Can India dump coal quite so easily?

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Since the Paris Climate Conference in 2015, India vouched to increase its renewable energy production by 175 gigawatts. These broad claims made many wonder whether India would ever be able to achieve this feat, until now. The government’s energy advisory board in a statement said that India could meet its energy needs by 2022, without the need for more coal-powered plants.
The national electricity plan, the draft of which was released by the Central Electricity Authority on 12 December 2016, stated that the share of non-fossil fuel production capacity of the country was to increase to 46.8 per cent by 2022. It may further grow by close to 10 per cent in the subsequent five years. These figures also take into account another 50 GW of coal-based power plants that are in construction and would likely come online by 2022. “The study result for the period 2017–22 indicated that no coal-based capacity addition is required,” said the report.
It’s not just the Indians who are confident and invested in making India renewable energy-sufficient. The confidence comes from the fact that the demand for electricity in India is growing continuously. One quarter of India’s population, which equates to 300 million people, still has no access to electricity. KfW Development Bank, a unit of the German Federal Ministry for Economic Cooperation and Development, recently concluded a 0.5 billion-euro loan agreement with Powergrid, the Indian power transmission company. This is the first leg of a KfW 1 billion-euro loan for expanding Indian transmission lines.
This investment, along with other minor investments from other countries and banks, seems set to fuel India’s renewable energy production in the coming years. These investments, coupled with a billion dollars from the Indian government, are a part of the construction of “green-corridors”. These new transmission lines will feed on electricity obtained purely from renewable energy sources.
Similarly, there is another mega project to expand the transmission network in the States. The government has signed contracts for expanding the networks in Rajasthan and Tamil Nadu. 125 million euros were provided to each of these States’ power companies to finance the project. This will enable electricity to be transmitted in a much more efficient way. It would reduce power loss during transmission and reduce our carbon footprint. If India wants to see a noticeable reduction in its CO2 emissions, there needs to be at least a 15 per cent increase in its renewable energy production by 2022, to match the increase in demand through the years. The main issue with renewable energy is that the end customer will only be able to access power from these renewable energy sources if they are stable and efficient. Stability is not as much of a problem for hydro power plants as it is for solar power and wind.
Another issue is that solar and wind power plants are primarily located in only seven states in the country, that is, Gujarat, Andhra Pradesh, Himachal Pradesh, Maharashtra, Karnataka, Rajasthan and Tamil Nadu. Some of these are situated away from the financial centres that are the primary consumers of the power. Therefore, it is very important that the transmission lines be expanded and made efficient.
To increase renewable energy production by such a magnitude is a huge turnaround for one of the world’s largest greenhouse gas emitters that has thrived until now on cheap coal. The energy policy announced in 2006 said that coal would continue to dominate the energy production matrix of India till 2031-32 and maybe even beyond. It projected that India may need 2 billion tons of coal by 2032.
However, with this new turnaround, the new plan puts the total coal requirement for 2022 at 727 metric tons, and for 2027 at 901 metric tons, provided renewable energy targets of 175 gigawatts are achieved. This is after factoring in a 30 per cent reduction in hydropower generation due to monsoon failure being supplemented by coal-based generation.
This bold move has been inspired by, in part, the successful deployment of various renewable energy programmes, especially the Jawaharlal Nehru National Solar Mission that has added 10 GW of power in six years.
The Draft Electricity Plan is the only policy paper we have today that provides an insight into the government’s intentions on energy. Thus contradictory plans seem to flow with government intending to increase the supply of coal and at the same time reduce greenhouse gas emissions by turning to renewable energy.
First, coal output is not being curtailed. With Coal India ready to produce a billion tonnes and private coal mines another half a billion, India will have twice the coal it needs. This coal would have to be pushed for export, a wise thing to do as long as the coal markets are buoyant and profitable. This would help India earn foreign exchange and help the country’s negative balance of trade. Second, the government has no legal power to prevent private coal mine owners from setting up coal-based power plants. Power generation no longer requires a license after the Electricity Act of 2003 opened it up.
So we might see a shift from state-owned coal power to privately owned coal-power generating capacities. Coal power nevertheless will grow as coal mining continues to grow. About 83 GW of India’s thermal generation capacity of 214 GW and 130 GW of its total power generation capacity of 308 GW is already privately owned.
The government believes that renewables, especially hydro and even nuclear power would help overcome some of the key problems that have led to a persistent gap in energy access. Moreover, off-grid localized production is also under discussion. It may help ensure stability and efficiency that may be a problem with high transmission and distribution losses.
There is some scepticism about India’s renewable energy policy. India is almost as big as China in terms of population; however, it still is desperately poor and is determined to develop. The easiest way to get richer is to industrialise the nation. This would require more power, and the easiest way to get more power is to dig up coal and burn it, especially as India is endowed with very large coal deposits.
Increasing the renewable energy base is welcome for the fight against global warming. To prevent the adverse effects of climate change, India will have to industrialise differently from the way Europe and the US did. They industrialised by burning coal. India will have to skip most of the coal stage and go right to solar.
The falling cost of solar will help with that, obviously, but India’s unusually abundant, cheap coal resources mean it will not quickly convert from coal to solar power. Although the Narendra Modi administration has made big promises on cutting carbon emissions, many question the government’s ability and will to follow through, especially given the country’s traditional reluctance to address the issue.
This reluctance is understandable. India is very vulnerable to climate change, with long coastlines and a lot of poor people. Therefore, it needs to industrialise quickly and also fight global warming. It is manifestly unfair for India to hobble its growth when most other nations got rich by burning fossil fuels. That will create popular pressure for the government to do less than it should.
The simple solution then would seem to be for rich countries to pay India and other fast-developing nations to skip coal and go straight to solar. However, with European economies in the dumps and the US soon to be headed by the Trump administration, such a bargain seems unlikely.
A more realistic solution to our present situation is for India and other developing countries to receive trade investment, access and know-how from the developed countries. Ways need to be provided to India to ensure it receives the required inputs and the technology base at a competitive price so that it grows faster and does not have to rely on more coal. Additionally, India can impose a high tax on carbon, and adopt other incentives to substitute solar for coal more quickly.
To summarise, developed countries should also do two things. First, they should direct large amounts of investment India’s way, and drop trade barriers. Second, they should set up technology transfer programs that give away clean energy know-how.
This kind of grand bargain would satisfy Indians’ desire for fairness, while also helping them to industrialise quickly. It would also strike a big blow against climate change. This is something that Europe, Japan and other developed countries can do, even if the US opts out under Trump. Though solar has given humanity a possible window out of the climate change trap, bold policy is needed to take advantage of that window.


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