Why burning more money on coal will not solve India’s power crises

India’s current power crisis comes at a time of scorching heatwaves across the country. This March was the hottest since the country began to keep meteorological records more than 120 years ago.

Several chief ministers have written to the Centre asking it to increase the supply of coal to their states in view of the increased demand for power. The Centre, however, maintains that the country’s power demand has been met and that coal stocks are sufficient.

On April 24, the Coal Ministry said in a tweet:

This year’s power crisis has occurred despite the availability of coal. India’s coal mining capacity increased by more than 8.5% in 2021-’22 compared to the previous year to produce 777.23 million tonnes of coal. To ensure that coal reaches thermal power plants on time, the Indian Railways cancelled more than 1,100 trains to prioritise more coal rakes.

However, the current crisis is just the latest of the coal sector’s failures.

Coal’s reliability to power the country has come under increasing scrutiny with several plants being shut down in the recent past for a variety of reasons: water shortages, causing severe air pollution to the lack of coal.

Despite coal’s unreliability, its role in precipitating climate change and its volatile prices in the global market, the government continues to invest in and promote mining, production and combustion. Amid a raging global pandemic, the Centre in June 2020 put up 41 coal blocks for auction for commercial mining by private companies – a first in nearly 45 years.

Though solar energy prices plummeted, the need for more coal blocks was justified as being necessary to increase domestic production and reduce the dependence on imports. However, the Centre’s coal demand projections and the current cumulative capacity of existing coal mines are far higher than the estimated demand for coal.

Mining capacity is already 15%-20% higher than the projected demand in 2030, which is between 1,300 and 1,900 million tonnes per annum.

Though domestic coal availability has increased, why is the country grappling with energy insecurity? Researchers at the Centre for Research on Energy and Clean Air analysed official data to take stock of the coal mining sector, two years after coal blocks were put up for commercialisation.

The question: does India need more new mines to meet energy demands? The findings were clear: new coal mines are a grave threat to India’s existing mines as well as global climate commitments. Given the availability of excess coal, new mines are also financially unsustainable.

Production exceeds demand

According to data compiled from various sources, India had a total mineable capacity of over 1,500 million tonnes as of 2021. Total production is less than 50% of this capacity. In 202-’-21, India produced 716 million tonnes of coal.

Coal India Limited, a public sector entity with a total mineable/environmental clearance capacity of more than 1,040 million tonnes, produced 596 million tonnes in 2020-’21, which is less than 60% utilisation of its capacity.

Assuming a 5% year-on-year increase for the next ten years from the current production, the country will have about 400 million tonnes of additional production from Coal India Limited.

If all the mines that already have environmental clearance and the ones at other stages of development under Coal India Limited start operations by 2029, the public sector giant alone will have a minable capacity of above 1,800 million tonnes, while the projected coal demand for the year 2029-’30 remains at 1,300 million tonnes.

This demand does not consider the possibility of disruptive growth in renewable energy beyond the current projections, as acknowledged by Coal India Limited in its Coal Vision 2030.

Data compiled by the Centre for Research on Energy and Clean Air showed that only 35 mines operated by Coal India Limited were producing more than 60% of their total capacity of 430 million tonnes in the financial year 2020-’21.

Ten other big mines cumulatively produced 62.42 million tonnes of coal, which is over 90% of their capacity. These numbers indicate that the lack of coal demand would make even existing mines financially unsustainable, let alone new ones.

“About 50 per cent of CIL’s [Coal India Limited] total production comes from 15 mines (all opencast) having a total production of 279 MTPA [million tonnes per annum],” states Coal Vision 2030. “The remaining 452 mines produce only 274 MTPA, approximately 0.60 MTPA per mine. Similarly, in the case of SCCL [Singareni Collieries Company], 83 per cent of total production comes from only 14 mines; the remaining 48 mines are able to produce only 11 MTPA.”

Few takers

The financial instability of the coal sector as well as the toll it exacts from forests, livelihoods and global commitments has put private players and a few state governments on the backfoot when it comes to new investments in the polluting fuel.

While a few state governments have written to the Centre to cancel new coal blocks in their states in the interest of forests, these states also lack a clear vision toward transition to cleaner energy. Private players have been slow to respond to government bids.

According to the Union Ministry of Coal, only 19 out of 38 mines got buyers in the first round of auctions in June 2020. Eleven of these received a single bidder, forcing the ministry to reauction them in the next round.

In the second round of auctions in March 2021, the government put up 67 blocks but only eight received more than one bid. In the third round, out of 88 mines that were put up for auction, 48 were those from the previous rounds that had not found takers.

These mines had reserves amounting to 55 billion tonnes with an annual peak rated capacity of 282 million tonnes. Of the 88, only 20 found bidders. In the fourth and the latest round of auctions, 99 mines have been put on sale. Only 24 of these are new while the rest are being rolled over from failed attempts

Retire coal

The current coal crisis-induced power cuts cannot be a means to justify further investments in mining and thermal power plants. Having powered the country for more than a century, it is time for coal to be slowly retired. The rapidly falling solar energy prices over the last six years and the poor response from the private sector to take over coal mine operations have already given a glimpse of the road ahead.

With the Centre’s focus on increasing coal mining and power generation capacity, the country has faced multiple power crises in recent years.

The frequent power crises and social, environmental and ecological problems because of India’s reliance on coal for more than 75% of its electricity needs show the idea that the polluting fuel cannot solve the electricity sector’s problems and is not the best way forward.

Instead, India should rapidly modernise the grid to support accelerated renewable energy integration to ensure a cleaner, just and economically viable future.

The country does not need new coal to meet its energy demands. What it needs is improved forecast, planning and execution of renewable energy integration plans for an energy secure future.

Sunil Dahiya and Karthikeyan Hemalatha work with the Centre for Research on Energy and Clean Air (CREA), an independent research organisation focusing on the social, ecological and health impacts of climate change and air pollution. The authors can be reached at @Sunil_S_Dahiya and @kkeya1988.