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On the Blogs: India Turns Purposefully Away From Coal

April 13, 2017

At the frontlines, the global pivot away from coal has been much swifter than almost anybody predicted. China, the world’s largest coal producer and consumer, has cancelled 300 coal-fired power plants in the last two years.

In the United States, the world’s second-largest producer, coal production fell to 739 million tons last year, down from nearly 1.2 billion tons in 2008, according to the U.S. Energy Information Agency. The United States now generates 30 percent of its electricity with coal, down from over 50 percent a decade ago.

Most big American coal companies are in bankruptcy and tens of thousands of miners lost jobs. Billions of dollars in coal reserves are being stranded around the world. Power companies are encountering new impediments in financing coal-fired power plants. Japanese, Chinese, and South Korean financiers have pulled out of three coal-fired projects in Bangladesh. South Africa’s 4,000-megawatt Medupi and Kusile power plants are a decade overdue, more than $US 24 billion over budget, and may not be finished until the early 2020s, if ever.

Similar trends are causing turmoil in India’s coal production and combustion sectors. Coal-fired power plants are idle due to lower demand for electricity, and inadequate water supplies to cool plants. Coal production is flattening. Coal imports have dropped.

The cost for completing UMPP plants had more than doubled, according to government figures. Prime Minister Modi, and Piyush Goyal, India’s energy minister, announced striking policy shifts to pivot India’s electricity sector to renewable energy sources from more expensive and polluting fossil fuels, a sizable share of which had to be imported. Moreover, the equipment to harvest wind and solar could be made in India.

Modi has been more serious than almost any other head of state in a promoting the transition. India doubled the coal tax to $US 6 a metric ton.  Coal tax revenues finance Green Energy Corridor projects for modernizing the transmission grid and installing solar plants, solar-power water pumping stations, and rooftop solar installations. One of the world’s largest solar power plants opened last year in Tamil Nadu. The world’s largest wind farm outside China is not far away.

A year later, in 2015, Modi committed India to signing the Paris Climate Accord and pledged to sharply reduce fossil fuel emissions. In the weeks after Paris, Modi called for generating 175 gigawatts of clean energy electrical capacity by 2022, or 131 more gigawatts than exist today. He joined with several heads of state to form the International Solar Alliance, headquartered in India, to develop and promote solar energy.

In December 2016, India released a draft national energy plan that set a target of generating nearly 60 percent of the country’s electricity, around 275 gigawatts, from wind, solar, biomass, and small hydropower plants by 2027. India currently relies on coal for about 70 percent of its electricity. Modi pledged to “achieve energy security for India based on clean fuels.”

The policy changes are having their desired effects. The Central Electric Authority declared that India does not need to start construction of any new coal-fired generating plants for at least the next decade.

Energy Minister Goyal, who is intensely interested in closing a drain on India’s balance of trade and limiting climate emissions, also is a powerful influence. He has vowed to halt coal imports by the end of the decade. Coal imports, which reached an average of 18 million metric tons monthly in 2014, fell to 11.6 million metric tons a month from March to May, 2016. In an address to a meeting of energy officials shortly after the December energy plan was made public, Minister Goyal declared: “We have to look at a world beyond fossil fuels.”

Tim Buckley, director of energy finance studies at the Cleveland-based Institute for Energy Economics and Financial Analysis, said that India’s pivot from coal to renewable energy is “absolutely transformational.”

Buckley added: “India is moving beyond fossil fuels at a pace scarcely imagined just two years ago.”

Chased by Drought, Rising Costs, and Clean Technology, India Pivots on Coal-Fired Power




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