India has a Coal Problem

05.22.15

India has a Coal Problem

05.22.15
ReutersReuters

India’s Prime Minister, Narendra Modi has expressed his interest in not only addressing climate change and energy security problems at the national level but also his willingness to work with the rest of the international community on reaching a consensus at the Paris Climate Summit later this year. During his recent visit to France, Germany and Canada, he declared, “India will set the agenda for the upcoming Conference of Parties.” During his latest visit to China, a climate change accord was signed between India and China, highlighting the two countries’ commitment towards advancing “the multilateral negotiations to achieve a comprehensive, balanced, equitable and effective agreement under the UNFCCC in 2015.”

However, India is still grappling with the fact that it has to walk a tightrope between energy development and environmental concerns. In a country where nearly 400 million people have zero access to electricity and a much larger proportion of the population is still affected by discontinuous power supply, the government (having won a huge mandate in 2014) is under pressure to ensure that at least every Indian has access to electricity. In fact, the government intends to provide uninterrupted 24-hour electricity to every household by 2022 (India’s 75th year of Independence).

In order to achieve this goal, the government has put a lot of emphasis on the need for enhancing the share of renewable energy in India’s energy portfolio, but one area that still remains highly critical for India’s energy security is thermal power. Today, 60 percent of India’s energy comes from coal and it is the world’s third largest coal producer. Despite being the third largest producer of coal, it is still heavily dependent on coal imports, chiefly from Australia, Indonesia and South Africa. In fact, a recent report reveals that India is set to surpass China to become the world’s largest thermal coal importer.

It is rather clear that the present government is not in favour of compromising its coal policy for environmental considerations. Coal production is expected to double to 1 billion tons by 2019 in the country. This is expected to have serious ramifications for the country for a number of reasons.

First, this will undoubtedly have a negative impact on the country’s climate change goals. With thermal power being one of the largest GHG contributors, India’s energy-related emissions are touted to double by 2040. According to a study published in Nature, if the international community intends to achieve the 2 degrees Celsius target (limit the rise in the earth’s surface temperature), 66 percent of the known coal reserves in India and China have to be left in the ground. With India’s latest announcement, this looks impossible.

If one compares the emissions of the Indian goods and services produced within the country, it is still far lower than that of its counterparts in the industrialized world, but India needs to look beyond those comparative figures. It needs to take into consideration, the effects of coal use domestically that range from pollution and ill-health to mining related environmental degradation and human displacement.

According to a World Health Organization (WHO) study, Delhi is the most polluted city of the world and incidentally, 30 percent of recorded air pollution is caused by coal. Air pollution has been primarily held responsible for increasing cases of lung ailments and other respiratory and cardiac disorders among the people of Delhi. Yet another study carried out by the Conservation Action Trust and Urban Emissions reveals that in the next five years, between 186,500 and 229,500 people could potentially die annually due to surging air pollution caused by coal-fired power plants.

In recent years there has been local resistance to many mining projects across India owing to violation of community rights over forests and at times, loss of livelihoods and human displacement. After stiff resistance by the local communities and environmental organizations such as Greenpeace, the Mahan coal block in Singrauli district of Madhya Pradesh has been removed from the auctions list of mining blocks by the Ministry of Environment, Forest and Climate Change. However, Greenpeace has since been targeted by the government for, in its words, “anti-national activities.”

At the same time, the government is also trying to compensate for excessive coal use by incrementally raising taxes on its production – mainly aimed at the suppliers and not the sources of externality or the emitters. In its 2014-15 budget, the government raised the coal tax from 50 rupees (US$0.82) to 100 rupees (US$1.64) per metric ton. The revenues garnered from this tax are being pumped into the National Clean Energy Fund, which still remains “underutilized” due to a serious lack of strategy.

In addition, India is also looking at options of procuring and producing ‘clean coal’ and investing in ultra-modern super critical coal-based thermal power technology. The Finance Minister Arun Jaitley, while highlighting that coal would “remain the most important source of energy for India and many other energy deficient countries,” also pointed out the significance of shifting to “clean coal” in order to “reconcile development and climate change goals.” Reports suggest that India could add 1,00,000 MW clean coal technology-based power generation capacity during 2016-2025.

Energy security – availability and access – will continue to guide India’s climate and environmental policies to a large extent. However, India cannot afford to overlook the serious ramifications of coal use for society and the economy. If one takes into account the externalities involved, many of the positives of coal use are most likely to be negated by more long-term socio-economic problems. India needs to gauge the situation carefully and form a strategy that does not compromise either energy security or environmental security.

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