For the past 25 years, energy analysts, investors, planners, and policymakers have been fixated on China. That made sense, as China’s decisions about energy production, consumption, imports, exports, and emissions have driven the global balance. But for the next quarter century, it is India’s energy decisions that will most likely be most impactful for the world economy. 

China’s rise was one of the most consequential development stories in modern history. Its entry into the WTO on December 11, 2001, allowed it to grow its manufacturing more rapidly than any country before, earning an informal moniker as the world’s factory. This industrial surge lifted hundreds of millions of Chinese out of poverty. It was also a key driver of the global energy system as China consumed fossil fuels, especially coal, at a staggering rate. Chinese coal consumption tripled since 2000, and total energy demand grew at about 8% or more annually from 2000 to 2012, both of which are remarkable. The growth in China’s fossil fuel consumption since the turn of the century has few historical precedents. The closest example is the rapid industrialisation in the U.S. in the late 19th and early 20th centuries, driven by a transition from coal to oil and infrastructure expansion enabled by rail, steel, and manufacturing. But that U.S. growth unfolded over 50-70 years, whereas the Chinese story unfolded over 20-30 years. 

Because fossil fuels were such a dominant part of China’s rising demand, it also overtook the U.S. as the world’s biggest greenhouse gas emitter. China also did more than any other country to make clean energy affordable. Its sheer scale of investment across sectors has had global impacts by driving down costs for buyers worldwide for technologies that are at the frontier of the energy sector today: solar panels, wind turbines, electric vehicles, and batteries. That is a complicated legacy, and it deserves to be understood as such. 

But China’s 25-year sprint as the defining force of global energy markets is slowing down. With its population peaking, it will grow old before it grows rich, a demographic trap that has no easy exit. Its coal consumption, carbon emissions, and gasoline have either peaked or are close to it. And whatever one thinks of its economic model, China is not a free country, which might limit its capacity to lead in the way the next phase of global development will require. 

India is different, and that difference matters enormously. 

Why India? And why now? 

India is already the world’s most populous country, and its population is still growing. It has the fastest-growing economy of the 20 countries with a GDP of $1 trillion or more. It is the world’s largest democracy, with an open economy and fewer language barriers that slow integration into global markets. With over 250 million English speakers and roughly 1.5 million new engineers trained every year, India comprises a huge consumer market but also has the ingredients to serve as a global-scale manufacturing centre as a counterweight and hedge against Chinese control of supply chains. What makes India the most interesting energy story of the coming decades is not the inevitability and relevance of its size; it is the uncertainty of where it lands and which direction it will choose. 

China’s development path, for all its complexity, played out in a world where the consequences of carbon-intensive growth were understood but not yet binding. With nearly 95% of the global carbon budget already exhausted to keep the temperature rise below 1.5 °C, India does not have that luxury. The emissions trajectory of its development has not yet been determined, and that is precisely what makes the stakes so high. If India gets this wrong, the consequences are global. If India gets it right, the benefits are also global. 

Analysts who oversimplify the potential pathway by lazily treating India as the next China are missing the differences between the two countries that shape their energy story. For all that is said about China being the world’s largest oil and natural gas importer, it is also among the Top 5 producers of oil and gas. Because India has had very limited success in increasing its hydrocarbon production, it depends more on imports. India’s geopolitical relationships around energy, drawing nuclear capabilities from Russia and gas from a range of suppliers, will produce a set of dependencies and calculations entirely its own.

Furthermore, India has far greater cooling and air conditioning needs than China, driven by its climate and its rapidly urbanising population. It has less heavy manufacturing. As such, its energy demands will skew more residential and less industrial, which changes load profiles, grid design, price expectations, and the consequences of grid failures or energy shortages. As just one example to consider, for industrially-dominant consumption, energy disruptions inflict economic damage. For residentially-dominant consumption, energy disruptions endanger lives. 

The unavoidable truth 

Here is the key aspect that underpins the global story of energy: development requires energy. That means India’s continued ascent will be enabled by increasing energy consumption. 

India today consumes only about 35% of the global average per-capita primary energy. That is not a sign of efficiency but a measure of unmet demand. If India were simply to reach the electricity consumption levels of today’s middle-income countries for human comfort and moderate prosperity, it would need nearly three times its current generation capacity. 

This gap creates what we think of as India’s fundamental energy dilemma. Insufficient energy constrains growth, productivity, urbanization, and job creation, but carbon-intensive growth risks locking India, and the world, into a trajectory that climate stability cannot absorb. Unlike countries that industrialised earlier, India is attempting to become prosperous after planetary carbon limits are clearly within view. There is no historical playbook for this situation. 

Viksit Bharat and what it actually requires 

The Indian government has put a name and a deadline to this ambition: Viksit Bharat, a developed India by 2047. This goal would require sustained per-capita GDP growth of 7-8% annually for more than two decades. This level of growth is not impossible, but rare. 

Manufacturing will be a key component of this growth and will be central to job creation for India’s young and growing workforce. The Make in India initiative reflects that reality. But this strategy is more nuanced than using the heavy hand of government to push for more factories that consume even more energy. Nearly half the sectors included under Make in India are service-oriented and far less energy-intensive than heavy manufacturing. That means India can generate employment and growth without replicating the most energy-hungry pathways taken by earlier industrialisers, and that phenomenon is already showing up in the data. 

India achieved its original emissions-intensity reduction target nearly a decade ahead of schedule. Updated projections suggest that by 2030, its energy intensity may be 70% lower than in 2005. That is an extraordinary achievement, driven largely by services-led growth. The country has genuinely decoupled growth from energy intensity, which serves as a model for other nations. 

But intensity reduction alone is not the finish line. Under current policies, India’s emissions are projected to peak in the 2040s, which is still too late to stave off the worst effects of climate change. Decoupling growth from intensity is not the same as decoupling it from emissions. That gap is where the real work lies. 

Where is this all heading? 

The global economy has already begun to sort itself in ways that favour India’s trajectory. Global companies turned to China as their manufacturing partner. They have turned to India as their research, development, and technology services partner. India’s rising manufacturing capacity, its service sector, and its R&D depth have positioned it well for what comes next. 

The question is not whether India will grow. The question is what kind of energy system it builds as it does. The choices made over the next five years on grid infrastructure, industrial policy, clean technology deployment, and carbon pricing will shape not just India’s future but the trajectory of global emissions for decades. 

That is why India is the most important energy market right now. And it is why the rest of the world has every reason to pay close attention. 

(Deb is the executive director of the Energy Policy Institute at the University of Chicago’s India team (EPIC India); Webber is the Sid Richardson Chair in Public Affairs, Cockrell Family Chair #16 in Engineering, and Engineering Academic Director of the KBH Energy Center at the University of Texas at Austin. Views are personal.)