India’s CO2 Emission in 2025 Grew at Slowest Rate in Two Decades: Study
The analysis states that the future emissions depend on resolving the contradictions in fossil fuel expansion plans of the country
Consumption of imported coal at power plants fell by 20%, while gas imports fell by 6% and net oil imports were flat year-on-year
Visual Credits: Pixabay
A new analysis by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief found that India’s carbon dioxide (CO2) emission in 2025 grew by 0.7%, the slowest rate in the last two decades. This is a sharp slowdown from the growth of 4-11% in the preceding four years and the lowest rate of increase since 2001, excluding the impact of COVID in 2020.
The analysis pointed out that emissions in the power sector fell by 3.8% as record clean-energy growth combined with weak electricity demand. Additionally, consumption of imported coal at power plants fell by 20%, while gas imports fell by 6% and net oil imports were flat year-on-year, reducing India’s vulnerability to the impacts of the Iran war.
Record Clean Energy Growth
The primary driver of this historic slowdown was a shift in the country’s power sector, for the first time in over two decades, clean energy additions were so substantial that they began to outpace the growth in electricity demand. The country added 38 gigawatts (GW) of solar, 6.3GW of wind, 4.0GW of hydropower and 0.6GW of nuclear power in 2025, with the new capacity expected to 90 terawatt-hours (TWh) of electricity annually, double the clean energy added in 2024, as per the analysis.
According to the analysis, this clean energy surge, coupled with a temporary slowdown in power demand due to milder weather and softer industrial output, led to the largest reductions in coal-fired power generation took place in Gujarat, Tamil Nadu, and Rajasthan, the three states that also led the buildout of new solar and wind power.
The analysis showed that India's power sector is poised for a potential inflection point, where clean-energy additions can meet or exceed the growth in electricity demand.
Oil Demand Slowed on Declining Industrial Demand
Oil demand slowed from 3.9% growth in 2024 to 0.4% in 2025, the key drivers came in the petrochemical and cement industry where the demand declined, according to the analysis. Demand slowed specifically for naphtha, petcoke and other oil products. Naphtha is used as chemical industry feedstock, while petcoke is used mainly in cement production.
The analysis said that part of the decline in demand could be attributed to an increase in India’s imports of plastics and precursors, which rose by 7% in volume terms, while exports fell.
The increase in imports came almost entirely from China, where the petrochemical industry is expanding, leading to complaints in India of price dumping. Mirroring the shift of plastics production to China, India began exporting large volumes of naphtha to the country, as per the analysis.
India’s import of nitrogen fertilisers also increased sharply, with most of the increase coming from China and Russia, while domestic production fell by 6% in April-September, according to the analysis. Fertiliser production is the second-most important use of naphtha.
India Expands on Coal Power Despite Slowdown in Emissions
The analysis pointed out that despite these trends, which could signal a lasting slowdown in emissions, India is planning major expansions in its capacity for coal power, petrochemicals, and coal-based steel.The government plans to add 85GW of new coal-fired power capacity over the next seven years. The country is also targeting $1trillion of investment in the petrochemical industry by 2040, a 50% increase in steel production capacity from 2025 to 2031 and a 25% increase in cement production capacity in the three years from 2026 to 2028.
This week, India’s Cabinet approved new climate pledges for 2035, which include a 47% reduction in carbon intensity, emissions per unit of GDP, from 2005 levels, and a 60% share of non-fossil energy in power generation capacity.
Citing the Central Electricity Authority’s recent projections, the analysis suggested that the 60% target is already achievable by 2030.
The analysis said if GDP growth averages 7.8%, the rate needed to meet India’s 2047 economic goals, then CO2 emissions could increase at 6% per year from 2025 to 2035 while still meeting the carbon-intensity target, compared with less than 4% growth from 2015 to 2025.
The analysis concluded that India’s energy and emissions trajectory over the next 5-10 years will depend heavily on how these apparent contradictions are resolved. Particularly in the power sector, where clean energy and storage are already set to cover future growth.