Coal is one of the fossil fuels that is causing concern over its impact on the environment. Along with oil and gas, its use has led to enormous carbon emissions that have, in turn, led to global warming. The difference between coal and the other two fossil fuels, however, is that it is being used extensively by emerging economies like India and China. Oil and gas, on the other hand, form the major energy sources for the developed world in Europe and the U.K. Much is written about the daily fluctuations in prices of these fuels while coal prices are not so volatile.
At the same time, coal availability is enormously important for both India and China which need coal for a large share of their electricity production. The network of thermal generating plants in these countries requires a continuous supply of coal. Any curtailment of supplies can result in severe power shortages for industry and consumers.
No wonder then that at last month’s climate summit in Dubai, India, and China strenuously opposed efforts to include a reference to “phase-out” of coal and altered it to “phase down”. In contrast, there is a stronger lobby in the developed world that has ensured that the other equally polluting fossil fuels - oil and gas - have been kept out of the climate summit declarations. Coal, on the other hand, was specifically brought into a summit statement in 2021 by COP 26 in Glasgow. Oil and gas, in contrast, are merely referred to as “fossil fuels” even in the latest COP 28 in the UAE. The declaration is considered historic as for the first time, it calls for a “transition away” from all fossil fuels including coal, oil, and gas.
This is undoubtedly a positive step forward for reducing global emissions, but realistically speaking, it is simply not possible for this country to suddenly put an end to its reliance on coal. It is comparable to the developed world’s dependence on oil and gas. In this context, it must be kept in mind that India may be cited as the world’s fourth largest carbon emitter, but has extremely low emissions on a per capita basis. As against the global per capita average of 4.7 tonnes of CO2 emissions, India has only 2 tonnes. This is a far cry from 14.9 tonnes for the U.S. and 11.4 tonnes for Russia.
It is against this backdrop that one must view the latest statement of Coal Minister Prahlad Joshi on reaching the target of one billion tonnes of coal production annually by 2023-24. He made it clear that the production of 780 million tonnes in 2022-23 would be quickly ramped up to ensure that the country relies almost exclusively on domestic coal output. Imports, he stressed, would soon be confined only to select varieties of coking coal for steel production.
The increase in coal output is proceeding along with a rapid expansion in renewable energy which is now reported to be about 44 percent of total power generating capacity. But output from coal-based thermal generation plants will also have to be stepped up to meet the growing power demand which is expected to double on a per capita basis by 2030. This will require adequate coal availability and consequently domestic output is being raised from 662 million tonnes in 2021-22 to the projected one billion tonnes in the current fiscal.
Yet reducing coal imports would mean reversing past directives allowing thermal generating plants to buy from abroad to meet local shortages. Logistics issues between the railways and the Coal Ministry in 2022 resulted in low inventories and resulting in power shortfalls in several states. It was at that time that thermal plants had been given the green signal to go ahead with imports to avoid widespread power cuts.
Ironically, this was around the same time that several European countries had revived coal-based plants to deal with soaring costs of oil and natural gas in the wake of the Ukraine war. This in turn led to a spike in international coal prices making imports more expensive than ever before. In the altered scenario of rising domestic output, power plants may no longer need to rely on purchases from abroad except occasionally at times of peak demand.
Even in the case of imported coking coal that is still needed for use in steel plants, the Coal Minister has said in an interview with a business channel that there is a need for research into new technologies to find out whether Indian coal can be used for this purpose. He conceded that domestically produced coal has high ash content and thus cannot be used by steel plants currently. But he pointed out that new technologies are being evolved and it may be possible in the future to use such high ash content coal even in the steel sector.
Currently, Indian steel mills consume about 70 million tones of coking coal annually, of which nearly 85 percent is imported.
It is thus evident that coal will continue to be part of the country’s energy scenario for quite some time to come. The reason is simple. It is an easily available domestic resource that is much cheaper than imported fuels like crude oil and natural gas. Developed countries have been using other fossil fuels like natural gas which are considered “cleaner” for the same reasons - easy availability and low cost. Like these economies, India too must have the option of using the fossil fuel of its choice. This issue must be considered in light of the low per capita carbon emissions in the country as well as the speedy enhancement of renewable energy capacity in recent years. Against this backdrop, it is clear there is no reason that coal should not continue to be used for quite some time, given its critical role in the economy.
Sushma Ramachandaran is a Delhi-based veteran journalist and commentrator on economy and politics