In an era where global concerns about climate change and sustainable energy sources are at the forefront, the world’s two most populous countries, China and India, are facing a complex energy conundrum. While they burn record amounts of fossil fuels, they are also installing record renewable power generation capacity.
This unique scenario underscores the slow pace and enormous inertia that must be overcome in the energy transition.
Growing Energy (Fossil fuels) Demand and Aspiring Living Standards
Both China and India are experiencing rapid growth in energy use to cater to various services, such as air conditioning, heating, cooking, lighting, power, and transportation. The aim is to raise living standards closer to those in advanced economies. This surge in energy demand for services mirrors historical transitions from pre-modern agricultural economies to modern urban and industrial societies.
This increased energy consumption brings about benefits like labour-saving technologies, higher wages, increased comfort, more entertainment, and opportunities for travel, bringing these countries closer to the living standards enjoyed in North America and Europe.
In 2022, the populations of China and India were comparable to the total population of countries in the Organisation for Economic Cooperation and Development (OECD), yet their total primary energy consumption remained significantly lower. This indicates that, even though they are pursuing rapid modernization, both countries have a long way to go to achieve similar energy consumption per capita.
The Imperative of an “All of the Above” Strategy
China and India are following an “all of the above” approach to economic development and energy security, reminiscent of the strategy advocated by former U.S. President Barack Obama in his 2014 State of the Union address.
This approach combines the use of fossil fuels and renewable energy sources, treating them as complements rather than substitutes, ensuring that both see simultaneous growth in consumption.
Unlike the OECD, where total energy consumption has remained essentially flat since 2007, China and India continue to experience rapid growth, with renewables and gas complementing fossil fuels to keep energy affordable and reliable.
Emissions Peak, but Not in the Near Future
China and India’s energy consumption is poised to grow more slowly in the future, at which point renewables will start substituting for fossil fuels instead of just complementing them. However, given their current position in the development process, this transition may take years in China and possibly decades in India.
Despite the growth of renewable energy sources, fossil fuels still account for a significant portion of primary energy consumption in both countries. In 2022, fossil fuels constituted 82% of primary energy consumption in China and 88% in India, including a substantial share in electricity generation.
Looking Ahead: The Global Energy Transition
While policymakers from OECD countries urge China and India to expedite their transition from fossil fuels to zero-emission alternatives, it is essential to recognize that these nations prioritize increasing access to energy services while ensuring affordability and reliability. In this, they are not straying from the historical and current examples set by the OECD nations.
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