India to soon overtake China as oil demand driver; can be leader in green hydrogen: IEA chief

India will soon overtake China as the largest driver of global oil demand even as it has an opportunity to become a world leader in green hydrogen production, International Energy Agency (IEA) chief Fatih Birol said Wednesday. A swelling population, which has likely already surpassed that of China, is driving demand in the world's third-largest energy-consuming nation. Its transition from fossil fuels to cleaner sources is expected to lag other regions, but cheap electricity produced from renewable energy sources like solar energy can help transform the nation into a green hydrogen leader.

"India's oil demand will grow. I think India will soon takeover from China as the largest driver of global oil demand growth," Birol told PTI on the sidelines of a G20 event here.

This is primarily because China has seen faster adoption of electric vehicles, leading to a drop in petrol and diesel consumption.

"One of the factors for the weakening of oil demand in China is rapid electrification of cars and buses," he said.

He hoped that demand in India will go down as electrification (vehicles run on batteries charged by electricity) picks up.

EV sales in China nearly doubled to 6.1 million units in 2022 compared to 48,000 vehicles in India in the same period.

Earlier, speaking at the event, Birol said he had six years back stated that India is set to move to the centre stage of global energy affairs.

"After 6 years today, I can tell you that India is at the centre of global energy affairs today."

This is not just on the strength of its huge demand but also its rapid strides in generating electricity from renewable sources like solar and using biofuels like ethanol produced from sugarcane, foodgrains and agri waste to replace fossil fuels.

He said that mixing 10 per cent ethanol in petrol helped the country avoid USD 2 billion equivalent of oil imports.

"In last 5 years, India was the largest contributor to the global solar capacity," he said, adding it has provided 500 million people access to electricity and given cooking gas to nearly 100 million to eliminate household pollution caused by using wood and others for cooking.

And the same can be done with hydrogen - the cleanest known form of energy.

He said India can use the cheap electricity it produces from renewable sources to split water to produce green hydrogen.

It can emerge as the lowest green hydrogen producer.

"India in my view cannot afford to miss the historical opportunity to be leader, to be a superpower in green hydrogen," he said.

Commenting on Oil Minister Hardeep Singh Puri's statement that India has the potential to become net zero in carbon emission before the 2070 target date, Birol said the country was doing "an excellent job" on the clean energy front.

"When Minister Puri said India may reach net zero before 2070, it is very good news for India and the rest of the world," he said.

"In my view, rich countries should reach their net zero targets well before (the current deadline of) 2050 and leave enough room for emerging countries to reach their net zero later on so the world as a whole reach net zero by 2050."

Speaking on the global energy scenario, he said last year, of all the power plants built in the world, 80 per cent were based on renewable sources of energy and the remaining 20 per cent on fossil fuels.

Within renewable, solar is definitely the main chunk, he said. "For the first time, the amount of global investment going into solar is higher than the amount of investment going into oil production. In my view, solar is the queen of the global energy system now".

Also, electric cars have seen exponential growth - from being one out of 25 cars sold in the world two years back to being one out of every 5 cars sold in the world this year, he said.

"Looking at the data and investment already locked in, a new clean energy economy is emerging. It doesn't mean we will stop using oil and gas. We will use oil and gas for years to come," he said.

Out of the total USD 2.7 trillion investment in energy this year, USD 1 trillion is for fossil fuel and USD 1.7 trillion in clean energy sources, he said, adding since 2015, investment in clean energy has increased year after year.

But the "growth in clean energy investment comes from advanced economies and China. Only a small portion is taking place in emerging markets, where it is needed the most," he said, emphasising the need for advanced economies, multilateral agencies and financial institutions to support clean energy investment in emerging nations.

Also Read: RBI rejects appointment of Akash Suri as CEO of Yes Bank-JC Flowers ARC: Sources

Also Read: RBI governor Shaktikanta Das awarded ‘Governor of the Year’ award for 2023 by London's Central Banking