An Unexpected Slowdown: Why India’s Emissions Growth Stalled in 2025
As a fast-growing developing economy, India's emissions of CO₂ are also rising, but 2025 was an exception with very low emissions growth. In this inaugural edition of the India Energy and Climate Pulse, we discuss this event and present a data-based analysis of the reasons behind it.
An Unexpected Slowdown: Why India’s Emissions Growth Stalled in 2025
As the largest contributor to India's CO2 emissions, the electricity sector is central to understanding the country's emissions trajectory.
India’s recent economic surge is notable not just for its pace but for the transformation in how that growth is powered. India’s economy expanded by 7.5% in 2025 compared to 2024, powered in large part by the central government’s strong push on capital expenditure. A rapidly growing economy leads to rising energy demand — but the key question is: what kind of energy is driving that growth? Based on our analysis using peer-reviewed methods, India’s fossil CO2 emissions rose by just 1.1% in 2025—far lower than the 4.1% average over the previous decade. This suggests that economic expansion is becoming less closely coupled with carbon-intensive energy in 2025 compared to 2024, marking an important step toward a cleaner growth trajectory.
In 2025, coal-related emissions rose by only 1.3% compared to 2024, while emissions from oil declined slightly by 0.3%. In contrast, cement emissions increased sharply in 2025, largely driven by government-led infrastructure spending. Natural gas consumption fell significantly by 6% in 2025, reflecting a shift in policy: unlike in 2024, when the government required expensive gas-fired power plants to operate during the two hottest months of the year, no such mandate was in place in 2025. The drop in emissions from oil was partly because of the increase in ethanol blending in petrol, which reached 20% in 2025, up from 14.6% in calendar year 2024.
India’s power generation from coal was down in 2025
A significant shift is underway in India’s electricity sector, with 2025 trends pointing to a substantial expansion in renewable capacity.
As the largest contributor to India’s CO2 emissions, the electricity sector is central to understanding the country’s emissions trajectory. In 2025, the sector showed a notable shift compared to 2024, with coal—still the backbone of power generation—declining by 3%. Two key factors drove this change. First, electricity demand grew more slowly than expected, largely due to an early monsoon and the wettest May on record, which brought cooler conditions and reduced the need for air conditioning during peak summer months. Second, 2025 marked a standout year for renewable energy expansion in India’s electricity sector, with significant growth in both solar PV and wind power, further reducing reliance on coal. The higher rainfall also contributed to higher generation from India’s hydropower.
India’s solar generation is now pushing midday coal down
The solar PV surge in India in 2025 is reshaping mid-day power generation.
Just six years ago, coal-fired power generation in India remained largely flat throughout the day, including during midday hours. In 2025, this pattern has changed significantly due to solar expansion. Even in the middle of winter, rising solar PV generation is now pushing coal output down during peak sunlight hours—a clear sign of how rapidly renewables are transforming the grid. Recognizing this shift, the government is actively working to make existing coal-fired plants more flexible, ensuring they can ramp up and down efficiently. Coal power plants utilization has also declined in 2025 compared to 2024. This adaptation is crucial to integrating even higher levels of variable renewable energy while maintaining grid stability. But much work remains to be done in tooling India’s coal-fired power plants to be more flexible in response to growing renewable generation.
India’s ethanol blending in petrol reached 20%, cutting oil- related emissions
India’s push to decarbonize its transport sector and enhance energy security is starting to show results, with recent policy and market shifts translating into measurable progress.
For the first time in at least 25 years—excluding the pandemic dip in 2020—India saw a decline in oil-related emissions. A key driver behind this shift is the country’s ethanol blending program, which reached 20% in 2025—five years ahead of the government’s original 2030 target. Strong crop yields in 2025 further supported this rapid progress, ensuring sufficient feedstock for ethanol production to meet this target. This blended fuel serves as a transition fuel to reduce transport emissions. With electric vehicle adoption in India still lagging well behind countries like China, ethanol-blended fuels could serve as an important bridge—much like similar strategies adopted across Europe—helping to curb emissions while the shift to full electrification gathers pace. However, this approach is not without trade-offs, as increased reliance on ethanol production can pose risks to food security and exacerbate water scarcity.
2026 could be a record year for India’s renewables
India’s renewable energy sector is poised for unprecedented growth, with record additions projected in the coming years.
While India added 44.6 GW of renewables (wind, solar PV, battery energy storage systems) in 2025, projects that are already under construction with completion dates in 2026 would see at least 64 GW being added, another significant increase. Further ahead the data are less reliable, since the reporting is only for projects that are already under construction at the time of reporting. But 2026 is likely to be a bumper year for renewable energy in India, as long as issues like transmission capacity, power-purchase agreements, and curtailment are dealt with effectively.
Coming up in our next edition
India is highly reliant on imports of crude oil, natural gas, and liquefied petroleum gas (LPG), much of which has come from the Middle East. The situation in the Middle East has led to very significant impacts on India’s energy availability, with reports of restaurants closing for lack of LPG, street-food stalls switching to coal, rapid increases in sales of induction stoves to replace or supplement LPG cooking, and cuts in energy supply to industry. Power generation from natural gas dropped by about 25% when shortages began in mid-March. The government is responding by reducing excise tax on petrol and diesel, helping the state-owned oil companies hold retail prices unchanged; encouraging auto manufacturers to produce more electric vehicles; encouraging a switch to piped natural gas (PNG) where available; and mandating that the Petroleum Planning and Analysis Cell (PPAC, under the Ministry of Petroleum & Natural Gas) collect higher frequency data for better monitoring. In our next Pulse we expect to have more data to be able to analyse this situation more closely.
