Time to plan coal exit
The shortage of coal in the power generation sector being reported from different parts of the country has been grabbing the headlines in the past few days. Out of 135 thermal power stations in the country, 104 had coal stocks only for five days, as of October 17, according to the government data. The reasons for this situation could be several short and long-term factors connected with production, supply chain, stocking, demand fluctuation etc. Whatever may be the contributory factors, the situation seems to be precarious and has caused concern in many sectors that depend on uninterrupted power supply like large outsourcing firms and continuous production facilities. Long power cuts have been reported from some states. The crisis has coincided with the global focus on climate change and preparations for the next round of climate change talks beginning in Glasgow on October 31. The Conference of Parties (COP) of the UN Framework Convention on Climate Change (UNFCCC) will grapple once again with the vexed question of reduction in carbon emissions from coal, oil and other fossil fuels.
Transition from fossil fuels to renewables in the power sector is critical for meaningful and sustainable low-carbon transition in other sectors as well.
The coal crisis has led to a predictable slugfest among political parties, the Central government and Opposition-ruled states. The discourse is on the looming shortfall in electricity and skirts the larger issue of the future of coal as a source of energy in India. Coal is still a dominant contributor to India’s energy mix. Of the 3.88 lakh MW installed power capacity, over 60% is in thermal power plants (mostly coal-fired). The hydro-based power plants account for more than 11% of the installed capacity. Renewable sources of energy — solar and wind — are the next big contributors accounting for 11 and 10%, respectively. The rest 8% installed capacity is in nuclear, small hydro and bio power plants, with much-hyped nuclear adding just 1.7% to the power kitty. These are all installed capacity shares. The actual power generated is much lower, particularly in renewable power plants where power generation depends on sunshine and wind speeds.
While coal and hydro continue to be dominant sources, renewables like solar and wind have grown dramatically in the past two decades. Coal directly adds to carbon emissions. Mining the coal locked in the reserves often located in forest areas results in emissions due to clearing of forests and other environmental impacts. Hydropower plants don’t add to direct emissions but are considered harmful to the environment in several other ways. The ecological fallout of large hydropower stations in hilly states like Uttarakhand has caused concern in recent years. As a result, many projects have been stalled and those completed are working at very low capacities.
To keep the global temperature rise below the threshold of 1.5 degrees as per consensus under the Paris Agreement, carbon emissions will have to be reduced in all sectors — automobiles, buildings, agriculture, industry, power production and so on. Some of the deepest cuts will have to come from the power sector. The share of coal and hydro in the energy mix must go down, and new capacities should come from solar and wind which have a minimum carbon footprint. In other carbon emitting sectors like transportation, the transition is just about beginning with electric vehicles but it won’t be meaningful unless the source of electricity (to power vehicles) is also green. In the same way, if domestic cooking has to shift to induction stoves from biomass and LPG, the source of electricity should be renewable. That’s why the transition from fossil fuels to renewables in the power sector is critical for meaningful and sustainable low-carbon transition in other sectors as well.
In the industrialised world, Germany is fast progressing with about 43% of its power generation coming from solar photovoltaic and wind energy in 2021. The figure was 48% last year. Germany’s renewable roadmap envisages it to become carbon neutral by 2045. In recent elections, the Green Party has emerged as a key player and if it joins the new coalition government, it will seek a faster exit of coal than earlier planned year of 2038. Japan has announced that it will stop investing in coal-based power plants in other countries. At the recent UN General Assembly meeting, China said it would stop overseas coal financing in developing countries. However, it has remained non-committal on any reduction in domestic consumption of coal, given that it is facing power outages currently. Australia, a major fossil fuel exporter, has also not made any commitments. India has unveiled large plans for renewables such as the International Solar Alliance but has not presented any firm plan of replacing coal with solar in the energy mix as yet.
The climate change imperatives strongly favour the phase-out of coal-based power but the future of coal depends on several political, economic and technological factors. Falling prices of renewables are making them competitive increasingly. Over the years, subsidies and fiscal policies boosted coal-based power. Now onward, investors are unlikely to put their money in coal as it becomes financially unviable. Multilateral financial institutions are planning to introduce ‘energy transition mechanisms’ basically to help countries retire coal plants before their life cycle ends. More investment is needed in research and development to address critical technological challenges like energy storage and integrated smart grids.
The energy question is intrinsically linked with the economic growth, infrastructure development and competitiveness of nations. Even if the climate talks make little progress on emission cuts and timelines, the only way forward is decarbonisation. It is in the common interest of all to end the dominance of fossil fuels for the sake of the environment, human health and to prevent catastrophic impacts of climate change. The current coal crisis has provided India an opportunity to rethink coal.
