India plans to reopen more than 100 coal mines and restart some idled coal-fired power plants, mainly in response to a killer heat wave that has engulfed the country, according to a report from the Institute for Energy Research.
The mines previously were considered financially unsustainable.
The country’s power minister has used an emergency law to restart the plants using imported coal, and has asked the states to continue importing coal for at least the next three years, according to IER.
India is the world’s third-largest greenhouse gas emitter, but the recent power crunch caused so much disruption to the country’s industries that the government was pressured to ramp up the coal industry in an effort to help meet demand, IER reported.
IER is a not-for-profit organization that conducts research and analysis on the functions, operations and government regulation of global energy markets. IER maintains that “freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.”
Climate Policies and Energy Needs
IER Policy Director Kenny Stern said the developments “reinforce many of the concerns and objections we have had with the administration’s asserted climate commitments as well as its desire to micromanage the electricity grid.”
“India doubling down on coal shows even further how the United Nations climate goals are not realistic and will never be met, because when the rubber hits the road, every government will ignore UN pledges when it means keeping the lights on for their citizens,” Stern said.
“Countries around the world want reliable, abundant and affordable electricity for their populations. They will seek to achieve that using whatever resources are needed, and regardless of the climate change concerns of the U.S. and Europe. And frankly, as a moral matter, they deserve to be able to try to achieve the quality-of-life improvement that electricity access brings without rich countries like the United States trying to interfere,” he added.
Coal Production Increases Expected
Meanwhile, coal production in the United States is projected to rise 3 percent in 2022 even as coal-fired generation decreases as domestic utilities seek to replenish depleted stockpiles, according to the U.S. Energy Information Administration.
“The forecast increase occurs despite our expectation that coal use in the power sector will decline,” EIA said in its May Short-Term Energy Outlook. “We expect rising coal production will replenish electric power sector inventories in 2023 that were depleted during 2021.
“We also expect coal exports will remain at high levels during the forecast period as a result of high global coal prices,” representatives of EIA said. “Although exports and inventory builds contribute to rising coal production in the forecast, labor shortages, rail congestion and challenges obtaining equipment are expected to limit production gains.”
Temporary Coal Cutbacks
India is the world’s second-largest producer, importer and consumer of coal after China and is forecast to increase coal production by up to 100 million metric tons in the next three years by reopening closed mines, IER stated.
Some 43 percent of the Indian plants fired by imported coal, which have a total capacity of 17.6 gigawatts and account for 8.6 percent of India’s total coal power capacity, had been idled. Power ministry officials are working with those involved in debt restructuring of financially stressed idle plants to make them functional, and a government committee will facilitate passing on higher costs of generation to customers.
During the COVID pandemic, electricity demand declined and state-run Coal India saw production fall for two years until March 2021; utilities also stopped importing coal.
This year, electricity demand shot up along with the temperatures as pandemic conditions eased.
The organization said India’s peak coal consumption probably is years in the future and the country’s use of coal for power generation is growing faster than it has in the last 10 years.
Only 13 percent of India’s households have air conditioning, but IER said that number is expected to increase by 69 percent by 2040.
Unfortunately, the summer forecast is for above normal temperatures over most of the country.
With power demand rising at a rate not seen in almost 40 years, and coal inventories at the lowest levels in years, the country is likely to see power cuts, IER reported.
“India’s coal demand is likely to keep coal prices up,” Stern said. “Coal consumption has increased due to soaring natural gas prices in Europe and Asia and increasing power demand due to a resumption in economic activity after the coronavirus lockdowns. Also, Russia’s invasion of Ukraine and the accompanying economic sanctions, including the European Union’s ban on coal imports from Russia, have helped to elevate coal prices.”