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Vijay Jayaraj: Wary of the new green wave, India continues to increase its coal capacity

Vijay Jayaraj, India

The next four years will be crucial to the prospects of poverty reduction in the developing world, and it remains to be seen how the leadership there will react to the barrage of anti-fossil darts from the West.

A steady stream of anti-fossil policies has been introduced across the world since the inception of Paris agreement in 2016. Be it the reduction in consumption of fossil fuels in some countries or the rapid increase in renewable installations across Europe and Asia, the changes forced by those policies have been quite tangible.

There were some major exceptions to this movement. Trump’s stance against anti-fossil energy policies, Australia’s continued export of coal, India and China’s unbreakable reliance on fossil fuels, and Japan’s shift from nuclear to fossil fuels were some of those glaring anomalies in a world where politicians were anti-fossil by principle during the past 4 years.

But in 2021, even those anomalies appear to be challenged by geopolitical developments. EU’s border carbon taxes and Biden’s Clean Energy plan are well on track to disrupt the global fossil fuel sector in a big way. Biden, for example, has cancelled permits for new oil and gas drilling in U.S. (unless the land belongs to Native Americans). Biden has also made the U.S. rejoin the Paris agreement, thus helping the cash-strapped Paris agreement to regain financial support from the U.S.

Inevitably, these factors will embolden those in Paris to exert further pressure on fossil-fuel dependent developing countries. For developing countries like India, it means more trouble as they are already stretched between meeting the energy demands of power-hungry industries through fossil fuel and increasing the dependency on highly unreliable renewable tech to satisfy their friends in Paris.

India is an important player in the global discussion on renewable tech transition as they are one of the largest consumer of fossil fuels and a key importer of clean coal from Australia. The rankings for fossil fuel consumption names India in the top 3 and together with China it makes up around 3 billion of the global population, representing the biggest fossil fuel consumption hotspot in the world.

India has never concealed its displeasure in accommodating the climate interests of those in Paris, Brussels, and D.C. In 2017, India’s chief economic adviser, termed the constant pressure for de-carbonization from the Western powers as “Carbon Imperialism.” For a country that had been in centuries of Imperial rule, invoking the concept of Imperialism does not come that easily. The Western powers have now touched the backbone of the Indian economy – the Energy Sector. India is predominantly fossil fuel dependent and to restrict the very same energy source that is propelling the country out of poverty is indeed a form of carbon imperialism.

The irony is that those nations which are exerting such undue de-carbonization pressure on India had used the very same fossil fuels in the 19th and 20th century to achieve the economic success and reached the developed economic state that they are in today. To ask India to forgo fossil fuels is suicidal. And the recent developments in 2021 is likely to usher in an epoch of Carbon Imperialism, not just in India, but in every developing country that is struggling to reduce the poverty rate.

India alone has 300 million under the poverty line, nearly the entire population size in the U.S. It was estimated that a further 104 million more people in India could fall below the World Bank-determined poverty line due to the COVID-19 lockdowns in 2020. But reducing poverty would be impossible if the fossil-fuel dominated energy sector is compromised by increasing the dependency on wind and solar. Besides, energy poverty and inability to provide uninterrupted electricity is a real concern in India. Despite significant improvement, an average Indian household received 20.6 hours of power supply from the grid per day. Daily power supply in rural households of some states in the Northern part of the country was only around 18.5 hours in 2020.

There have been a lot of mainstream media reports about India being the largest installer of renewable technology, especially solar. While that is true, the reality is that India has also developed its fossil fuel sector simultaneously, becoming more dependent on fossil fuels than ever before.

India understands the unreliability of wind and solar, and are leaving no stones unturned when it comes to securing fossil fuel reserves for the present and the future. For example, in 2020, the wind sector could not operate to its potential even in the months that are traditionally considered to be best for operations. “A prominent reason for the decline was the unseasonable and sharp reduction in wind speeds in resource-rich States (Gujarat, Rajasthan and Tamil Nadu), leading to an approximately 41 per cent reduction in wind generation in July 2020 compared with July 2019. The second quarter typically records the highest wind energy generation every year,” said a report from CEEW.

Last week, the EIA released its World Energy Outlook Special Report, which stated that the power generation from India’s solar sector will be similar to that from the coal plants by the year 2040. The news was quickly gobbled up by the mainstream media and the internet was flooded with the flashy headline that Solar will overtake Coal by 2040. However, the EIA’s forecast is nothing more than wishful thinking.

The leadership in India has been wary of the Paris agreement since the idea was floated around in 2015. India’s nationally determined contribution (NDC) agreement with the consortium of parties at the Paris agreement makes it clear that the country’s domestic use of fossil fuels will not be mandated by any external treaty or nation. The country has safeguarded its national energy interests in a proactive way and it is being reflected in its policy decisions.

Speaking at an event last week, India’s Coal Minister Pralhad Joshi reiterated that Coal will remain the primary energy source of the country, calling the coal sector as “backbone of the country” and assuring that the government will offer “full support.” That is understandable, for the country’s peak demand is predominantly met by coal and government recognizes it to remain their priority even by 2030.

Last week, India released its latest stats on coal import and it was revealed that the “coal import rose by 15.1 percent to 23.63 million tonnes (MT) in December 2020” compared to the year-ago month. Sources from mjunction—a key coal and steel entity—said, “Coal demand from utilities moved up due to higher generation in December. This coupled with a gradual recovery in industrial activities and expectations of further firming up of international prices led to increased volumes.” According to data from shipping sources, India’s appetite for imported coal has returned in the last four months. India was a key importer of coking coal from Australia, but now the country has also begun to import thermal coal from Australia. Australia’s thermal coal exports to India were 1.87 million tonnes in December 2020, up by 450% during the same month in 2019.

India saw historic peak power demand on January 22, 2021, which was swiftly met by its strong coal power plants. Coal India Limited, the public sector unit in charge of most of India’s coal said “Of the total 3.906 Billion Units (BU) generated on 22 January, coal-fired generation chipped in the bulk with 3.072 BUs. CIL (Coal India) is well geared to meet any surge in demand for the dry fuel from the power sector especially on the back of close to 63 million tonnes stock at its pitheads.”

India has streamlined its coal acquisition process where private players can buy coal and bid for operation of coal mines. India’s coal secretary said that they have also adopting better coal marketing strategies, which would “give an assurance to buyers that they will be able to get the product, if they want it, without having to go through multiple processes.” CIL registered an annual growth of 76.2% during April-December 2020 in the sale of coal under the auction mode. 41 new coal mines were put out for auction in 2020 and it is expected that the country will offer another 55 new coal mines for auction in the next five years. There are also plans to expand the 193 of the existing coal mines.

On January 27, 2021, India agreed with Russia, Japan for trilateral cooperation to improve their respective energy sectors, especially coal mining. The newly agreed upon co-operation will further strengthen the coal sectors in all the three countries. Analysts have commented there is “No early end to India’s love for coal despite climatic commitments,” after the country’s Home Minister declared that coal is central to India’s ambition of becoming $5 Trillion economy.

With unprecedented investments in coal and oil, India is moving ahead into a fossil fuel powered future. But it is likely that India will be subject to immense pressure during the course of next 4 years if not earlier. The United Nations will certainly not come to their aid and the argument surrounding “Climate Justice” will not provide them immunity much longer.

The developing countries must not allow their domestic energy policies be dictated by carbon imperialists from the West, especially those from the Biden administration. A lackluster response to West’s carbon tax and anti-fossil pressure will cost the developing nations dearly. The next 4 years will be crucial to the prospects of poverty reduction in the developing world, and it remains to be seen how the leadership there will react to the barrage of anti-fossil darts from the West.