Clean energy keeps India’s power emissions flat, but industry drives CO2 higher

India’s rapid expansion of clean energy has kept carbon dioxide (CO2) emissions from its power sector flat for two years, even as electricity demand continued to grow. But the gains in electricity generation are being offset by rising emissions from heavy industry, leaving the country’s overall CO2 emissions 3.7% higher in the first half of 2026 than a year earlier.

An analysis by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief found that India’s power-sector emissions in the first half of 2026 were at the same level as in the first half of 2024. The analysis describes this as the first two-year period in more than 50 years in which coal power did not grow despite an increase in electricity demand.

Over the same two years, electricity generation increased 7%, or about 63 terawatt-hours (TWh). Clean energy sources added 70 TWh, more than enough to cover the increase in demand. Solar accounted for 44 TWh of the increase, followed by wind at 13 TWh, hydro at 8 TWh, and nuclear at 7 TWh.

The shift has also been driven by a rapid increase in renewable capacity. India added 77 gigawatts (GW) of solar, 11 GW of wind, and 5 GW of hydropower between the first halves of 2024 and 2026.

Clean energy is capping coal power

Coal generation has effectively stalled despite continued additions to the coal fleet. Generators added 8.5 GW of coal capacity over the two-year period, but the additional capacity has resulted in fewer running hours rather than higher overall generation.

The analysis says new clean-power generation has remained above average electricity demand growth for the past 18 months. This suggests that the trend could continue if new projects are completed and the electricity system can absorb more variable renewable power.

Gujarat has led this shift. It recorded both the largest decline in fossil-fuel generation and the largest increase in clean-power generation between the first halves of 2024 and 2026. Rajasthan and Tamil Nadu also recorded strong growth in clean generation alongside reductions in fossil-fuel generation.

However, the picture varies across states. Madhya Pradesh, West Bengal, and Punjab reduced fossil-fuel generation largely because of higher electricity imports rather than increased local clean generation. Meanwhile, Maharashtra and Telangana were able to almost match their large increases in electricity demand with clean-power growth.

Oil and gas demand is falling too

India’s oil consumption also declined for a second consecutive year, falling 1.3% year-on-year in the first half of 2026. Overall CO2 emissions from oil and gas fell 7%.

The decline came despite continued growth in road transport fuels. Diesel consumption increased 4.1%, while petrol consumption rose 6.9%. Greater ethanol blending reduced petrol-related emissions, while the growing adoption of electric vehicles is beginning to moderate demand for petrol.

The disruption caused by the Strait of Hormuz crisis also affected fuel consumption. LPG demand fell 7%, while petcoke consumption dropped 9.9%. Aviation fuel demand growth slowed to 2%.

Industry is pushing emissions higher

The biggest increase in emissions came from heavy industries — steel and cement. Emissions from the two sectors rose 8% year-on-year in the first half of 2026, with their combined share reaching 23% of India’s total CO2 emissions.

Steel and cement production grew 8% and 9%, respectively, supported partly by higher investment in real estate. At the same time, Indian industry remains heavily dependent on fossil fuels.

The CREA analysis found that India has the second-lowest rate of industrial electrification in the G20. Electricity accounts for a much smaller share of industrial energy use than in many other major economies, leaving substantial scope for replacing direct fossil-fuel use with clean electricity.

That also means industrial growth could continue to drive emissions, fuelled by fossil fuels, unless electrification accelerates.

Coal investments continue

The expansion of clean electricity has not stopped investment across India’s coal supply chain. About 43 GW of coal-power capacity was under construction at the end of June, according to the analysis.

The government is also pursuing coal gasification to produce chemicals such as fertiliser and plastic feedstocks, while seeking to increase domestic coking coal production for steelmaking. New coal mines are also planned.

The analysis warned that these investments could lock in coal use for decades, even as clean electricity begins to absorb most or all of the growth in power demand.

Grid and storage will determine the next phase

Maintaining the clean-energy growth rate will require upgrades to India’s electricity grid, more energy storage, and greater flexibility from coal plants.

The government has issued tenders for around 272 GWh of storage capacity by May 2026, including 142 GWh of pumped hydro and 133 GWh of battery storage. But grid constraints are already emerging. Renewable projects totalling 5.3 GW have missed completion deadlines, and curtailment has affected projects dependent on interstate transmission.

The analysis therefore pointed to a changing emissions challenge for India. Clean energy is increasingly capable of meeting new electricity demand without increasing coal generation. The bigger test will be whether the same shift can reach industry, where rising output is still closely tied to fossil-fuel consumption.

[Additional inputs: Bhasker Tripathi]