India’s CO2 emissions growth slows to lowest level in last two decades: CREA

Mumbai: India’s carbon dioxide (CO2) emissions growth slowed to its lowest level in the last two decades, signalling a potential turning point in the power sector, according to a new analysis by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief.

The report was based on official data on fuel consumption, industrial output, and power generation of the country. 

According to the report, CO2 emissions grew by just 0.7 per cent in 2025, marking the slowest rate of increase since 2001, excluding the Covid-19 period.

The slowdown reflects a combination of record additions in clean energy capacity, a decline in coal-based power generation, and weaker growth in electricity demand. Emissions from the power sector fell by 3.8 per cent year-on-year, even as overall emissions saw a marginal rise due to continued growth in steel and cement production.

At the same time, trends in fossil fuel consumption shifted. Oil demand growth slowed sharply to 0.4 per cent, gas demand declined by 4 per cent, and imports of fossil fuels reduced significantly, particularly imported coal, which fell by 20 per cent at thermal power plants.

The analysis points to a potential inflection point in India’s power sector, where the pace of clean energy additions could begin to meet or exceed growth in electricity demand—potentially leading to a structural decline in coal-based generation.

“India’s power sector appears to be approaching a decisive inflection point, where the pace of clean energy additions is set to meet the growth in electricity demand. If sustained, this shift could mark the beginning of a structural decline in coal-fired power generation and emissions. Early signs of this transition are already visible at the state level, with Gujarat, Rajasthan, and Tamil Nadu having effectively crossed this threshold in 2025," said Lauri Myllyvirta, lead analyst at CREA.

"At the national level, 2026 could mark the first year when renewable capacity growth outpaces demand expansion, signalling a fundamental turning point in India’s power sector trajectory,” Myllyvirta added.

The findings also highlight implications for energy security amid global volatility in fossil fuel markets.

“The fall in fossil fuel consumption in 2025 led to an even larger cut in imports, with a drop of 20 per cent in consumption of imported coal at thermal power stations and total gas imports by 6 per cent. This was fortunate as it reduced the country's vulnerability to the current oil and gas supply shock. Shifting from fossil fuels to clean energy is a boon for energy security, while also furthering air quality and climate protection,” said Anubha Aggarwal, analyst, CREA.

Key findings:

● India’s CO2 emissions increased by 0.7 per cent in 2025, the slowest growth rate over the past two decades (excluding 2020).

● Power sector emissions declined by 3.8 per cent, driven by clean energy additions and slower electricity demand growth.

● Record clean energy capacity additions in 2025 are expected to generate around 90 TWh annually—double the previous record.

● Growth in electricity demand slowed sharply to around 1 per cent in 2025, down from 7.4 per cent during 2019–23.

● Oil demand growth slowed to 0.4 per cent, while gas demand fell by 4 per cent.

● Consumption of imported coal at thermal power plants fell by 20%, and gas imports declined by 6 per cent, reducing exposure to global supply disruptions.

● Emissions growth was driven largely by increases in steel (8 per cent) and cement (10 per cent) production.