India will become the world’s fastest-growing largest economy by 2023, and an investment boom is expected to sharply boost factory output, bank lending and consumer purchases, according to a recent study by the Indian central bank.
Climate Watch is concerned about such a strong outlook, as India’s energy sector faces record emissions in 2022 as the economy changes and is likely to further increase total emissions.
2022 was constrained by a shortage of producers, rising interest rates that weakened consumer demand and a record weak rupee against the dollar that made imports more expensive. But after a rapid corporate deleveraging that helped strengthen bank balance sheets in 2022, “the private sector is poised to increase spending, which could boost investment as the investment cycle picks up,”
Indian consulting firm Deloitte forecasts for 2023. economic outlook.
If aggregate industrial activity increases as expected in 2023, energy consumption and pollution from production lines and stacks
across the country will increase, undermining global efforts to control fossil fuel pollution.
Record use of Coal
Emissions of carbon dioxide (CO2) and related gases from India’s power sector will reach a record in 2022, according to data from think tank Ember. Emissions for January-November – the latest monthly data available – are 7.5 percent higher than the same period in 2021, when record annual electricity sector emissions totaled 1.091 billion tons.
Strong and sustained demand for electricity from households, retail and offices -primarily in air conditioning – helped boost India’s overall electricity demand in 2022, despite a modest outlook for manufacturers.
The main sources of pollution in 2022 were record high coal use and a sharp decline in natural gas use due to high global gas prices. Total electricity production in November rose 8.3 percent year-on-year indicating that Indian power producers successfully deployed more
new clean electricity in 2022 (up 13.3 percent) than new fossil fuels (up 6.7 percent). cents).
Electricity generation continued to be heavily dependent on coal, with an average of 72.7 percent of electricity coming from coal in 2022, Ember Data shows.
With Russia’s incursion into Ukraine continuing to disrupt natural gas markets, India’s power producers will continue to rely on coal for most of their baseload power generation in 2023, even as they bring in new clean but intermittent supplies. renewable energy.
Although capacity increased in 2022, India’s manufacturing bases remained below recent peaks as supply chain stress, rising interest rates and a weaker rupee weakened both production and consumption.
India’s famous car market – the fourth largest in terms of sales and production in 2021 – was particularly tight, with average production in 2022 about 25 percent below 2014-2018 annual average.
Other indicators of manufacturing activity in India also showed continued development. Production levels are lower, and several indices published by the Ministry of Statistics and Program Implementation (MOSPI) point to a decline in production in the textile, wood products and metal industries.
However, among Indian business executives surveyed by investment bank JP Morgan, 63 percent are optimistic about the economy in 2023, 9
percent expect investment to grow or remain flat, and 8.3%percent profit growth
Some concerns remain, with percent of respondents indicating that supply chain pressures are worse than a year ago, and 61 percent saying a
recession is likely in 2023, in line with global economic expectations.
But the overall tone of optimism among survey respondents – as well as positive expectations for India across the financial community – suggests that businesses across all sectors of the economy are poised for growth this year.
That means more energy use in homes, offices, farms, factories, mines, refineries, cement plants and logistics channels – and a corresponding increase in emissions.
With the country’s energy sector already hitting a new record in November last year, the cumulative emissions bill for 2023 could easily exceed
billion tonnes, cementing India’s position as the third largest energy sector polluter after China and the US.