoe in 2008 versus 2.4 kgCO2/kgoe, in 2035.


  • If it is a reassurance, carbon intensity of GDP is projected to fall over the projection period. And why not, this policy goal is explicitly factored in the New Policies Scenario.In line with that, it turns out that the carbon intensity of electricity considerably reduces from 0.96 kgCO2/KWh in 2008 to 0.5 kgCO2/KWh in 2035. This decarbonization of electricity sector is on account of diminishing coal share.


  • A point that strikes one is the projection of solar PV and CSP capacity. For the two combined the document projects 7 GW by 2020 and 18 GW by 2025. This means that the Outlook considers the National Solar Mission, whose goal is to have 20 GW solar capacity by 2022 (with interim target of 7 GW by 2017), would meet only one-third of its target in the central scenario.


  • For Hydroelectricity, the projection of 133 GW by 2035 is directionally moving towards the full potential of 150 GW. However, for Nuclear-based electricity, the projection of 28 GW by 2035 is far short of what the Department of Atomic Energy thinks can be achieved.


IEA’s Outlook document is one of the most cited documents in the energy sector and has become a critical reference book for a variety of needs. Only a few other organizations produce such a holistic picture of world energy. This year’s outlook has considered the policy announcements around the world in making its central scenario.

When looking at India numbers, one finds that it is a mixed bag. While the goal of carbon intensity reduction features in the scenario, the goal of National Solar Mission, which is a part of National Action Plan on Climate Change that it considers, would be only partially met.

It would be too much to expect IEA’s Outlook which covers the entire global energy system to provide a clearer picture on a single country, although it does a good justice to large emerging countries like India, China and Brazil. To compliment such global document, it might be desirable to have an Indian institution providing similar authoritative and holistic guiding light every year, for enriching energy and carbon policy debate in the country.

Dr Ashish Rana works in a leading private sector company. He has been a Lead Author in Working Group III of the IPCC. The views expressed here are solely those of the author and do not reflect those of his employers.

Image(s) Courtesy:

Argonne National Laboratory

Author: Ashish Rana