M Ramesh |
Why the demand for more coal to offset power shortage is nothing more than a short-term development
The recent shortage of power and scramble for coal has raised the question of whether India is witnessing a coal renaissance. The answer is ‘no’.
At a recent webinar organised by Climate Trends, a Delhi-based company that works towards building awareness around climate risks, experts noted that the current leaning towards coal is short-term.
For reasons such as competitiveness of coal, the difficulty in getting coal power projects financed, coal cannot be declared a victor.
According to a recent report titled ‘Boom and bust Coal: Tracking the global coal plant pipeline’, produced by a group of civil society organisations such as CAN Europe, Sierra Club and Global Energy Monitor, India is doing rather well in keeping coal under check.
The report notes that between 2015 and 2021, the planned coal power capacity declined 90 per cent, from 238 GW to 23.8 GW.
However, during the same period, operating capacity increased by 20 per cent, from 192 GW in 2015 to 232 GW in 2021, but the increase is slower than it used to be before. In 2021, 6.4 GW of capacity was added and 1.26 GW retired — the net addition is 5.1 GW. In contrast, between 2010 and 2017, the increase on an average was 17.3 GW a year. “The pace of new coal plants and proposals, as well as coal plant use, has generally slowed despite a post-Covid rebound in commissioning,” the report notes.
Coal demand is, meanwhile, increasing due to the resurgence in economic activity.
Between April 2021 and February 2022, Indian coal companies mined 601 million tonnes, 7.5 per cent more than the 559 mt mined in the same period last year. Coal from captive mines also increased to 64 mt from 45 mt. However, imports fell to 24 mt from 42 mt. As such, there is an increase of 43 mt in coal dispatch.
Is this a harbinger of coal renaissance? Hardly.
Green campaigners are being blamed as the root cause of the present coal shortage, as the emphasis on renewable energy is seen as dampening coal production.
Countering this at the Climate Trends webinar, Sunil Dahiya, analyst at the Centre for Research on Energy and Clean Air (CREA), stressed that the ‘coal crisis’ is due to “mismanagement by regulators, generator and coal suppliers”, because they did not foresee the upcoming demand for power — coal stocks at thermal power plants had started declining from the prescribed holding of 25-days’ requirement since the summer of 2021.
Sreshta Banerjee, Director, India Just Transition Centre of the International Forum for Environment, Sustainability & Technology (iFOREST), pointed out that the demand for coal will rise between now and 2030, the year coal demand is set to peak. This does not conflict with the ongoing energy transition, Banerjee emphasised; the transition, in fact, calls for calibrated tapering of coal to avert socio-economic disturbances.
Thus, if you conflate the three developments — coal power addition is slowing, financiers are keeping away from coal, and coal power increase is only for the short term, it is clear that there is no comeback for coal in India.
The scene in the rest of the world is rather different Globally, an additional 176 GW of coal capacity is under construction; 280 GW on the drawing board.
China, for instance, initially announced ‘net zero’ by 2060 and peaking coal consumption by 2025. But things soon took a different turn.
In the second half of 2021, says the Boom and Bust Coal report, China experienced a shortage of coal and coal power, leading to electricity rationing. Though the crisis had little to do with coal power capacity, pro-coal interests leveraged it to rewrite the country’s energy policy, the report says.
In 2021, the country added 25 GW of new coal power plants (five times that of India) and began work on 33 GW, “the most since 2016 and almost three times as much as the rest of the world put together”.
This has continued into 2022. At least 7.3 GW of new capacity was permitted in the first six weeks of the year, more than twice as much as in all of 2021.