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Apr

Global Energy Scenario and Indian Economy

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Rajeev Mathur

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New Delhi | Wednesday | 2 April 2025

The global energy mix refers to the combination of different energy sources used to meet the world's energy demand. It includes fossil fuels, renewables and nuclear energy.  During the last decade or so, about 80% of the world’s energy requirements have been met by using fossil fuels, i.e coal, oil and natural gas, with the renewables – hydropower, wind, solar & biomass accounting for between 15 to 20% and nuclear energy making up for the rest.

Current trends suggest that the global energy landscape is characterized by a significant shift towards renewable energy sources, driven by technological advancements, policy initiatives, and changing economic dynamics.

The Paris Agreement of 2015 was a pivotal moment in global climate action, setting the stage for countries to adopt self-determined climate targets. Over time, this has evolved into widespread commitments to achieve net-zero emissions, driven by scientific urgency, international negotiations, and global climate advocacy.

The International Energy Agency (IEA) reported that in 2024, renewables accounted for the largest share of growth in total energy supply at 38%, followed by natural gas (28%), coal (15%), oil (11%), and nuclear (8%).

A thrust on renewable energy in 2025 has led to installations across the world reaching a record high. Today, Clean energy sources like solar and wind account for 92.5% of new electricity capacity. China has led this expansion, contributing nearly 64% of the new capacity, primarily through solar panel installations. Despite these gains, projections indicate that the world may fall 28% short of the goal to triple renewable energy capacity by 2030, a target set for climate change mitigation efforts.

Article at a Glance
The global energy mix, primarily dominated by fossil fuels (80%), is shifting significantly towards renewable sources, which now account for 15-20% of the energy supply. The 2015 Paris Agreement catalysed this transition, leading to commitments for net-zero emissions. By 2024, renewables will represent 38% of energy supply growth, with solar and wind making up 92.5% of new electricity capacity, largely driven by China. However, projections indicate a 28% shortfall in achieving the goal to triple renewable capacity by 2030. In India, the energy sector is also transforming, with a focus on renewables and sustainability. The 2025 Union Budget emphasizes funding for renewable projects and green hydrogen while India considers removing import taxes on U.S. liquefied natural gas to enhance energy security. Additionally, Saudi Aramco is exploring investments in Indian refineries, reflecting India's strategic balancing of economic growth and energy sustainability in the global landscape.

Energy and the Indian Economy

India's energy sector is also experiencing a rapid transformation, marked by a growing emphasis on renewable energy and policy measures aimed at enhancing energy security and sustainability. As of January 2025, India's total installed power capacity stood at 466.26 GW, with coal remaining the dominant source despite efforts to reduce reliance on fossil fuels.

The Union Budget 2025 underscores this transition, introducing initiatives to bolster renewable energy, green hydrogen production, and e-mobility. Key measures include increased funding for renewable projects, support for domestic manufacturing, and skill development programs. Additionally, the budget proposes tax reforms and financial support for distribution companies (DISCOMs) to strengthen sustainable finance mechanisms. 

In a strategic move to secure energy resources, India is contemplating the removal of import taxes on U.S. liquefied natural gas (LNG) to increase imports and reduce its trade surplus with the U.S. This initiative aims to make U.S. LNG more competitively priced and aligns with India's commitment to augment U.S. energy purchases. Currently, U.S. supplies account for 20%-25% of India's LNG imports. 

Furthermore, Saudi Aramco is in discussions to invest in two new refineries in India, seeking a stable market for its crude amidst a declining share of Indian oil imports and increased competition from other sources.

These developments reflect India's strategic approach towards balancing economic growth with energy sustainability, positioning the nation as a pivotal player in the evolving global energy landscape.

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