New Delhi [India], India's energy future will continue to rely heavily on coal, even as the country navigates challenges and opportunities in oil, LNG and renewable energy.
According to a comprehensive view from S&P Global Commodity Insights (GCI), India's strategic priorities in energy security, affordability and sustainability are shaping its dynamic energy landscape.
Pritish Raj, chief pricing editor for Asia Thermal Coal at S&P Global Commodity Insights, said coal is poised to retain its status as the cornerstone of India's power generation. As one of the fastest-growing economies globally Globally, India's growing energy demand requires a substantial increase in coal consumption.
Raj emphasized: "As energy security becomes the top priority of one of the world's fastest growing economies, India's energy demand and in turn coal consumption will continue to rise exponentially over the next decade."
Despite significant advances in domestic coal production, which is projected to reach between 1.5 and 1.7 billion metric tons by 2030, coal imports will remain vital due to current challenges related to domestic coal quality and transport inefficiencies.Raj said: "We expect India's domestic production to be easily in the range of 1.5 to 1.7 billion tonnes by 2030, and imports to remain stable at over 150 million tonnes over the next 5 to 6 years".
Raj noted: "Investments in clean energy are going in the right direction, but with the intermittent nature of renewables, the higher cost in the development, production and transmission phase due to low scale will keep coal as a major driver of energy generation".
The intermittent nature of renewable energy and the higher costs associated with its development and transmission will ensure that coal remains a major driver of India's power generation for the foreseeable future.Joel Hanley, Global Head of Crude Oil and Fuel Markets Oil from S&P Global Commodity Insights, highlighted India's complex energy trilemma: ensuring security, affordability and sustainability.
India's ambition to become carbon neutral by 2070 requires a delicate balance between fostering economic growth and investing in sustainable energy solutions.
Hanley commented: "India is committed to being carbon neutral by 2070 and is investing in more sustainable energy, such as hydrogen, as well as more accessible electricity grids, but while that happens, India's economic development and growth will depend on oil."Affordability has been significantly bolstered by discounted oil trade with Russia and changing dynamics in the global crude oil market.
Hanley explained: "India is now very well positioned to take advantage of these changes to increase its levels of security and affordability. In all of this, India needs robust pricing methods to ensure a transparent and robust benchmark for its economy, such as Platts Dated Brent and Dubai."
A robust pricing framework, such as the Platts Dated Brent and Dubai benchmarks, is crucial to ensuring transparency and stability in Indian oil markets. Kenneth Foo, associate editorial director for Asia LNG at S&P Global Commodity Insights, reported that India has seen a notable increase in LNG imports, benefiting from the shift in global LNG cargoes and more competitive prices.
"With cargoes set to move away from Europe in 2024, Asian companies, including Indian importers, have benefited from cheaper LNG imports this year. India imported 10.54 million tonnes between January and May this year, a 25 percent more than in the same period in 2023. LNG prices remain attractive compared to competing fuels such as naphtha, LPG and fuel oil, imports are expected to continue growing," Foo stated.
If LNG prices remain favorable compared to alternative fuels, imports are expected to continue to increase. Achieving India's goal of including 15 percent LNG in its energy mix by 2030 will require overcoming significant challenges, including obtaining long-term contracts with transparent pricing mechanisms.
Foo highlighted: "There is a potential risk that importers will be locked into forward contract prices that are out of sync with prevailing LNG prices when such contracts begin from 2026. To eliminate price risk for LNG importers , create an even stronger index link between LNG import prices and domestic gas prices would be desirable."
Agamoni Ghosh, chief pricing editor for Carbon Pricing, APAC at S&P Global Commodity Insights, discussed the critical need for India to balance economic growth with the imperatives of decarbonization. Ghosh said: "Being one of the fastest growing economies of the world, India's energy transition policies aim to balance the need for decarbonization with energy affordability, as the country will rely on more traditional energy sources."
He added: "But given India's ambitious net zero emissions goal by 2070, a significant shift towards low-carbon energy alternatives is necessary. Balancing the imperatives of growth and sustainability will be paramount as India navigates the future. energy panorama".
India's emissions are expected to peak in 2043, with substantial contributions from coal-fired power generation. Key mechanisms driving India's energy transition include the establishment of an emissions trading system, expanding renewable energy capacity and promoting alternative fuels such as green hydrogen.
Hydrogen, in particular, is emerging as a key element in India's carbon reduction strategy. Recognized as an emerging sector, hydrogen is poised to accelerate decarbonization and create export opportunities.
According to a comprehensive view from S&P Global Commodity Insights (GCI), India's strategic priorities in energy security, affordability and sustainability are shaping its dynamic energy landscape.
Pritish Raj, chief pricing editor for Asia Thermal Coal at S&P Global Commodity Insights, said coal is poised to retain its status as the cornerstone of India's power generation. As one of the fastest-growing economies globally Globally, India's growing energy demand requires a substantial increase in coal consumption.
Raj emphasized: "As energy security becomes the top priority of one of the world's fastest growing economies, India's energy demand and in turn coal consumption will continue to rise exponentially over the next decade."
Despite significant advances in domestic coal production, which is projected to reach between 1.5 and 1.7 billion metric tons by 2030, coal imports will remain vital due to current challenges related to domestic coal quality and transport inefficiencies.Raj said: "We expect India's domestic production to be easily in the range of 1.5 to 1.7 billion tonnes by 2030, and imports to remain stable at over 150 million tonnes over the next 5 to 6 years".
Raj noted: "Investments in clean energy are going in the right direction, but with the intermittent nature of renewables, the higher cost in the development, production and transmission phase due to low scale will keep coal as a major driver of energy generation".
The intermittent nature of renewable energy and the higher costs associated with its development and transmission will ensure that coal remains a major driver of India's power generation for the foreseeable future.Joel Hanley, Global Head of Crude Oil and Fuel Markets Oil from S&P Global Commodity Insights, highlighted India's complex energy trilemma: ensuring security, affordability and sustainability.
India's ambition to become carbon neutral by 2070 requires a delicate balance between fostering economic growth and investing in sustainable energy solutions.
Hanley commented: "India is committed to being carbon neutral by 2070 and is investing in more sustainable energy, such as hydrogen, as well as more accessible electricity grids, but while that happens, India's economic development and growth will depend on oil."Affordability has been significantly bolstered by discounted oil trade with Russia and changing dynamics in the global crude oil market.
Hanley explained: "India is now very well positioned to take advantage of these changes to increase its levels of security and affordability. In all of this, India needs robust pricing methods to ensure a transparent and robust benchmark for its economy, such as Platts Dated Brent and Dubai."
A robust pricing framework, such as the Platts Dated Brent and Dubai benchmarks, is crucial to ensuring transparency and stability in Indian oil markets. Kenneth Foo, associate editorial director for Asia LNG at S&P Global Commodity Insights, reported that India has seen a notable increase in LNG imports, benefiting from the shift in global LNG cargoes and more competitive prices.
"With cargoes set to move away from Europe in 2024, Asian companies, including Indian importers, have benefited from cheaper LNG imports this year. India imported 10.54 million tonnes between January and May this year, a 25 percent more than in the same period in 2023. LNG prices remain attractive compared to competing fuels such as naphtha, LPG and fuel oil, imports are expected to continue growing," Foo stated.
If LNG prices remain favorable compared to alternative fuels, imports are expected to continue to increase. Achieving India's goal of including 15 percent LNG in its energy mix by 2030 will require overcoming significant challenges, including obtaining long-term contracts with transparent pricing mechanisms.
Foo highlighted: "There is a potential risk that importers will be locked into forward contract prices that are out of sync with prevailing LNG prices when such contracts begin from 2026. To eliminate price risk for LNG importers , create an even stronger index link between LNG import prices and domestic gas prices would be desirable."
Agamoni Ghosh, chief pricing editor for Carbon Pricing, APAC at S&P Global Commodity Insights, discussed the critical need for India to balance economic growth with the imperatives of decarbonization. Ghosh said: "Being one of the fastest growing economies of the world, India's energy transition policies aim to balance the need for decarbonization with energy affordability, as the country will rely on more traditional energy sources."
He added: "But given India's ambitious net zero emissions goal by 2070, a significant shift towards low-carbon energy alternatives is necessary. Balancing the imperatives of growth and sustainability will be paramount as India navigates the future. energy panorama".
India's emissions are expected to peak in 2043, with substantial contributions from coal-fired power generation. Key mechanisms driving India's energy transition include the establishment of an emissions trading system, expanding renewable energy capacity and promoting alternative fuels such as green hydrogen.
Hydrogen, in particular, is emerging as a key element in India's carbon reduction strategy. Recognized as an emerging sector, hydrogen is poised to accelerate decarbonization and create export opportunities.
