Opinion Sustainable economic growth demands cleaner energy use but also poses a challenge of efficiently using energy to grow

As India strives toward becoming the world’s fourth-largest economy by 2025, it is crucial to sustain high economic growth while lowering carbon emissions. India aims to have 50 per cent of its installed power capacity from non-fossil sources by 2030. wind and solar power capacity India ranks 4th and 5th globally in wind and solar power capacity, respectively. Renewables in 2022-23 form over 20 per cent of the energy mix, up from 17 per cent in 2013–14. Despite these impressive numbers, about 80 per cent of India’s electricity still comes from fossil fuels. So, is decoupling taking place?

The problem: Balancing growth versus energy use

India’s rapid economic growth is energy-intensive, with the country’s energy consumption rising over 40 per cent in the past decade, from 379 exajoules (EJ) in 2013 to 531 EJ in 2023. Energy-related carbon dioxide emissions rose by 5.3 per cent in 2024 which is three times higher than the global rise of 0.8 per cent in the same year (IEA Global Energy Review, 2025). India’s power sector alone accounts for half of total energy-related emissions.

Sustainable economic growth demands cleaner energy use but also poses a challenge of efficiently using energy to grow. While green energy is growing, the key question is: Is more economic output being achieved per unit of green energy used? Or is the same level of economic output achieved with lower energy consumption? This measure of economic output per unit of energy consumed is known as energy productivity and gauges how effectively energy supports economic growth.

Energy productivity in India

Driven by the rapid growth of renewables and curiosity about how productively green energy is used in India, we examined energy productivity trends. We compared the energy and economic data from multiple reports, created the database, identified metrics of energy productivity, analysed the trend and explored the factors driving it. While economic sectoral classifications are primary, secondary and tertiary, the energy balance has sectors classified as industry, transport and others, based on their energy intensities. Aligning energy and economic sectors proved challenging due to differing classification systems across reports, making meaningful comparisons complex but necessary for effective policy insights.

According to data in the MOSPI (Ministry of Statistics and Programme Implementation) National Accounts Statistics and MOSPI Energy Balance, between 2013 and 2023, we find that India’s gross output rose 79 per cent, final energy use grew 40 per cent, electricity consumption increased 70 per cent, and green electricity from wind, solar, biomass, and cogeneration bagasse (excluding hydro and nuclear) surged 267 per cent. This indicates three trends: Energy use remains tied to growth, electricity demand may soon outpace GDP, and green electricity, though slowing, will keep growing faster than overall energy use, helping curb emissions that would otherwise rise.

India’s energy productivity between the same period of 2013-23 rose by 28 per cent which could be driven by one or all three factors viz increased economic activity, shifts in the structure of the economy, and improved energy efficiency. We found that unlike earlier periods where sectoral shifts led the change, recent gains are largely due to better energy use. However, when measured differently, especially for green energy (electricity), productivity gains are declining. This suggests India’s energy landscape is still evolving, with efficiency improvements uneven and without a definite trend.

As we dig deeper, we find changes in energy consumption and productivity vary widely across sectors. On categorising consumption into sectors as industry, transport and others, we find sector-specific patterns and uneven efficiency gains. While industries like steel, cement, and chemicals improved under schemes like Perform, Achieve and Trade (PAT), transport and agriculture saw declines. This uneven progress means green energy growth hasn’t yet translated into higher overall energy productivity due to rapidly expanding green energy — that’s not bad. However, what is a concern is that the headline improvements do not stack up at the disaggregated level. Relying on a few efficient sectors risks leaving others behind, highlighting the need for more targeted, sector-specific policy action.

The findings provide policy implications for India’s energy and economic planners: One, expanding non-fossil energy sources is not enough, it needs to be utilised efficiently: Increasing green capacity is not enough. Policy must focus on improving the productivity of green energy through better grid integration, technology upgrades, and targeted incentives. Two, transport and agriculture need tailored energy efficiency programs. Expanding the PAT scheme or introducing new market-based instruments could help.

Three, energy productivity must be adopted as a key indicator: Instead of focusing solely on capacity addition or total consumption, energy productivity offers a better lens to align energy policy with economic goals. Although India has made commendable gains in energy efficiency, declining green energy productivity signals a new challenge. As the country shifts toward a cleaner energy future, the focus must move beyond quantity to quality, ensuring that every unit of energy, especially green energy, contributes effectively to economic growth. This should be central to India’s energy transition, guiding investment, policy, and technological innovation in the years ahead.

Prasad is assistant professor, Department of Management Sciences, Indian Institute of Technology Kanpur and Bhattacharya is postdoctoral fellow, Department of Management Sciences, Indian Institute of Technology Kanpur