2019-2020 figures put demand for coal in India at 1000 million tonnes

Coal – the unmissable resource in India’s energy mix (but for how long?)

Love it or hate it, coal is omnipresent in India. It is certainly a highly visible commodity, thanks to the open-cast mines, the stockpiles at the many conventional power plants and of course the seemingly endless procession of coal waggons which criss-cross the countryside. For years the mainstay of the Indian economy, coal is however yielding ground to alternative energies.
^ 2019-2020 figures put demand for coal in India at 1000 million tonnes

Article by David Sear

How many other countries can boast of having a dedicated Ministry of Coal? The mere presence of this government body signals just how important coal has been and continues to be to India. Indeed, as the Ministry’s website reports, coal has long been the most important and abundant fossil fuel in India, today accounting for just over half of the country’s current energy needs. Question is: will that remain the case?

Let’s start by considering two conflicting factors. Firstly there’s the per capita energy consumption in India. Currently that may still be well below that of so-called developed countries, but the figure is growing rapidly as aspirations for improved living standards become more and more widespread. That’s good news for coal. Yet at the same time, rising environmental awareness means critical questions are being asked about the green credentials of all energy sources. In that light the observation from Prime Minister Narendra Modi that India will not just achieve but surpass its agreed Paris climate goals suggests increasing government support for renewable technologies such as solar and wind power.

“Our goal is to secure availability of coal to meet the demand of various sectors of the economy in an ecofriendly, sustainable and cost effective manner.” Government of India, Ministry of Coal

The coal sector in India is also hampered by other concerns, ranging from unexpected pollution levels at some mining operations, pilfering during transportation, inefficient power plants and of course the unescapable reality that combustion releases huge quantities of carbon dioxide – one of the top greenhouse gases. Indeed India already ranks third amongst the world’s worst carbon dioxide emitters, contributing 7% of all emissions according to Investopedia. And now another very serious threat to coal’s dominance can be noted, namely the falling price of solar power. During 2020 the price of electricity generated by solar sources fell below that of coal generation for the first time ever.

The case for solar power was recently enunciated most eloquently by Dr Varun Sivaram (a visiting senior fellow at the Columbia University Center for Global Energy Policy). In a recent TED Talk he outlined why India should not just embrace, but rapidly accelerate the roll-out of renewable energy sources such as solar and wind. Relying on fossil fuels to satisfy the increasing power requirements, such as electricity for air conditioning and petrol for motor vehicles of a growing population could create unprecedented pollution, he states.

This is why he is an advocate for the quick closure of those coal-fired power plants that are the worst polluters.

The case for coal

Set against this backdrop, phasing out coal as an energy source might seem an easy choice to make. However, the reality is that coal is probably here to stay, at least in the short-to-medium term. Compelling reasons include the fact that the coal sector generates significant revenues for central and state governments. It also provides employment for a great many people. Moreover, coal-fired power plants can run 24x7, something that cannot be said for solar plants. Hence whilst the cost of solar-generated electricity may be cheaper during the daylight hours, coal-fired power plants have the clear  advantage for nighttime supplies. Equally important is that fact that India is blessed with huge reserves of coal, making it a logical choice for a country looking to maintain energy security. It is not without good reason that the latest figures (2019-2020) put demand for coal in India at a staggering 1000 million tonnes! Of this, an estimated 811 million tonnes was met by Indian mines, with 189 million tonnes derived from imports.

But of course in an open market money talks, with changes often prompted by fluctuations in investor confidence. Hence the real demise of coal could be heralded by the development of low-cost batteries with sufficient capacity to store excess energy from solar farms and wind parks. Once that happens, investors will no longer see any profit in building new coal plants.

Yet perhaps the final words should go to the Minister for Power and New & Renewable Energy Mr. R K Singh. Speaking in the summer of 2020 he said that he expected India would have around 60 per cent of its installed electricity generation capacity from clean sources by 2030, with total renewable energy capacity touching 510 GW. Should his forecast become reality, that still leaves a huge short-to-medium term market for ‘King Coal’.

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