For over three decades, every major global energy shock \u2013 from the 2003 Gulf War to the 2008 oil price spike and now renewed crisis in the Middle East\u00a0 which disrupting around 20% of global energy supply \u2013 has exposed the same structural weakness in India\u2019s economy: a deep and persistent dependence on imported fossil fuels and resulting vulnerability from price volatility.<\/p>\n
Each time global supply tightens, the consequences<\/a> ripple through India’s economy, widening trade deficits, raising inflation, and forcing fiscal interventions. But beyond these macroeconomic pressures, a more fundamental issue remains unresolved: India\u2019s energy system is still structurally tied to fuels that it does not control.<\/p>\n This dependence is not episodic; it’s systemic. Fossil fuels<\/a> constitute around 75% of India\u2019s primary energy need and import plays a significant part of it. India imports roughly 85\u201390% of its crude oil<\/a>, around 45\u201350% of its fossil gas<\/a>, and a significant share of its coal<\/a> needs, particularly higher-grade fuels.<\/p>\n The recent increased focus on coal<\/a> amid oil and gas shortages should be understood in this context. It is not simply a short-term operational decision. It is a reflection of a deeper strategic dilemma, one in which fossil fuels continue to dominate, even as their risks become more visible.<\/p>\n Coal as a shock absorber and not a solution<\/p>\n The current increase in coal utilisation<\/a> reflects its role as a \u201cshock absorber\u201d in India\u2019s energy mix. When gas becomes scarce or expensive, coal plants are ramped up to maintain electricity supply. This has been evident in recent policy responses, where coal plants are being pushed to operate at higher capacity to offset fuel shortages elsewhere.<\/p>\n Coal reliance comes with several critical drawbacks.<\/p>\n First, coal does not eliminate import dependence. India still imports substantial volumes, over 240 million tonnes<\/a> annually in recent years on the top of one billion tonnes of domestic production, particularly for coking coal and higher-grade thermal coal, exposing it to international price volatility and supply risks<\/a>.<\/p>\n Second, continued coal expansion locks in<\/a> long-lived infrastructure, creating stranded asset risks and reducing system flexibility at a time when cleaner, more cost-competitive alternatives are scaling rapidly. Third, this lock-in reinforces inefficiencies across the power system<\/a>, including underutilised assets and rising fixed costs, which can translate into higher tariffs and fiscal stress.<\/p>\n Finally, it exacerbates environmental and public health costs, including air pollution and emissions.<\/p>\n In effect, coal provides short-term resilience but reinforces long-term vulnerability.<\/p>\n Contradictions in current policy<\/p>\n What makes the current moment particularly striking is the coexistence of two parallel trends. On one hand, India is accelerating renewable energy<\/a> deployment, with solar and wind capacity expanding rapidly and non-fossil sources accounting for a growing share of installed capacity. On the other hand, fossil fuel infrastructure, especially for gas, is still being actively expanded<\/a>.<\/p>\n Amid the Middle East crisis, India is pushing renewable energy<\/a> by accelerating wind and battery clearances because gas supply has become volatile, but at the same time planning to use emergency clause to run imported-coal plant at full capacity<\/a>.<\/p>\n Fossil gas has long been positioned as a \u201ctransition fuel,\u201d but the geo-political disruptions again underscore its volatility. For a fossil fuel import-dependent country like India, this makes gas a risky foundation for long-term energy planning.<\/p>\n Expanding gas infrastructure, pipelines, LNG terminals, and distribution networks, risks locking India into another fossil fuel-dependent pathway. These are capital-intensive, long-lived assets that create economic and political incentives to sustain fossil fuel use, even as cleaner alternatives become more competitive.<\/p>\n Meanwhile, Indian households<\/a> and businesses<\/a>, which are already suffering from energy shortage, are going to face yet another summer of climate-fueled heatwaves<\/a>, one reason for the huge increase in energy demand seen over recent summers.<\/p>\n Renewable energy is the strongest link<\/p>\n To align with a 1.5\u202f\u00b0C pathway wind and solar generation need to grow about five\u2011 to six\u2011fold<\/a> by 2030, reaching roughly 900\u20131\u202f200\u202fTWh and around 600\u202fGW of installed capacity from the generation of around 220 TWh in 2024<\/a>, while accelerating coal phase\u2011down, expanding grid integration.<\/p>\n A persistent narrative<\/a> is that India continues to rely on coal because renewable energy cannot yet meet demand reliably. While challenges around storage, and grid integration are real, this framing misidentifies the core issue.<\/p>\n Renewable energy is not the source of India\u2019s vulnerability; fossil fuel dependence is.<\/p>\n India\u2019s renewable energy potential far exceeds its current and projected electricity demand. Estimates suggest over 3 TW of solar<\/a> and 1 TW of wind<\/a> energy potential, compared to current peak demand of around 250 GW<\/a>. At the same time, the economics have shifted decisively. Utility-scale solar tariffs in India have fallen to around INR 2\u20133\/kWh<\/a> (USD 0.3\/kWh), one of the lowest globally<\/a>, making new renewable generation cheaper<\/a> than new coal and gas plants in many cases.<\/p>\n While challenges related to storage and grid integration remain, India is already managing significant variable renewable energy with around 30% of total installed capacity<\/a> and also \u00a0scaling<\/a> both transmission infrastructure and battery storage, demonstrating that these are manageable system planning issues rather than structural barriers.<\/p>\n Electrification as the strategic pivot<\/p>\n Reducing this vulnerability requires more than diversifying fossil fuel sources. It requires reducing reliance on fossil fuels altogether. The most effective pathway<\/a> to align with a 1.5oC compatible world is large-scale electrification of end uses \u2013 transport, buildings, and industry \u2013 combined with a power system increasingly powered by renewables.<\/p>\n Electrification directly reduces oil and gas demand, thereby lowering exposure to import shocks. When paired with domestic renewable generation, it enhances both energy security and economic stability.<\/p>\n