When heavy storms triggered a fault on a major power line in Indonesia’s Sumatra in late May, blackouts plunged homes and businesses across the island into darkness, leaving millions to cope without power in the humid heat for up to a day.
Failed traffic lights caused chaos on the streets of Medan, one of the country’s biggest cities, and restaurants and shops had to shutter or throw out food after fridges stopped working. Four people were reported to have died from carbon monoxide poisoning from generators.
A power outage caused by damage to cables on a high-voltage transmission line, the first of two to strike Sumatra in a fortnight, highlighted the huge challenge facing Indonesia and much of neighbouring Southeast Asia – the maintenance and upgrading of inadequate grid capacity that industry analysts say is proving an obstacle for billions of dollars in planned clean power investments.
Experts told Climate Home News the Galang–Simangkuk transmission line, which was relatively new and only began operating seven years ago, should have been able to withstand the storms that caused transmission towers to collapse in early June.
“It should not have had these grid failures,” said Wai-Shin Chan, Hong Kong-based head of research at Asia Research & Engagement, a consulting firm, warning that climate change would bring more frequent episodes of extreme weather.
“The grid resilience is really not there,” Chan said.
The Indonesian Air Force helped state-owned utility PT Perusahaan Listrik Negara (PLN) transport emergency power towers to restore electricity supplies within 24 hours, but the two incidents could cause longer-lasting damage to investor confidence – hurting the delivery of much-needed reliable clean electricity supplies.
PLN did not respond to a request for comment.
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Indonesia’s failing Just Energy Transition Partnership is a cautionary tale
The government has abandoned its plan to shut down a major coal plant, which was a key part of the deal, raising doubts about the donor-backed approach -
EU, UK lead push for electrification as “powerful weapon” against fossil fuels
A group of dozens of countries seeks to build momentum for a COP31 pledge to electrify 35% of global energy use by 2035 as an alternative to fossil fuels
Grid bottlenecks and projects stuck on hold
With electrification high on the agenda of the COP31 climate talks later this year, there is growing global focus on the need to bolster grid infrastructure to cope with increased electricity use and more renewables in the power mix.
In Southeast Asia, energy experts say inadequate grid capacity and maintenance is already proving a major factor in the region’s stuttering rollout of new clean energy projects.
About 50% to 60% of renewable energy projects in Vietnam, Thailand and Indonesia were cancelled or stalled between 2021 and 2025, according to a recent report by consultancy Bain & Company and Standard Chartered. In Indonesia, 48% of announced projects were subsequently dropped or delayed during that period.
Progress in the region is also being hampered by issues ranging from unclear power purchase agreement (PPA) structures, a failure of power policies to keep up with investor needs, permitting and licensing approval delays, grid connection constraints, limits to private sector involvement in electricity markets, and policy and tariff uncertainty, energy experts said.
Some renewable energy projects have also faced opposition due to their environmental impact and issues related to land rights.
But Bain researchers found grid infrastructure was the biggest bottleneck for Southeast Asia’s energy transition, with about $18 billion per year needed in investment for modernisation and upgrades.
The International Energy Agency (IEA) has warned that electricity grid and storage investment in the region was higher in 2015 at $15 billion compared with $12 billion in 2025, even as electricity demand and renewable energy growth accelerated.
“It’s a concern for long-term power development in the region,” Chan said.
“If these risks – grid curtailment, policy uncertainty, permitting and PPA – are not adequately addressed, investors just don’t have the confidence to hit the final investment decision button,” he added.
A stuttering energy transition
Ramping up progress on solar, wind, hydro and geothermal projects is vital for Southeast Asian nations to hit their targets on cutting planet-heating carbon emissions.
Indonesia has pledged to reduce emissions by 31.9% by 2030 compared with business-as-usual levels, or by 43.2% with international support, on the way to reaching net zero by 2060.
Renewables accounted for about 18% of Indonesia’s energy mix in April 2026 according to local media reports, falling short of the country’s initial 23% target for 2025, with the majority of its energy needs met by coal, oil and gas. In 2025, a new National Energy Policy postponed achieving the target to 2030.
“The region carries significant weight in global terms, given its share of world population and energy consumption,” said Joseph Jacobelli, an impact investor and author of Asia’s Energy Revolution and Powering the Unstoppable Green Shift.
“Every delay in renewable energy deployment extends dependence on fossil fuels and pushes net zero targets further out of reach,” he said.
There are cost benefits of increasing renewables in the overall power mix, too.
In many parts of the region, new renewable power – especially solar and onshore wind – is cheaper than building new fossil fuel generation. The global energy shock unleashed by the Iran war has highlighted the energy security benefits of renewables, though it also raised concerns about coal backsliding in countries including Indonesia.
Surging oil prices exposed Southeast Asia’s vulnerability to fossil fuel supply disruptions, causing energy prices to soar and widespread fuel shortages that led the World Bank to downgrade the region’s growth projection.
“This situation pushes us to accelerate [the energy transition], we must move faster,” Indonesian President Prabowo Subianto said in March, adding that the government was focused on solar projects that would deliver a total installed capacity of up to 100 GW.
At the same time, progress on moving away from coal has been sluggish. Both Indonesia and Vietnam signed up for Just Energy Transition Partnerships (JETPs) – a funding initiative set up by the G7 to help developing nations shift away from coal – though a lack of favourable financing is holding back these plans.
The US withdrew from its JETP deals with the two countries last year, reflecting President Donald Trump’s wider energy policies, and Indonesia abandoned plans to close a major coal power plant.
Lack of finance, or lack of faith?
But a shortage of financing to bring new renewables projects online is not the cause of foot-dragging in Indonesia, where installed solar capacity reached only about 20% to 30% of the government’s 2020-2025 target, Bain researchers said.
Of an estimated $540 billion in green capital expenditure announced across Southeast Asia’s power and electric vehicle value chains between now and 2030, only about $315 billion is on a credible path towards deployment under current conditions, according to the report.
Between 2022 and early 2026, more than a quarter of the 452 new solar projects announced in Southeast Asian countries were postponed or cancelled, according to Global Energy Monitor‘s Global Solar Power Tracker.
In Indonesia, the Batam Bintan Karimun solar farm was initially expected to come online by 2024 but was cancelled in 2023 for unknown reasons, Kasandra O’Malia, a project manager at Global Energy Monitor, told Climate Home. The project also included plans for Southeast Asia’s largest associated battery storage facility.
Another high-profile Indonesian development that has stalled is a 3,500 MW solar and storage project proposed on Riau Island to export clean electricity to Singapore. While not formally abandoned, there have been few updates to this project since April 2022.
“This execution gap is not really to do with money – there is available capital – but the finance is not being deployed effectively because the risks have not been adequately redressed,” Chan said.
In a bid to foster investor certainty, Indonesia’s government approved a new 2025-2034 Electricity Supply Business Plan (RUPTL) for PLN in May 2025, replacing years of delays over the country’s power development roadmap.
As well as aligning government policy, streamlining permitting, simplifying purchase procedures and targeting 70 GW of new generation, with renewables accounting for the vast majority of additions, the plan includes the construction of about 47,800 kilometres of new transmission lines and substations with a total capacity of 108,000 megavolt-ampere, spread across Indonesia.
The Ministry of Energy and Mineral Resources, several domestic and international renewable energy developers, and the Indonesia Renewable Society, did not respond to requests for comment.
Another way to soothe investors’ nerves would be for governments to use public money to de-risk investments, but there is little appetite for this approach in the region, Chan said.
A more effective tool would be ensuring stable, investment-friendly energy market policies and regulations, said Alnie Demoral, a Manila-based energy analyst at climate think-tank Ember who previously worked with solar developers and investors.
Renewable energy developers, investors and authorities can spend years negotiating the project’s costs, permitting and whether grid connection will be available to bring clean power online, she said.
Often the longest discussions focus on the power pricing tariffs that governments set for renewable energy producers. Changing policies or disagreement on underlying cost assumptions can stall or delay a project before it reaches financial close, she added.
“Governments have to do their part by making sure the investment environment is stable,” Demoral said.
“But this is a two-way process. The private sector and developers must also ensure that their assessments of the project are based on robust assumptions.”
AI data centres add to the strain
At the same time, rapid growth in power-hungry AI data centres is putting extra strain on the region’s overstretched grids.
AI data centres, which use much more power than regular data centres, are becoming one of the largest drivers of new power demand in Southeast Asia as governments in the region jostle for more multibillion-dollar investment in the sector.
-
Explainer: Will AI data centres make or break the energy transition?
As grids struggle to meet soaring electricity demand for AI data-crunching, big tech is under pressure to cover the costs of boosting power supplies – which may be dirty or clean -
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The slow pace of renewable energy deployment and grid modernisation, coupled with ongoing reliance on fossil fuels in the electricity mix, will make it difficult for the region to meet a new, fast-growing source of additional demand without increasing emissions.
Emissions from data centre power use in Indonesia are expected to quadruple between 2024 and 2030, according to Ember.
AI data centres operate around the clock and will often use any power that is available – be it renewables or fossil fuels, said Chan, urging policymakers to first ensure they can meet the power needs before courting data centres.
Many new AI data centres are planned for areas with insufficient high-voltage transmission capacity, according to the Bain report, suggesting that countries should focus on new high-voltage lines, larger substations and stronger interconnections between regions.
The researchers note that AI data centres also typically take about one to three years to build, while major electricity transmission lines and grid updates can take five years or more, adding that power grid investments must happen before renewable energy or AI projects.
“Growth in data centres and AI is already adding pressure to constrained grids,” said Christina Ng, the Kuala Lumpur-based co-founder of Energy Shift Institute, an Asia-focused, independent energy finance think-tank.
“The risk is that new demand is met through high-emitting electricity if clean power and clean grid investment do not keep pace.”
Main image: A technician walks next to solar panels that partially provide electrical power to the Grand Mosque of Istiqlal in Jakarta, Indonesia (Photo: REUTERS/Willy Kurniawan)
The post Southeast Asia’s fragile grids threaten billions in clean energy investment appeared first on Climate Home News.
Southeast Asia’s fragile grids threaten billions in clean energy investment
What happens when a love of marine life meets a playful imagination?
Sydney artist, illustrator and children’s author Sha’an d’Anthes, better known as Furry Little Peach, has teamed up with Greenpeace to create Happy Ocean Happy Planet: a joyful celebration of the extraordinary creatures that call our oceans home.
Sha’an felt inspired to create an illustration celebrating the beauty and resilience of marine life. Its hopeful message, A Happy Ocean is a Happy Planet, sparked a special collaboration with Greenpeace and a limited-edition t-shirt designed to help protect the oceans that inspired it.
The exclusive Furry Little Peach tee is available as a gift to new regular Greenpeace donors who give $30 or more and make at least three donations. By becoming a regular giver, you’ll help Greenpeace campaign for ocean protection.
ARTIST INTERVIEW: Sha’an d’Anthes (Furry Little Peach)
Sha’an shares the story behind the artwork, the local marine creatures featured in the design and why hope can be such a powerful force for action.
Hi Sha’an! Can you tell us a little about yourself and what you do?
My name is Sha’an d’Anthes, I also go by the pseudonym Furry Little Peach and I’m an illustrator, artist and children’s author based in Sydney, Australia. I love creating joyful, vibrant and nostalgic art that looks at the world through the lens of childlike wonder.
What do you love about drawing animals and nature?
I love all of the different shapes, colour and narrative you get to explore when drawing animals and nature. I’m also a city-slicker these days, and so I think that my work is a sort of escapism (for myself and hopefully for my audience).
How did the Greenpeace collaboration come about?
I went to the premiere of David Attenborough’s documentary Ocean, and felt compelled to create something to share the message of the film. This t-shirt is actually based off of that illustration including the tagline in I included when I shared it “A Happy Ocean is a Happy Planet”. I’m so grateful Greenpeace approached me for the project – it was a blast.
Where did you start when creating the Happy Ocean Happy Planet design?
The Happy Ocean tee starts the same as all of my work – with a brainstorm/braindump and really loose concept sketches.
How did you choose the animals for the illustration?
I actually asked Greenpeace to help me with the research of local marine life and they were so accommodating. They very quickly delivered me a huge list of local species of fish, mammals and coral and I just went through and looked up each creature and curated a little group of sea life that I thought would look sweet together – a mix of sizes, types, colours, textures and shapes.
What did you use to create the artwork?
So much of my work is traditional, but when it comes to things like t-shirts I always use digital drawing programs because I like to draw each colour in a separate layer which requires me to jump in and out of layers because it allows me to control colour and printing. When working digitally I always sketch in Procreate (an Australian digital art app), and then with this project I created final art in Adobe Fresco because it called for a vector graphic (an image that can be blown up to any size).
Do you have a favourite creature in the design?
I love painting Humpback Whales and always have, but I also have a soft spot for the sweet little Jelly Blubber jellyfish.
What did you want people to feel when they saw the artwork?
I specifically wanted to focus on the outcome that all of us want to see – a happy, thriving ocean where creatures are given the time and space to balance themselves. I feel that even when tackling tough subjects, leaning into hope is my natural inclination. As long as we have hope that things can be better, we will continue to take action.
What was the most fun part of creating it?
I actually documented the entire process of this project in a studio vlog on YouTube – and you can see how much fun I’m having doing final art jumping between layers and building the image. I had just come off completing final art for two books which are multi-year long projects, so being able to do a project that from start to finish in just a few days was really freeing at the time.
What does a “happy ocean” mean to you?
An ocean that given the time and space to repair and balance itself. Something I really took away from David Attenborough’s Ocean is that ocean ecosystems are actually really good at repairing themselves if we just let them do their thing.
How can people get their hands on the t-shirt?
The shirt is a reward for regular givers to Greenpeace – those who commit to at least 3 months of donations will receive the tee as a gift. Read about how at http://act.gp/flp-tee
How is Greenpeace helping to make our oceans happier places?
They have a deep focus on the health and happiness of our oceans through advocating for the set up of marine sanctuaries, holding big ocean polluters to account and calling for a ban on deep sea mining.
What are you working on next?
I will be jumping headfirst into Peachtober – an annual daily art challenge I run each year in October, if there are any artists reading this it’s a great time so please come join! In terms of publications my next picture book The Late Bird will be out in February 2027 (published by Harper Collins US) and then I have an creative activity book for adults coming out next August with Chronicle US and Penguin Australia. Otherwise you can always check out what I’m tinkering away with in my studio on Instagram and YouTube.
Climate Change
AI giant Anthropic’s first Australian data centre deal an “egregious” example of Big Tech double talk
SYDNEY, Thursday 17 September 2026 — Greenpeace Australia Pacific has slammed AI giant Anthropic’s deal for its first Australian site in Queensland’s Western Downs, the heart of coal seam gas country, saying the project will entrench gas and turbocharge climate pollution.
The expected electricity demand from the data centre site, situated in the middle of the Western Downs coal seam gas fields, is comparable to 1.5 million Australian households. Greenpeace’s report Energy Vampires: The AI data centres draining Australia called for a moratorium on frenzied data centre development until appropriate guardrails are in place.
Joe Rafalowicz, Head of Climate and Energy at Greenpeace Australia Pacific, said: “This is an egregious example of Big Tech giants being given carte blanche to drain energy and water, and use polluting gas to fuel their hyperscale data centres.
“AI and Big Tech corporations claim to bring new renewable energy to the grid, while blatantly planning to power their operations with polluting fossil fuels.
“Planning documents show the first stage of this behemoth project could be powered by ‘behind the metre’ gas — the same playbook AI companies have used in the US, leading to a 20% increase in climate pollution from electricity. Now these companies want to bring their cowboy plans to Australia and the Federal Government is allowing it.
“If they plugged into the local grid, the power required would increase Queensland’s electricity grid emissions by around 6.6 million tonnes — an 18% rise. If they build their own gas-fired power plants, this will drive up Queensland’s emissions even more.
“Billions of dollars are now pouring into a massive pipeline of proposed new data centres, of unprecedented size, being built at incredible speed across the country. Australians should be worried about the extreme lack of scrutiny being applied to these projects, and the corporations leading the data centre charge.
“The data centre build-out is happening without the endorsement of the Australian people, yet we are the ones who will pay the price. We can not allow unchecked data centre expansion to derail our renewable energy transition, entrench gas and turbocharge climate pollution — that’s why Greenpeace has called for an urgent moratorium until appropriate guardrails are in place.”
ENDS
Media contact: Kate O’Callaghan on 0406 231 892 or kate.ocallaghan@greenpeace.org
Climate Change
Analysis: India’s power-sector emissions flat for two years due to clean-energy surge
A surge in clean energy has kept carbon dioxide (CO2) emissions in check across India’s power sector, with no growth from the first half of 2024 to the same period in 2026.
This guest post is by:
Lauri Myllyvirta, lead analyst at Centre for Research on Energy and Clean Air (CREA)
Anubha Aggarwal, India analyst at CREA
This is the first time in more than 50 years that there has been no growth in India’s coal power over a two-year period, even as electricity demand grew overall.
At the same time, both oil and gas consumption have fallen across the nation for two years in a row, helping alleviate the shock of the Hormuz crisis.
Nevertheless, the new six-monthly analysis for Carbon Brief shows that India’s emissions grew by 3.7% year-on-year in the first half of 2026, due to increases from steel, cement and other sectors.
Other key findings for the first half of 2026 include:
- India’s power-sector emissions flatlined at 2024 levels, after a 2.2% decline in the first half of 2025 and a 2.3% rise in the same period this year.
- Clean energy met all of the 7% rise in India’s electricity demand over the two years, adding 63 terawatt hours (TWh), equivalent to the total demand of Switzerland.
- India has added 77 gigawatts (GW) of solar in this two-year period, helping meet 60% of the rise in electricity demand overall.
- While fossil-fuel generation stagnated, generators added 8.5GW of new coal capacity, leading to fewer running hours and increased costs to electricity consumers.
- CO2 emissions from oil and gas fell by 7% year-on-year, extending a reduction that began in 2025, despite higher demand for road transport fuels.
- Steel and cement emissions grew by 8% year-on-year, reaching a 23% share of India’s total CO2 in the first half of 2026.
If the pace of India’s clean-energy expansion is to continue, it will need to upgrade its electricity grid, rapidly build out energy storage and boost the flexibility of coal power.
While clean-energy expansion is covering most or all of India’s power-demand growth, the fossil-fuel industry continues to pursue major capital investments.
This includes large amounts of new coal-power capacity, ambitious plans for the conversion of coal-to-chemicals and efforts to boost domestic coking coal production for the steel sector.
While CO2 output from the power sector is flat, with oil and gas in decline, India’s emissions still went up due to the contribution from industry.
India lags behind its competitors – including most large emerging economies – when it comes to electrifying its industrial sector.
Faster progress would enable clean electricity to substitute for fossil fuels in industry, as well as for power, offering the potential for India to cut its emissions overall.
Flatlining fossils
Last year, India’s CO2 emissions from fossil fuels and cement grew at their slowest pace in two decades, according to previous analysis for Carbon Brief.
This sharp slowdown was due to rapid clean-energy growth and flat oil demand, combined with rising emissions from steel and cement.
The first half of 2026 marks a continuation of these trends.
Most strikingly, the ongoing surge in clean-energy generation means that emissions have flatlined in India’s power sector for two years, as shown in the figure below.
Power-sector CO2 was the same in the first half of 2026 as two years earlier, with a small decline in 2025 having been reversed over the same period this year.
Beyond electricity generation, India’s key emitting sectors continued to see divergent trends in the first half of 2026, as some saw ongoing decline while others reached new heights.
This is shown in the figure below, which compares year-on-year changes in emissions during the first half of 2026 with the same periods in 2025, 2024 and the average for 2021-23.
Specifically, emissions grew by 2.3% in the power sector, reversing last year’s decline, while demand for gas and oil products fell for another year.
The biggest increases were for steel and cement, where emissions growth accelerated to 8% year-on-year in the first half of 2026, well above the recent trend.
Clean-energy growth matches power demand
The period from the first half of 2024 to the first half of 2026 saw the largest increase in non-fossil power generation on record in India.
This enabled fossil-fuel consumption and CO2 emissions from the sector to stay flat, even as electricity consumption increased.
Indeed, this is the first time in more than 50 years that there has been no growth in coal power over a two-year period, even as electricity demand grew overall, as shown below.
Over this two-year period, India’s total power generation increased by 7%, some 63TWh, equal to the total consumption of Singapore or Switzerland.
The additional power requirement of 63TWh was met entirely by clean energy. Solar grew by 44TWh, alongside growth from wind (13TWh), nuclear (7TWh) and hydro (8TWh).
Together, clean-energy sources added 70TWh over two years, more than the net increase in demand.
(For comparison, China’s nuclear, wind and solar output increased by 485TWh in 2025.)
The figure below shows that new investments are more than sufficient to maintain this trend, as added power generation from new clean power capacity has stayed above average demand growth for the past 18 months.
Over the past two years, India added 77GW of new solar capacity, 11GW of wind, 5GW of hydro and 0.6GW of nuclear capacity.
Solar power continues to dominate clean-energy growth, but, collectively, the other non-fossil sources still contributed 40% of the overall increase in generation.
One factor in electricity demand growth in 2026 is the El Niño, which delayed the monsoon and intensified heatwaves, driving up cooling demand.
India is accelerating investment in energy storage, which will support further growth in clean power. The National Electricity Plan projected a requirement of 82 gigawatt-hours (GWh) of energy storage capacity by 2026-27 and 411GWh by 2031-32.
As of May 2026, the government has issued tenders for around 272GWh of energy storage capacity, including 142GWh of pumped hydro and 133GWh of battery storage systems. Current capacity is 7.5GWh of battery storage and around 60GWh of pumped hydro.
Which states led the clean-power shift?
The fall in power generation from fossil fuels from the first half of 2024 to the same period in 2026 was concentrated in a few states.
Gujarat saw both the largest reduction in fossil-fuel generation and the largest expansion in clean power, as shown in the figure below.
After Gujarat, the largest increases in clean-power generation were seen in Rajasthan and Tamil Nadu, which also saw reductions in power generation from fossil fuels.
Several other states saw declines in fossil-fuel generation due to higher net imports, rather than local clean power. These included Madhya Pradesh, West Bengal and Punjab.
Karnataka and Andhra Pradesh also succeeded in increasing clean-power generation faster than power demand, thereby contributing to keeping fossil fuel-based power generation stable nationwide across the two-year period. However, they exported much of the increase and consequently saw local increases in power generation from fossil fuels.
The two states with the largest increases in power demand, Maharashtra and Telangana, managed to almost match the rise with growth in clean-power generation.
Fall in oil and gas consumption continues
India’s oil consumption continued to fall during the first half of 2026, dropping 1.3% year-on-year, a slight acceleration from the 0.7% reduction in the same period last year.
While diesel and petrol consumption continued to grow, oil consumption was pulled down overall by declines in liquefied petroleum gas (LPG), petcoke (a solid derivative of oil used in the cement industry) and industrial feedstocks. Growth of aviation fuel use eased.
Diesel consumption growth accelerated from 1.8% to 4.1% in the first half of the year, supported by higher freight movement and increased agricultural demand, as the delayed monsoon led to greater use of diesel-powered irrigation.
Petrol consumption returned to growth, increasing 6.9% year-on-year after zero growth in the same period in 2025, reflecting sustained growth in passenger and two-wheeler mobility.
A significant increase in ethanol blending shaved a full percentage point off the growth of petrol consumption. India achieved its 20% ethanol blending target five years ahead of schedule in 2025-26. (Ethanol blending has faced public opposition.)
Electric vehicle (EV) adoption in India is also gaining momentum, with EVs adopted in a widening range of categories.
In Delhi, an EV policy was launched to accelerate electrification of the vehicle fleet, with a particular focus on two-wheelers, three-wheelers (auto rickshaws), commercial vehicles and high-mileage segments, alongside expanded charging infrastructure. Higher EV adoption rates will moderate the growth in emissions from petrol consumption in India.
In contrast, aviation fuel demand growth slowed down from 5% to 2%. The slowdown coincided with the strait of Hormuz and wider crisis, which disrupted international aviation through temporary airspace closures and flight cancellations to several Middle Eastern destinations. Elevated aviation fuel prices also increased airline operating costs, contributing to lower fuel demand.
LPG consumption contracted by 7%, after 5.7% growth in the same period last year, amid disruptions in global LPG markets following the Hormuz crisis.
Petcoke consumption fell 9.9%, more than reversing a 9.3% increase in the same period last year. Rising petcoke prices encouraged cement manufacturers to switch to coal.
Consumption of other petroleum products continued to drop, although the pace of decline moderated from 14% in 2025 to 9% in 2026.
Industrial feedstock use was affected by shortages and price increases.
Naphtha demand contracted as import prices nearly doubled and domestic prices increased by around 60%, prompting petrochemical manufacturers to reduce operating rates and suppress demand for imported naphtha.
Bitumen consumption remained subdued due to slower road construction, driven by persistent land acquisition challenges and higher bitumen costs.
Meanwhile, higher light diesel oil (LDO) prices and shortage of LPG led some industrial consumers to switch back to furnace oil in boilers and heaters, despite the higher air pollutant emissions. Supply of fuel oil to industry increased for the same reason.
Rapid emission growth from heavy industry continues
Steel and cement output in India grew by 8% and 9%, respectively, year-on-year in the first half of 2026, despite rising input prices and weakening profitability.
The growth in steel and cement was supported in part by increased investment in India’s real estate sector, especially in the second quarter. Steel consumption growth outpaced production, implying that inventories built up last year were tapped.
Despite domestic demand growth, profit margins of Indian steel and cement manufacturers remained under pressure for much of the period due to elevated raw material costs – particularly imported coking coal – and higher freight costs stemming from the Hormuz crisis.
The pressure on prices could dampen growth. Cement prices are expected to rise to levels last seen in the 2021-22 financial year, when Russia’s decision to cut back gas exports to Europe drove a sharp increase in fossil-fuel prices.
Outside the steel, cement and power sectors, coal-consumption growth accelerated to 14% in the first half of 2026, up from 3% last year, as the LPG shortage prompted a shift to coal.
Gas shortages resulted in some additional burning of coal for cooking in March and April. The government officially authorised the hospitality industry to use coal, refuse-derived fuel pellets, biomass and kerosene for one month.
The ceramic and tile industry also requested that the government allow the use of coal gasifiers amid the gas shortage. State governments including Delhi NCR, Rajasthan, Tamil Nadu, Gujarat and Maharashtra also allowed industries to temporarily use alternative fuels, including coal.
India’s industrial energy use is dominated by fossil fuels, particularly coal. Indian industry has the second-lowest electrification rate in the G20, as shown in the figure below. The share of electricity in total energy consumption in the sector also lags the world average, in terms of both current levels and the rate of increase.
The current low rates of electricity use in Indian industry imply that there is major potential for electrification, using technologies and processes already in place in other countries.
New investments in coal
While the clean-power expansion is starting to meet most or all of India’s electricity demand growth, there are still large investment plans across the coal supply chain.
Some 43GW of coal-power capacity was under construction at the end of June. Additional coal-power capacity is seen as necessary to meet increasing peak loads, even as solar power and energy storage are already playing a role in covering daytime and evening peak demand, respectively. The expansion of energy storage will increase this contribution.
Outside the power sector, India has major ambitions to produce chemical-industry products, such as fertiliser and plastic feedstock, from coal through coal gasification, in pursuit of energy security.
The government is targeting a capacity to process 100m tonnes of coal per year in the next four years, despite the technology for coal gasification still being nascent in India. At present, the only operational use of coal gasification is at Jindal Steel Limited, which is reportedly using syngas in its steel-making process.
Meanwhile, India plans to reduce its average CO2 emissions per tonne of steel by 25% by 2025-26, mainly by reducing the share of coal-based steelmaking.
At the same time, the government is aiming to increase the use of domestic coking coal, which it notified in January this year as a “critical and strategic mineral”. Coal miners and steel companies are reportedly planning to establish additional washeries for coking coal to make it suitable for blending with imported coal for use in steel production.
India is also looking to invest in new coal mines in the near future.
These continued investments in coal gasification, domestic coking coal and new coal mining capacity could lock in coal use across industry for several decades.
Outlook for India’s emissions
Over the two-year period from the first half of 2024 to the same period in 2026, India has achieved its largest clean-energy expansion on record.
As a result, power-demand growth has been met entirely by clean electricity and CO2 emissions in the sector have flatlined.
This expansion of clean energy also allowed a reduction in fossil-fuel imports for power generation, with the use of imported coal falling 38% and the use of gas by 35%, supporting the energy security aims of the government and reducing exposure to the Hormuz shock.
In order to keep the clean-energy growth going, India would need to overcome multiple obstacles, including expansion of the electricity transmission network, improvements in grid flexibility to accommodate variable renewables and the timely completion of new projects.
For example, renewable power projects totalling 5.3GW missed completion deadlines and are having to pay penalties to the grid operator in order to retain network access.
Curtailment has emerged as an issue, particularly for projects relying on interstate power transmission, pointing to the need to upgrade the network. (Curtailment refers to electricity generation that is “wasted” because it cannot be accommodated by the power network.)
Another obstacle to be overcome if clean energy is to keep growing will be making coal-power plants more flexible, so they can ramp down during high renewable output.
A flexibility plan for coal-power plants has been delayed by more than a year due to persistent regulatory bottlenecks, contributing to the curtailment of renewable energy.
Expanding energy storage has the potential to ease grid and flexibility constraints, while reducing or eliminating the need for adding thermal-power capacity to meet peak loads.
The Central Electricity Authority has proposed that, after June 2027, all new government-owned solar and wind projects would have “mandatory” two-hour battery storage. (This mirrors a policy that was in place in China until early 2025 and was subsequently scrapped, in favour of more market-based approaches.)
For oil and gas, India’s consumption has been flatlining for the past two years, after half a century of continuous growth that was only briefly interrupted by Covid-19.
This has reduced the impacts of the Hormuz crisis on the country’s trade balance, helping close the gap between supply and consumption. But it has entailed disruptive shifts in many oil-dependent sectors.
For example, high prices and fuel shortages due to the Hormuz crisis led state governments to reverse their orders banning the use of dirtier fuels such as fuel oil, kerosene and coal in industries and commercial establishments.
Meanwhile, EV adoption has also begun to influence oil consumption.
Despite the progress in the power sector and reductions in oil consumption, India’s total emissions went up over the past two years due to a major increase in industrial emissions.
Low levels of electricity use in industry mean that growing industrial output results in increasing direct fossil-fuel use and emissions.
Unless the rate of industrial electrification picks up, increases in heavy industry output will continue to translate into increases in fossil-fuel consumption and CO2 emissions.
About the data
This analysis is based on official monthly data for fuel consumption, industrial production and power generation from different ministries and government institutes.
Coal-power emissions are estimated by combining plant-level coal consumption from the Central Electricity Authority’s (CEA) monthly coal reports with data on the calorific value and emission factors of coal used at different power plants from the CEA’s CO2 baseline database.
For each station and month, total coal consumption is split into domestic and imported coal using the imported share of coal receipts over a trailing two-month window, found to best reproduce the actual split in data available for 2023.
Consumption is converted to CO2 using each plant’s station-specific gross calorific value from the CEA database and IPCC emission factors for domestic coal, imported coal and lignite. The national-average calorific value is used for recently added plants, for which data is not available in the baseline database.
Coal use at steel and cement plants, as well as process emissions from cement production, are estimated using production indices from the index of eight core industries released monthly by the Office of Economic Adviser, assuming that changes in total fossil-fuel use follow production volumes. These production indices were used to scale fuel use by the sectors in 2022.
To form a basis for using the indices, monthly coal-consumption data for 2022 was constructed for the sectors by combining the annual total coal and petcoke consumption reported in IEA World Energy Balances with monthly production data. This work was set out in a paper by Robbie Andrew, a researcher at Norwegian research institute CICERO, on monthly CO2 emission accounting for India. Monthly petcoke consumption was available from the Petroleum Planning and Analysis Cell, while coal consumption by the cement industry was calculated by subtracting petcoke use from total fossil-fuel use.
Annual cement-process emissions up to 2025 were also taken from Andrew’s work and scaled using the production indices. This approach better approximated changes in energy use and emissions reported in the IEA World Energy Balances, than did the amounts of coal reported to have been dispatched to the sectors, showing that production volumes are the dominant driver of short-term changes in emissions.
For other sectors – including aluminium, auto, chemical and petrochemical, paper and plywood, pharmaceutical, graphite electrode, sugar, textile, mining, traders and others – coal consumption is estimated based on data on despatch of domestic and imported coal to end users from statistical reports and monthly reports by the Ministry of Coal, as consumption data is not available.
Coal consumption by “captive” coal-power plants – those supplying power to industrial sites, not to the public electricity network – was calculated based on capacity changes from Global Energy Monitor, assuming constant utilisation, as utilisation has been very stable year-to-year, as calculated from Central Electricity Authority data.
The difference between coal consumption and dispatch is stock changes, which are estimated by assuming that the changes in the amount of coal stored at end-user facilities mirror those at coal mines, with end-user inventories excluding power, steel and cement assumed to be 70% of those at coal mines, based on comparisons between our data and the IEA World Energy Balances.
Stock changes at mines are estimated as the difference between production at and dispatch from coal mines, as reported by the Ministry of Coal.
Coal consumption is estimated in two ways for sectors beyond power, steel and cement. Consumption of domestic coal in these other sectors is taken from the monthly reports by the Ministry of Coal. Their consumption of imported coal is estimated from the total imports of thermal coal reported by consultancy Kpler, by subtracting demand for imports at coal-power plants. The basis for this assumption is that steel and cement industries use little imported thermal coal, according to Ministry of Coal data.
Product-by-product consumption data for petroleum products, as well as gas use by sector, is from the Petroleum Planning and Analysis Cell of the Ministry of Petroleum and Natural Gas.
As the fuel dispatch and consumption data is reported as physical volumes – such as tonnes or litres – calorific values are taken from IEA’s World Energy Balance and CO2 emission factors from 2006 IPCC Guidelines for National Greenhouse Gas Inventories.
The emissions factor for motor oil or petrol was updated, based on the blending percentage of ethanol each year. The ethanol-blending percentage is as reported by the Ministry of Petroleum and Natural Gas.
Calorific values are assigned separately to different fuel types, including domestic and imported coal, anthracite and coke, as well as to petrol, diesel and several other oil products.
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The post Analysis: India’s power-sector emissions flat for two years due to clean-energy surge appeared first on Carbon Brief.
Analysis: India’s power-sector emissions flat for two years due to clean-energy surge
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