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India cheers the return of ‘King Coal’ as the industry sees a buoyant future

GS Paper 3

 Syllabus: Infrastructure (Energy)

 

Source: TH

 Context: After a 3-year pandemic break, the coal industry in India welcomed back its major conference (Coaltrans India conference) with a positive forecast of demand, increased production from new mines and strong demand for imports.

 

The prosperous future of the coal industry in India:

  • Increased output: The production in the first 10 months of FY22 reached 25 million tonnes, up 16% over the same period a year ago.
    • It will jump to around 1.4 billion tonnes per annum by 2030 from around 1 billion tonnes currently.
  • Acceleration in Imports: India’s imports (10.19 mt in February) of seaborne thermal coal are likely to accelerate, especially since the government mandated power plants to operate at full capacity as the summer demand peaks.
  • Increased imports of coking coal: It is expected that coking coal imports will rise from around 63 mt a year currently to around 100 mt by 2030, given the expected increase in steel production.
  • Increased private participation: Private mining companies are expected to make a bigger contribution to domestic output as they start bringing mines to production.

 

Challenges:

  • Can Coal India, the state-controlled miner that accounts for about 80% of the country’s total output, continue to ramp up production?
  • India’s commitment to “phase down” coal-fired power generation and achieve net zero carbon emissions by 2070.
  • Will India be able to source sufficient imports at a price that its utilities can afford?

 

Whether this additional coal the industry expects to produce will actually be needed?

NoYes
●        India is rapidly rolling out renewable energies

●        The share of renewables was at 27% in 2022 and is expected to rise to at least 40% by 2030

●        In the 2021-22 FY, some 15.5 GW of renewable capacity was installed, but only 1.4 GW of new coal-fired generation

 

●        Rising power demands

●        Thermal generation still accounts for 59% of India’s total capacity

●        India is building new (32 GW) coal-fired power plants

●        Each GW of generation requires around 3 million tonnes of coal annually

 

Conclusion: Overall, it appears the positive mood of India’s coal sector is justified, especially in the short term. But their forecast of enormous growth in output and demand for many years may turn out to be too optimistic.

Insta Links:

India wants energy transition on its own terms – without phasing out coal and with more grants