#1 cleantech news, reviews, & analysis site in the world. Subscribe today. The future is now.

Clean Power image URL: https://www.flickr.com/photos/statelibraryofnsw/2876670277/

Published on November 14th, 2014 | by Anand Upadhyay


India Shocks Australia, To Stop Coal Imports In 2-3 Years

November 14th, 2014 by  

India has witnessed a steady increase of coal imports in recent times. As of last week, 60 of India’s 103 power plants had only enough coal for less than a week’s usage. With the domestic coal supply chain in shambles, imports have been an easy way out. As a result, imports have risen from 10% of domestic coal demand five years ago to well over 20% in the last year.

image URL: https://www.flickr.com/photos/statelibraryofnsw/2876670277/

Conveyor belt coal loader in Newcastle in 1952

But now the future of coal imports in India looks unsteady. India’s Energy Minister Piyush Goyal, who is in Australia for the G20 meet, recently announced that India plans to completely stop coal imports within a period of 2 to 3 years.

China, the US and India together accounted for about ¾ of the world’s consumption of thermal coal in 2013. So this announcement combined with the news of falling coal imports in China has taken off the shine from Australian Prime Minister Tony Abbott’s mega plans to revive the coal economy, which he earlier claimed had a “big future, as well as a big past.”

Only last year, almost 70% of the delegates polled at the 33rd World Coal Conference organized by CoalTrans believed that the loss of the Labor Party in Australia’s election would have a positive impact on the nation’s beleaguered coal industry. But from the news coming in from all quarters, that does not seem to be happening any time soon.

India wants to cut down coal imports by growing its domestic industry. Coal India, the world’s largest miner of the fuel, has been asked to pull up its socks and more than double its output to 1 billion tonnes by 2019 to feed the existing as well as upcoming thermal power plants. Over the past five years, coal production in India has dragged its feet at a dismal growth of 2% a year.

According to Central Electricity Authority (India), as of now only about 55% of the Indian thermal power plants capacity is being utilised. So if India can streamline its supply chain and boost domestic coal production, it can help meet short-term electricity demand.

Of course, pure economics is a key part of India’s new goal. The cost of imported coal is easily 2–3 times as expensive as domestic coal. Results this week reflect a price of Indian domestic coal as $24/ton, as against this Newcastle (Port of Newcastle is the world’s largest coal export port by volume) thermal coal is $62/ton.

“I’m very confident of achieving these targets and am very confident that India’s current account deficit will not be burdened with the amount of money we lose for imports of coal,” Goyal told a conference.

The Modi government has promised round-the-clock power to all by 2022. Recently, it was announced that the nationalised coal industry would be opened up to allow private firms to compete with Coal India, which currently accounts for 80% of India’s output. But many familiar with Modi’s work style suggest that a major part of the goals could be achieved well before this, just in time for the 2019 national elections.

Amidst all of this, renewable plans have not been sidelined. Only last week we reported that India is eyeing to raise a sum of $100 billion to boost renewable energy growth. The government is seeking another $50 billion for transmission and distribution upgrades which would be critical for development of the electricity sector as a whole.

Back in India, the Ministry of New and Renewable Energy is believed to be working on a roadmap to push cumulative solar power installations to 100 GW by 2022. That is five times the target which was being pursued by the previous regime. If Modi can have his way, it would be 100 GW of solar and wind each! Lofty targets aside, can this really be achieved? A report, published by Bridge To India in association with Tata Power Solar tends to agree. It states that India has an achievable potential to install 145 GW of solar power capacity across various project sizes by 2024.

In a recent interview with the UK-based Guardian, Piyush Goyal also seems to agree with his boss. He said that, “for India to add 10 GW a year of solar, and six, seven or eight of wind every year is not difficult to envisage.” However, he cautioned that, “Coal will have to expand in a very rapid way. I would wish that the proportion of renewable energy was higher but my fear is that, even if I would want to do more, I may not be able to fund it.”

While some are sceptical if India can pull off its dependency on imported coal so fast, what matters is that its intentions and motivations are clear.

Photo Credit: State Library of New South Wales collection / Foter / No known copyright restrictions

Tags: , , , , , , , , , , , ,

About the Author

is an Associate Fellow with The Energy and Resources Institute (TERI, New Delhi) – an independent, not-for-profit research institute focused on energy,
environment, and sustainable development. Anand follows the Indian solar market at @indiasolarpost. He also writes at SolarMarket.IN. Views and opinion if any, are his own.

  • darma2u

    So awesome, way to go India and thank you to Presidents Obama and Hu Jintao (China) …:-) this fills my soul, spirit will joy and the thought that we, ALL, may be able to breath cleaner air. If India can do this then every country can! If everyone does this than every little ‘dent’ adds up…they are being the change they want to see in others!

    • Dragon

      I don’t want to curb your optimism, but read some of the comments more carefully. They make it sound like India will emit more CO2 (and more particulates) using local coal vs Australian coal. We need to celebrate when countries move towards NO coal, oil, or gas, not when they simply swap to a different source of CO2.

  • Shazia Immlli

    Just a trick to pressurize Australi to send coal to Adani 🙂

    Good job India. Its better to buy the coal mines, develop them & import it!

  • David Austin

    A truely pathetic PM

  • Ronald Brakels

    If anyone is interested here is a (bad) graphic showing Indian coal deposits and new coal plant construction. Well, sort of new coal plant construction. It’s a bit dated. And note that it’s not impossible to find coal outside of those dark splotches, it’s just much less likely and any deposits you find are likely to be smaller. Anyway, the graphic does show there can be a bit of a gap between coal power stations and coal deposits. That gap can be problematic, particularly with things like up to a quarter of the coal disappearing on the way to the power station:

  • venkatram

    its gud being an indian as i was against we can build forests and animals and from coal inside it, we should develop into rain harvesting forests , which improves agriculture and population witin whites not mix wit asians , also so many australian mining town bcom ghost town so y tey r suplying it to china and other europe also to do same in africa

  • Ronald Brakels

    While on the physical side of things the situation may not have appeared to have changed much to an outsider, 10 years is a very long time in politics and things can be made now that would not have been…realistic in the past. If India wishes to put the resources required into it, there is no reason why it cannot have 15% a year growth in coal production. After all, China managed about a 25% growth in the first decade of this century.

    But I hope India won’t put the resources into massively expanding its coal production. And the difference now between now and the first decade of the 21st century is the significantly lower cost of renewable energy. Coal generators in Australia is very upset about the effect that solar and wind power are having on their profit margins. Hopefully decision makers in India will pay attention to this and decide that new coal plants may not be the money making investments they thought they were.

  • India will be able to cut imports only if it increases domestic production. The government has asked the miners to double domestic output to 1 billion tonnes per year. So actually it is a bad news because Indian coal is less carbon and energy efficient than Australian coal.

    • Joseph Dubeau

      That’s what I understood from your article.

    • Maybe if you only consider the energy part of the coal. There might be several other elements to this strategy – use the money to generate employment within India (coal production is struggling mostly because of conflicting political-commercial reasons, there are no technical problems as such), it provides an opportunity to bargain with Australia, or maybe in light of US-China climate deal India has to show that it is committed.

      • India has to use 1 billion tonnes of coal whether it is produced domestically or imported. So the revenue generated from coal tax will remain Rs 100 billion ($1.6 billion) every year.

        The immediate downside will be increased pollution and reduced efficiency. Indian coal has higher ash content, higher sulphur content and lower carbon content (and thus calorific value) compared to Indonesian and Australia.

        • Dragon

          Don’t forget you have to add the CO2 emissions needed to ship the Australian coal to India. I’m not sure how much that adds, however.

  • spec9

    Eat it, Tony Abbott.

  • Adrian

    Were I an Aussie coal miner, I think I’d be looking into getting my solar installer certification at night school about now.

    • I think its been quite a while since I have read a positive sentence containing both “solar” and “night” 😀

  • JamesWimberley

    What exactly is Goyal’s plan to transform Coal India from a dozy mastodon barely capable of increasing output by 2% a year to a tiger that doubles production in 5 years? Supposing this is technically possible – a big assumption -, he will have to change all the management, for example by breakup and privatisation. I reckon he has simply been sold a bucket of snake oil by the current incompetents running the company. Give him 6 months to find this out.

    There is then a little hope for Australian coal exporters, eking out survival at barely profitable prices. But counting on massive policy failure in your biggest customer is a very risky strategy. The other, and probably higher risk, is that India’s renewables strategy works fine and India simply shifts away from coal.

  • Ronald Brakels

    While low quality Indian coal is much cheaper than Australian export coal, higher grade coal is not. According to December 2013 prices Indian domestic coal of the same energy content as Australian Newcastle coal was $62 US a tonne which is what the Newcastle coal now costs. And the price of Australian coal could go much lower which makes for some interesting choices for India.

    • Mint

      Higher grade coal is irrelevant for a country with lax pollution standards.

      Lower-grade coal is $14/tonne, and only has 35% lower energy content than Australian coal. Unless Aussie coal can get well below $30/tonne, or India fails to execute on coal production targets, the choice to go domestic is very clear for them.

      • Bob_Wallace

        India may have lax pollution standards (or poor enforcement of their standards). That does not mean that the government isn’t feeling pressure to clean up India’s massive air pollution problem.

        • Mint

          Yeah, but that’s irrelevant for Ronald’s point about Australian coal being an “interesting choice” for India. Nobody is going to pressure the Indian gov’t to use Aussie coal instead of Indian.

          Such pressure will manifest itself as more renewables and a reduction of coal use, thus fewer imports as stated in the article.

          • Bob_Wallace

            You just can’t stand it when someone else makes a valid point, can you?

      • Ronald Brakels

        Hmmm… Victorian brown coal is only about $3 a tonne while New South Wales black coal is $62 a tonne. Obviously New South Wales only uses Victorian brown coal in its power plants.

        • Mint

          Did you not read the first sentence of my post?

          1) That brown coal has only half the energy content of even the low grade Indian coal I mentioned.

          2) You can’t transport coal to NSW plants for $3/tonne, so who cares? Brown coal is burned at plants next to the mining site.

          3) Australia has emissions regulations and a carbon tax (at least currently). At $20+/tonne, why would you want to use such low grade fuel?

          Victoria only uses because it gets carbon tax exemptions:

          Here’s an article about how useless that coal is:

          • Kyle Field

            Be nice. Contrary to popular republican opinion, being a jerk does not lend towards being credible.

          • Mint

            Why is Ronald’s snarky “Obviously New South Wales only uses Victorian brown coal” comment beyond criticism?

            I simply asked if he read a sentence, as his sarcasm makes no sense to me if he did, and then I laid out some facts.

          • Ronald Brakels

            I see, so the lower cost of energy per joule of Victoria’s brown coal doesn’t make up for its lower energy density, transportation costs are an important consideration, and pollution is an important consideration as well.

          • Mint

            You got it.

            I could see India using it if it was all they had and domestic, because they’ll allow industry to put tons of crap into the air with minimal penalty. But not elsewhere.

            Things may change, however, if Abbott keeps lowering environmental standards. Then maybe NSW and others could find it useful.

          • Mint

            I Don’t Feel So Smart Anymore.

    • Ronald Brakels

      Now I did something naughty above and treated Indian and Australian prices as if they were directly comparable. It would be remiss of me to not point out that this may not be the case. There is room for highly nuanced philosophical discussion on this point.

      • Joseph Dubeau

        Right now they needs to import coal.
        “The Modi government has promised round-the-clock power to all by 2022.” Which means lights go out often.

        Isn’t Victorian brown and New South Wales both Australian coal?
        I really didn’t understand Mint’s comment.

        • Ronald Brakels

          I bet India is really kicking themselves that they didn’t think of ending coal imports in 2 to 3 years 10 years ago when they first started importing appreciable quantities of coal. Particularly since there was a huge run up in coal prices in over the past decade. Back in 2003 one could get seabourne coal for $25 US a tonne or less than $30 US a tonne in today’s money. We may be headed back there again.

          • Joseph Dubeau

            In order support their economic growth, what choice did India or China have? Look how bad the US is at planning energy. We don’t have a National Energy Plan/Policy.
            The cynical view is “drill babe drill” and the oil wars.
            I’m sorry I digress.

            The current world wide economic slow down is causing gasoline, coal, and oil prices to fall. Fracking is producing a surplus of gas and oil on the world market, but it does not explain the falling prices. Demand is down.

            Everyone, (people, business, and government) should take these savings and double down on renewables and energy efficiency.

          • Ronald Brakels

            As far as I am aware, nothing has changed that will make it substantially easier for India to septuple growth in its coal industry now as opposed to ten years ago. But I may be wrong about that. They might have an app for it now. Or maybe satellites. But hopefully they will soon abandon building new coal capacity in favour of renewables rendering increased domestic coal production or coal imports unnecessary.

    • Karn

      India imports almost all of her coking coal from Australia . The ending of imports relates only to energy production . With an expansion of steel production planned the demand for Australian coal will probably remain significant .

      • Ronald Brakels

        Yes, steel production is likely to remain high in India for some time. However, steel production appears likely to decline in China, so India may be able to get that coking coal at a low price.

        Currently India imports little or no thermal coal from Australia, but members of the Australian coal industry and their politicans have been promising us that coal demand will surge in both India and China, so the recent plunge in Chinese coal imports and India’s recent announcement has been quite amusing.

  • Brian

    This is great news, but small cheap decentralized solar power is the best alternative for the 400 million in India, who lack electricity. A combination of building large solar power plants, and wind farms, and small wind and solar power installations will be needed to provide power.

    • Right. The meme that India needs coal is unfounded, but seems to have a lot of influence in India at the moment.

    • You are spot on Brian. In fact the ‘mood’ in the Indian solar market is slowly (but) steadily shifting towards commercial rooftop installations. The large scale solar market (10s of MW) has a lot of big players now. So the next round of growth is expected from relatively smaller installations.

  • Kyle Field

    Yesssss!! This is great news! Go India! (oh, and suck it Abbot…glad this turnaround came so quickly for the Aussie coal industry) 😀

    • Kyle Field

      Looks like things may already be turning around in the Aussie Coal market: http://www.skynews.com.au/news/top-stories/2014/11/14/glencore-shutdown–miners-on-forced-leave.html

      • Adrian

        It sounds like a lot, but a production cut of 5 million tons is only roughly 5 days of Australian exports. That is barely a dent in the problem.

        • Kevin McKinney

          But this bit speaks volumes, doesn’t it?

          “The global seaborne coal market is more than one billion tonnes, and spot prices for thermal coal have more than halved to around $US60 per tonne since 2011.”

          • Bob_Wallace

            Investors have soured on coal stocks over the last couple of years. The market generally acts before facts become obvious to most people.

          • Ronald Brakels

            And the price can go down to $30 US a tonne, or even less. It 2003 one could buy coal for $25 a tonne. The higher price of diesel these ays is one reason to think prices won’t drop below $30 a tonne, but mining does not require diesel and I’m sure we will continue to see a shift towards more renewables and electrification in mining.

        • Kyle Field

          It’s a start…it’s better than nothing and hey…it’s still a ton of coal (5 million of them) which will be staying in the ground due to lack of demand 🙂

        • darma2u

          if everyone does this than ever y little ‘dent’ adds up…they are being the change they want to see in others!

Back to Top ↑