India’s energy demands will increase significantly, driven by rapid urbanisation, improved electricity access and an expanding manufacturing base. Increasing coal production and imports will play a major role.
More than a fifth of India’s population lacks access to electricity, posing a major development challenge. India’s Prime Minister Narendra Modi has promised to bring affordable access to electricity to all of these people by 2019.
While Modi has committed to increasing renewable generation, India is also increasing coal production. India is the world’s third-largest coal producer and its second-largest coal importer.
This is creating a growing tension between development and India’s efforts to reduce greenhouse gas emissions to combat climate change.
The world economy is changing faster than ever and Asia is at the forefront of its transformation. The growth, led by China over the past decade and more recently by India, shows that Asia has significant progress to make. But there are enormous challenges in realising the dream of the Asian Century.
For instance, in India, 22% of the population is living below the national poverty level. Only 47% of the households have access to a toilet, while 105 million people lack access to clean drinking water and 240 million people don’t have access to electricity.
But there is also bright news for India. The country’s economy is growing quickly and will soon surpass China’s. The Organisation for Economic Co-operation and Development (OECD), in its recent interim economic outlook, has predicted that India’s Gross Domestic Product (GDP) will grow by 7.4% in 2016 and 7.3% in 2017.
In his electoral victory speech, Modi promised a “shining India” of new hopes and aspirations. The reality, however, is far more complex.
Resources are the focal point of this tension, particularly the increasing demand for energy. India’s energy demands will increase significantly, driven by rapid urbanisation, improved electricity access and an expanding manufacturing base.
Energy security is closely linked with food and water security, which are the backbones of the nation and a growing challenge in the face of climate change.
Indian government and businesses are addressing these issues by managing supply, increasing production of coal-based thermal plants and growing renewable energy sources. Coal supplies around half of India’s total energy supply.
Will constraints on resources, particularly access to affordable coal, disrupt India’s economic growth?
What role for coal?
India is the world’s third-largest producer of coal for electricity. While production has increased over the past few decades, the pace of growth has been insufficient to meet demand. Consequently, India has become more reliant on imported coal.
India’s thermal coal imports have increased from almost zero in the 1990s to having it overtake Japan as the world’s second-largest importer in 2013. The Indian government seems to promise adequate supply to its coal-fired electricity generation capacity by expanding its coal production as well as encouraging imports.