Fuel consumption by India was rising in December 2023 as the nation moved towards all-electric automobiles and rolled back another leg of subsidizing fossil fuel. As for the figures revealed by the Petroleum Planning and Analysis Cell, Petroleum Ministry and Natural Gas, overall fuel demand registered a rise of 2.1% on an annualised basis in December to 20.67 million metric tonnes.
Among all the products, petrol or otherwise known as gasoline led the pack first with a 10.8% YoY growth to 3.3 million tons. Diesel fuel sales have also seen a 6% growth to 8.1 million tons. LPG sales have also grown favorably at 5.8% sales elevation to 2.78 million tons. Naphtha has declined by 22.7%, thereby reducing the sales to 1.07 million tonnes. In December, the consumption of bitumen and fuel oil grew by 6.6% and 1.1%, respectively.
The surge in fuel usage does create some cause for alarm over long-run sustainability in the attainment of the sustainability objective of India as it is gradually migrating to electric vehicles and also on account of reforms in fossil fuel subsidies by the government.
Transition Challenges to Electric Vehicles
In India, electric vehicle transition picked up in the recent past with government support and increased investment in infrastructure. It aims for 30% of new vehicle sales to be electric by the year 2030, which would significantly reduce demand for traditional fuels in the form of gasoline and diesel. But despite all this, consumption of fuel in India continues going up, though there is indication that only the direction towards EV could not significantly do much to abate dependency on fuel within that short period.
This according to a recent report published by the Council on Energy, Environment, and Water said that to achieve 30 per cent penetration of EVs in new vehicle sales would translate into reduction of about 15% from their petroleum tax revenues for central as well as the state governments by 2030 as their fossil fuel consumption will come down when electric vehicles see increased adoption. This is moving towards sustainability, although the thing is that such vehicles can never be taken without any restriction because, in a major portion, the revenues of a government are based on fossil fuel consumption.
Electric cars in India are expected to pick up pace in the next few years. It is expected that by the end of 2025, there would be about 500,000 electric cars on Indian roads alone-where 370,000 of these would be battery electric vehicles and 129,500 of them plug-in hybrid electric vehicles. That growth represents focused efforts by the government towards cleaner transportation solutions and reduced carbon emissions.
This would certainly not be in tune with overall increases in fuel demand soon enough; this will be preceded by increases in country vehicle ownership by the country and economic recoveries from COVID-19 pandemics that encourage greater fuel usage.
Oil, Gas, and Coal Subsidy Reforms
Apart from electric vehicle push, over the recent past, the country has started reformmating its fossil-fuel subsidies. Subsequently, with a “remove, target and shift” strategy implemented since 2010, and successive fiscal support in the oil and gas segment increased to 85%, freed some resources that can be diverted for clean energy projects such as EV infrastructure or renewable energy installations.
One of the ways India is striving to make the transition toward a more sustainable energy future is through reducing fossil fuel subsidies. Removal of subsidies on fossil fuels is how the government is going to reduce reliance on oil and gas, ensuring the environment while providing resources to cleaner energy sources. All the monies freed into these reforms get injected into the popularization of EVs as well as similar sources of renewable energy, including the likes of solar and wind power.
These subsidy reforms are aligned with India’s long-term vision of weaning itself off fossil fuel dependence. Under the Paris Agreement, India has agreed to reach net-zero emissions by 2070. This nascent stage of India’s energy transition would mean that such reforms would play an important role toward its ambitious climate goals.
Balancing Fuel Demand and Sustainability Goals
Although fuel demand is going up, the Indian government gives more importance to its net-zero emission target and wishes to pursue long-term sustainable solutions for energy requirements. However, problems still arise to be overcome in balancing consumption of fuels, energy security along with the rise in demand towards economic growth.
Population growth and urbanization might be the possible reasons for increased fuel demand because of a growing economy. All these drive further demand for energy. India, as one continues to evolve from the rest on the scale, is envisioned that the trend to electric transport is going to facilitate a lowering overall fuel consumptions. Similarly, India too shall have to raise its energy efficiency levels as well build clean-energy infrastructures; more electrification of vehicular transport across the country has had to be pressed for and opening up into fresh markets under such sustainability-related agenda.
Conclusion:The dual challenge that India will face in the coming years is increasing fuel demand and long-term environmental goals. Its success depends on continued investment in EV infrastructure, renewable energy projects, and further reductions in fossil fuel subsidies. This would thus mean that the energy transition of India is rather complex, in which there is increasing fuel demand as well as an evolution towards a more clean form of energy supply for the country. Though this path towards sustainability is tough, there are definite pathways forward like the reforming of subsidies, incentives towards electric vehicles, and investments into renewable sources.