Breakthrough Findings from CREA's 2025 Emissions Analysis
India's carbon dioxide (CO2) emissions from fossil fuels and cement experienced a remarkable slowdown in 2025, growing by just 0.7% for the full year and 0.5% in the second half, marking the slowest annual increase in more than two decades—excluding the COVID-19 anomaly of 2020. This analysis, prepared by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief, highlights a pivotal shift driven by surging renewable energy deployment and subdued power demand. The findings underscore India's evolving energy landscape, where clean power additions are beginning to outpace traditional fossil fuel reliance, offering hope for aligning economic growth with climate ambitions.
Historically, India's CO2 emissions have surged at an average of 4.9% annually since 1990, accelerating to 4-11% between 2021 and 2024 amid post-pandemic recovery. The 2025 deceleration signals a potential inflection point, particularly in the power sector, which accounts for over half of the nation's emissions and saw a 3.8% drop—the first decline outside the pandemic era since 1973. Researchers attribute this to record clean energy generation and favorable weather patterns reducing demand.
Historical Context: From Rapid Rise to Deceleration
To appreciate the significance of 2025's figures, consider the trajectory. India's emissions rebounded sharply post-2020, contributing 37% of global energy-sector CO2 growth in recent years despite representing 18% of the world population. Per capita emissions remain below the global average, but absolute volumes place India as the third-largest emitter.
Prior to 2025, the power sector fueled half the emissions surge through coal expansion. Coal power generation grew uninterrupted since the early 2010s until COVID. By contrast, 2025's slowdown began in late 2024, with half-yearly growth dipping to 1-2%, the lowest since 2001. This trend persisted into 2026 forecasts, with ICRA projecting 1% power demand growth for FY2026 before rebounding to 5-5.5% in FY2027.
- Average annual growth 1990-2024: 4.9%
- 2021-2024: 4-11%
- 2025 full year: 0.7%
- Power sector 2025: -3.8%
Sectoral Breakdown: Power Sector Leads the Decline
The power sector's 3.8% emissions drop was transformative. Coal consumption at power plants fell 20%, with imports declining similarly. States like Gujarat, Tamil Nadu, and Rajasthan—leaders in solar and wind—saw the largest coal reductions. Solar generation rose 30 TWh, wind 20 TWh, and hydro 21 TWh, adding a record 90 TWh from new clean capacity.
Oil demand grew modestly at 0.4% (down from 3.9% in 2024), gas fell 4%. Meanwhile, industry offset gains: steel production up 8%, cement 10%, leveraging domestic coal as petcoke prices rose. Steel's emissions intensity exceeds the global average by over 20%, posing ongoing challenges.
Renewable Energy Surge: Record Additions Fuel Change
India added nearly 48 GW of renewable capacity in 2025, including 37.9 GW solar and 6.3 GW wind, pushing total non-fossil capacity toward 258 GW (including large hydro). This doubled 2024's record, with rooftop solar up 72%. Clean sources now cover demand growth, a first. For FY2026, over 39 GW more is expected, potentially exceeding 5.8% demand rise.
Hydro benefited from above-normal rainfall, while policy boosts like GST cuts on EVs (to 5%) and diesel pump replacements curbed fossil transport fuels. For deeper insights, see the detailed Carbon Brief analysis.
Industrial Pressures: Steel and Cement Buck the Trend
Despite power gains, steel and cement drove the residual growth, accounting for 21% of emissions. Plans for 50% steel capacity increase (mostly coal-based) by 2031 and 75% cement addition FY2026-2028 risk reversing progress. Coking coal imports are projected to rise 55% to 135 MT by 2030 for 300 MT steel output. NITI Aayog warns cement emissions could surge without green procurement.
Demand Dynamics and Economic Factors
Power demand grew only 1% in 2025, down from 7.4% average 2019-2023, due to milder weather post-2024 heatwaves, prolonged monsoons, and industrial slowdown. GDP growth moderation further eased pressure. Transport saw EV sales up 16% (8% market share), Delhi's diesel curbs dropping sales 13%.
Global Context: India's Deceleration Amid Peaks Elsewhere
While global emissions hit records, India's 0.7% contrasts China's -0.3% and rises in US (+1.9%), EU (+0.4%). India contributed less to 2025 growth, reducing geopolitical vulnerabilities like Iran Strait disruptions.
Alignment with India's Updated NDCs
India's new 2035 NDC targets 47% GDP emissions intensity reduction (from 2005) and 60% non-fossil capacity—achievable by 2030 per CAT. Already at 36% intensity cut (2005-2020), 2025 trends support this if sustained. However, targets allow 6% annual growth at 7.8% GDP, but recent <4% suggests better.
Read the full NDC document for details.
Research Contributions from Indian Academia
Indian institutions like TERI, IITs, and IISc have modeled low-carbon pathways, influencing policy. TERI's net-zero frameworks and IIT Bombay's CCUS workshops complement CREA's data-driven insights. Universities are pivotal in sustainability research, from emissions accounting to green steel tech.
Challenges and Policy Roadblocks Ahead
Coal power (85 GW planned), coal-steel expansion, and petrochemicals ($1tn by 2040) threaten peaks. Overcapacity in steel/cement amid falling demand adds uncertainty. Solutions include green procurement, battery storage, and R&D in low-carbon tech.
Future Outlook: Peaking Emissions by 2030?
If clean additions exceed demand (projected 100+ TWh in 2026), power emissions could decline sustainedly, peaking total CO2 before 2030. Lauri Myllyvirta (CREA): "India's power sector is poised for an inflection point." Sustaining momentum requires resolving fossil expansion contradictions.
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