India's CO2 Emissions Grow at Two-Decade Slowest Rate in 2025 Driven by Clean Energy Boom

India's CO2 emissions grew by a mere 0.7% in 2025, the slowest in over two decades, primarily due to record clean energy additions and moderated electricity demand leading to a 3.8% drop in power sector emissions. Oil demand also softened across several sectors. However, robust growth in steel and cement output partially offset these gains. Despite this promising slowdown, India's future plans include substantial expansions in coal power, petrochemicals, and coal-based steel, creating a significant contradiction with its decarbonization potential and its new climate targets.

India experienced a significant deceleration in CO2 emissions growth in 2025, with an increase of just 0.7% for the year and 0.5% in the second half, marking the slowest rate in over two decades, excluding the Covid-impacted year of 2020. This starkly contrasts the 4-11% growth seen in the preceding four years. A pivotal factor was the power sector, where emissions dropped by 3.8% following a historic decline in coal-power generation. This was driven by record clean-energy capacity additions—38 GW of solar, 6.3 GW of wind, 4.0 GW of hydropower, and 0.6 GW of nuclear—generating 90 TWh, double the amount in 2024. Concurrently, overall power demand growth slowed to 1% due to milder weather and a broader economic slowdown, further easing the pressure on fossil fuels. Beyond electricity, oil demand growth moderated to 0.4% in 2025. This was influenced by reduced demand in the petrochemical industry (e.g., naphtha for plastics and fertilizers) and cement production (petcoke), partly due to increased imports and a shift to domestic coal. The transport sector also saw slower growth in petrol and diesel consumption, attributed to the saturation of post-Covid demand rebound, heavy monsoon rains, the rising adoption of electric vehicles and CNG, and air pollution regulations in major cities. However, the overall slight increase in CO2 was propelled by robust output growth in the steel (8%) and cement (10%) sectors, which together account for 21% of India's total industrial CO2. Despite these positive trends, India's government plans substantial fossil-fuel infrastructure expansions, including 85 GW of new coal power, significant investments in petrochemicals, and increased coal-based steel and cement capacity. These plans and the recently approved 2035 climate targets (47% carbon intensity reduction from 2005, 60% non-fossil energy share in power capacity) appear less ambitious than what the current clean energy momentum suggests is achievable, creating a critical dilemma for India's future emissions trajectory.