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Addressing India's Historic Coal Dependency: Pathways to Sustainable Energy Transition


sustainable energy
Addressing India's Historic Coal Dependency: Pathways to Sustainable Energy Transition

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Abstract


Mining of coal in India began in the late 1700s and today, India has become the largest producer and consumer of coal after China. With rising pressure and international scrutiny, India appears to be grappling to break free from this reliance on coal that has grown into a centerpiece in global climate change deliberations. As the climate-focused world pushes for a total fossil fuel phase-out, the critical question remains: Can India truly break free from its over 400-year dependency on coal to fulfill its climate goals, or will it continue on the same path?


This study investigates the various issues surrounding India's coal dependency and proposes potential remedies to reduce its negative consequences. The goal is to provide an understanding of the situation and suggest pathways to a sustainable energy future.



1.Introduction


Until the arrival of steam locomotives, the economic exploitation of coal in India started out slow and its history has been shaped by fluctuations in demand. Subsequently, as a result of the First World War's demands, production rose significantly from an average of one million metric tons per year in 1853 to thirty million metric tons per year in 1946. Ultimately, Indian participation in coal mining began with the establishment of Indian-owned collieries in the Jharia Coalfield area, challenging European and British monopolies.


Today, coal is the dominant energy source in India, with over 70% of coal used in generation of electricity. Large industries including steel washeries, sponge iron, cement, fertilizers, and chemicals use the remaining resources. India procures coal from domestic mines as well as imports from Australia, Indonesia, and South Africa.








2.Coal and it's Impacts:


Coal's negative repercussions encompass air, land, and water pollution, imperiling ecosystems and human health alike. Coal mining triggers acid mine drainage, tainting water supplies and jeopardizing ecosystems, as seen in India's coal-rich Jaintia Hills where water quality is gravely compromised. Air pollution caused by coal plants that emit harmful pollutants, exacerbates global warming and respiratory ailments. The International Energy Agency's 2021 report underscored coal's substantial role in India's air pollution, highlighting the necessity for stricter regulations. Furthermore, coal poses direct health risks, causing respiratory diseases and threatening workers and communities through mining and transportation hazards.


Additionally, coal's radioactive properties present hazards, with emissions from thermal plants exposing populations to radiation. These dangers accentuate the urgency of transitioning to cleaner energy sources. The link between fossil fuels and climate change is not a novel revelation. Since the late 1900s, coal has been acknowledged as a primary source of carbon dioxide emissions. NASA scientist James Hansen, who has been studying climate since the 1960s, stressed the critical need to phase out coal to combat global warming in his 1988 testimony to Congress. The situation regarding climate change has only deteriorated since.



Fossil fuel emissions India and the world



3.India and its reliance on coal


India's reliance on coal, driven by its abundance and cost-effectiveness, faces scrutiny amid the nation's burgeoning power demands fueled by population growth, urbanization, and industrialization. This strain on the power infrastructure exacerbates environmental concerns, with coal-fired plants emitting greenhouse gases and pollutants. Despite efforts to promote renewables, coal remains dominant due to its reliability as baseload power.


The country, home to approximately 285 coal-fired plants, grapples with environmental challenges amidst global pressure to phase out coal. The Indian government has responded with regulations and initiatives to mitigate coal's impacts, promoting cleaner coal technologies and boosting renewable energy through schemes like the Green Energy Corridor and PM-KUSUM. Yet, a decisive shift away from coal remains elusive. Compounding matters, India's transition to sustainable energy is hindered by its soaring energy demands, particularly evident during summer heat waves when thermal plants struggle to meet needs, leading to widespread power outages. Recent reports highlight a significant expansion of coal plants to bridge the energy gap, signaling continued dependency on coal despite challenges and efforts toward diversification.


In essence, India's reliance on coal persists amidst efforts to transition to alternative energy sources, driven by the imperative to meet growing energy needs and navigate the intermittent nature of renewables. As the nation grapples with environmental and energy security concerns, the path to a sustainable energy future remains fraught with complexities and uncertainties.



3.1Can India truly wean itself off coal? What are the challenges?


The chief reason for India’s persistent reliance on coal despite advancements lies in concerns over energy security, particularly evident after coal shortages in 2021. Energy security, crucial for economic growth, encompasses affordability, accessibility, and uninterrupted availability of energy sources. India's rapid GDP growth of 7% annually necessitates abundant and reliable power, and while renewable technologies are evolving, they cannot meet escalating demands. India acknowledges the need to reduce coal reliance for sustainable growth but recognizes coal's role in maintaining economic expansion.


This reliance, though unsustainable environmentally, is not entirely unjustified.


Policies and Initiatives:


In the last decade or so, India has established a comprehensive suite of policies and initiatives to navigate the challenges posed by climate change and transition towards cleaner energy sources. The commitment to increase renewable energy (RE) capacity is pivotal to these endeavors. India’s focus on solar, wind, and hydroelectric power projects, illustrated by undertakings like the Kurnool Ultra Mega Solar Park and the Bhadla Solar Park, reaffirms its dedication to diversifying the energy mix and reducing fossil fuel reliance. Schemes like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) initiative are a reflection of a sophisticated strategy towards mitigating fossil fuel dependence in the transportation sector. These initiatives highlight India's recognition of the importance of adopting sustainable practices across various sectors to achieve long-term environmental goals.


Related case study:


A discussion on India's efforts to clean energy transition to necessitates a real-world example that demonstrates the ground-zero impact. In 2012, the sun-soaked land of Gujarat became home to a groundbreaking initiative epitomizing India's prioritization of renewable energy: the Gujarat Solar Park. Spanning a vast 5,384 acres, the project was an initiative spearheaded during Narendra Modi's tenure as Chief Minister. The park generates clean electricity from the abundant sunlight, meeting Gujarat's energy needs while substantially reducing carbon emissions. The initiative has also accelerated economic growth by creating employment opportunities for local communities and attracting large investments, thereby bolstering Gujarat's economy and serving as a model for sustainable development nationwide. The venture is an impeccable example of the transformative power of visionary leadership and collaborative partnerships.


Accomplishments thus far:


The targets were further reinforced in India's updated Nationally Determined Contribution (NDC) under the Paris Agreement in 2022, aiming for 50% of the country's cumulative electric power installed capacity to come from green energy sources by 2030. These goals build upon earlier objectives, such as the National Solar Mission's 100 GW grid-connected solar power target and the 175 GW RE target by 2022. To support this transition, the "Transmission System for Integration of over 500 GW RE Capacity by 2030" plan was introduced to focus on developing essential transmission infrastructure.


Further, the National Green Hydrogen Mission (2023) aspires to position India as a global leader in green hydrogen production, usage, and export, with a production target of at least five million tonnes per year by 2030. The National Mission on Transformative Mobility and Battery Storage (2019) aims to reshape India's mobility sector by establishing competitive battery and cell manufacturing plants and localizing the electric vehicle (EV) value chain by 2024. India has also set substantial EV adoption targets for 2030, including 30% of passenger cars, 80% of two and three-wheelers, and 70% of commercial vehicles.


These initiatives collectively signal monumental changes, positioning India as a leader in renewable energy and sustainable mobility over the next decade.


At international forums such as COP28, India has continued to call for strong climate action. By engaging in conversations on strategies for reducing emissions, technological transfer, and climate finance, India exemplifies its firm dedication to being a proactive contributor in global climate governance. The growing nation is committed to addressing the climate change challenges holistically and inclusively.


In addition to governmental strategies, industries are increasingly collaborating to develop customized emission reduction and net-zero plans, emphasizing energy efficiency, improved waste management, and material circularity. Companies such as Infosys and Ambuja Cement have committed to the Science-based Targets Initiative (SBTi), which mandates short-term, consistent actions to reduce emissions in alignment with global warming to 1.5 degrees Celsius.


India's recent decline below 50% in coal consumption in electricity generation marks a pivotal moment in its energy transformation, driven by investments in renewables and cleaner coal technology. This shift cuts emissions and stimulates the economy with new sectors and jobs. The diversification of the energy mix enhances stability and security, shielding the country’s economic aspirations from volatile foreign markets.




4.Hurdles in India's shift from coal and tackling climate change


India’s decoalification process must begin with a strong commitment to move from a fossil fuel “phasedown” to a “phaseout.” However, this transition is complex and fraught with challenges that must be carefully considered. In the pursuit of moving away from coal, the concept of a "just transition" has emerged as a crucial framework globally, emphasizing the importance of ensuring that coal-dependent workers and communities are not left behind in the shift towards renewable energy. Addressing these multifaceted aspects is essential for India to successfully navigate the path to a sustainable and inclusive energy future. Spain's approach provides a notable example of implementing policies aimed at mitigating the socio-economic impacts of coal phase-out. In regions like Asturias and Castilla y León, where coal mining has historically served as an economic pillar, Spain has implemented retraining programs for miners and invested in alternative industries to facilitate a smooth transition.



However, adapting this approach to India, especially in areas like Jharkhand reveals substantial societal obstacles. Coal mining in India is not merely about livelihood. It is a cornerstone of local identity and sustenance. The socio-economic fabric of coal-producing states is deeply intertwined with coal, presenting a formidable hurdle in diversifying the economy and providing sustainable livelihoods for affected communities amidst the coal phase-out. Without strategic planning and viable employment alternatives, the transition could exacerbate unemployment and social unrest.


India faces intricate technological challenges in effectively integrating renewable energy sources into its power grid infrastructure. The Kurnool Ultra Mega Solar Park in Andhra Pradesh showcases India's progress in developing renewable energy infrastructure. However, scaling such projects nationwide requires overcoming several obstacles. One major challenge is the intermittent nature of solar and wind power, which demands advanced grid management systems and energy storage solutions to maintain grid stability and reliability. Tamil Nadu's experience highlights this issue, as rapid wind power expansion strained existing grid infrastructure, necessitating curtailment of wind power during peak periods to prevent grid overload. Despite technological progress, ensuring equitable distribution of renewable energy benefits remains crucial, particularly in rural areas lacking sufficient grid connectivity and electricity access. Continuous research and development (R&D) efforts are essential to enhance the efficiency, durability, and cost-effectiveness of solar panels and wind turbines throughout their operational lifetimes.


Financial challenges represent another significant barrier to India's energy transition. The upfront costs associated with renewable energy infrastructure development, such as solar parks and wind farms, are often high, and so, securing adequate financing for these projects, particularly in a growing-yet-developing economy like India, can be daunting. For instance, several solar power projects in Rajasthan faced financial difficulties and operational challenges, leading to delays and even cancellations. Various states have witnessed power distribution companies or DISCOMs faltering in honoring their power purchase agreements (PPAs) with renewable energy developers, hampered by financial constraints and administrative inefficiencies. Moreover, ensuring affordability of renewable energy for consumers, especially in rural and marginalized communities, requires innovative funding mechanisms and facilitative policies.




5.Solutions to India's Decoalification Challenges


Addressing the multifaceted challenges in India's transition away from coal calls for a comprehensive strategy encompassing financial, technological, societal, and infrastructural dimensions. Taking inspiration from the Just Energy Transition Partnerships (JET-P) adopted by countries like South Africa, India can tailor solutions by leveraging global best practices while focusing on the unique socio-economic and geographical realities of India.


Societal Solutions:


For a just transition, India must prioritize the socio-economic well-being of coal-dependent communities. In India’s unique situation, the adoption of well-thought out retraining programs along with the creation of employment opportunities in clean energy and other sectors becomes imperative. Community engagement and stakeholder participation in planning and decision-making processes are crucial to address local concerns and ensure social acceptance of the drafted plans.


Transitions require time, effort, and immense hard work. In coal-reliant areas, it's crucial to provide welfare and social protection, including basic necessities, healthcare, unemployment benefits, and security for displaced workers. Skill development programs can ease the shift to new job sectors. Policies to protect, aid, and provide for such communities are necessary to ensure implementation of plans. Community-based initiatives offering psychological support, emotional assistance, and financial literacy training can help individuals adapt. Additionally, involving local communities in renewable energy projects, like community-owned solar farms for example, ensures shared benefits and fosters a sense of ownership and participation.


Financial Solutions:


Financial obstacles significantly impede national development, yet innovative solutions exist to ameliorate the situation. India could overcome its financial barriers by deploying dedicated green financing mechanisms, such as a national green bank, to supply low-cost financing for renewable energy projects. The expansion of public-private partnerships (PPPs) can further aid the situation by attracting private investment while ensuring risk-sharing and financial stability. Moreover, the government can introduce feed-in tariffs and green bonds to incentivize investments in renewable energy. Drawing from Denmark's experience, India can also focus on ensuring timely payments from state DISCOMs by setting up a central payment security mechanism, which guarantees payments to developers and enhances investor confidence.




Technological Solutions:


Technological integration is crucial for India’s renewable energy goals. To address grid stability issues, India, like Germany, would have to invest in smart grid technologies and advanced energy management systems. Implementing large-scale energy storage solutions, like battery and pumped hydro storage, is crucial for managing the intermittency of renewable sources. Integrating accurate forecasting tools for renewable energy generation can also help in better grid management and reduce curtailment issues. In addition to grid stability improvements, India can capitalize on its rare earth element (REE) reserves to enhance the efficiency and cost-effectiveness of renewable energy technologies. By investing in research and development of advanced extraction and processing technologies for REEs in coastal sand deposits of Kerala, Tamil Nadu, Odisha, and Andhra Pradesh, India can secure a local supply chain critical for solar panels and wind turbines. This strategic approach not only reduces dependency on imports but also stimulates domestic economic growth through value-added manufacturing and innovation in renewable energy sectors.


Establishing clear regulatory frameworks and streamlined approval processes for renewable energy projects can reduce delays and increase efficiency. Collaborating with international partners through platforms like JET-P can provide technical expertise and financial support for large-scale infrastructure projects.


Other Solutions:


Aside from technological advancements and societal strategies, India can bolster its renewable energy transition by supporting entrepreneurs, start-ups, and green industries. This can be achieved through favorable policies, incubation centers, and financial incentives to spur innovation and create job opportunities in emerging sectors.


Environmental stewardship is critical. Reclaiming and remediating industrial lands, increasing material cycling through recycling and circular economy models, and investing in energy efficiency technologies across industries and residential sectors can reduce environmental impact and support India's shift towards cleaner energy sources effectively. These integrated efforts will contribute to a more resilient and sustainable energy landscape.




6.Conclusion:


India's proactive measures in reducing coal dependency through strategic policies, technological innovations, and international partnerships underscore its commitment to sustainable energy transformation. To reinforce its leadership in global climate action, India should articulate a phased coal phaseout plan, emphasizing a just transition that mitigates socio-economic impacts and supports affected communities. By channeling resources and expertise into renewable energy solutions, India not only charts a path towards environmental stewardship but also sets a benchmark for responsible energy transition on the world stage.




Meet The Thought Leader





Ms. Laboni Singh is a mentor at GGI and is currently working at The Bridgespan Group as an Associate Consultant. She takes a keen interest in socioeconomic development issues, public policy, and equity across different vectors of gender, caste, class, and ability, which in turn fueled her transition from working at a global bank to the social sector. She is an Urban Fellow from the Indian Institute for Human Settlements, Bangalore and has a bachelors degree in Economics from St. Stephen's College, University of Delhi.




Meet The Authors (GGI Fellows)




Shwetha is a graduate with a triple major in Psychology, Political Science, and Public Policy & Administration from St.Francis College for Women, Hyderabad. She worked with Silicon Valley Bank as an Associate, where she discovered her strengths in the banking and finance industry. She continues to expand her expertise in the financial sector through academics and internships45 and is passionate about solving problems with data. For leisure, Shwetha enjoys baking, creating music, and reading sci-fi.



If you are interested in applying to GGI's Impact Fellowship program, you can access our application link here.


 

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