India Within A Decade Of Peak Thermal Coal Demand, Predicts IEEFA
New research published this week by the Institute for Energy Economics and Financial Analysis predicts that India will reach peak thermal coal demand within the next decade.
In a report published on Tuesday, the Institute for Energy Economics and Financial Analysis (IEEFA) forecasts India will significantly increase its share of renewable energy generation, a trend which it believes will be driven by significant cost decreases and increased energy efficiency gains over the next 10 years. As a result, Indian demand for imported coal will most likely decline and coal consumption will peak in 10 years.
A side effect of this is the potential that India’s declining demand for imported coal will undercut US and Australian coal exporters expectations of a long-term growth market.
“IEEFA forecasts that India’s thermal coal use is likely to peak not more than 10 percent above current levels, a far lower peak than most other analysts are forecasting,” said Tim Buckley, lead author of the report and IEEFA’s director of energy finance studies. “India’s target to all but cease thermal coal imports by the end of this decade is now the logical economic outcome.”
The IEEFA’s conclusions sit in stark contrast to the projections put forward by the International Energy Agency (IEA) which predicts Indian coal use will double by 2040.
“IEEFA would challenge IEA’s coal-centric view of the world as entirely out of touch with energy developments in India under Prime Minister Modi,” Buckley said. “While IEEFA acknowledges that our forecasts are non-consensus, we believe strongly in them and note that we were ahead of the pack in predicting a similar transition in China.”
“India’s national decarbonisation policy is in line with global trends, which have seen renewable energy infrastructure investment running at two to three times the level of new fossil fuel capacity investment since 2011. India is on track to catalyze US$200-300 billion of new investment in renewable energy infrastructure over the coming decade, and IEEFA expects global capital inflows will play an increasingly important role.”
The IEEFA report forecasts an electricity sector model through to 2027 which includes expectations that India’s electricity demand will double over the coming decade. However, the IEEFA — unlike the IEA — predicts that India will be able to “meet its growing electricity needs via increasingly cost-competitive renewable energy resources and numerous energy efficiency measures, while at the same time keeping its coal use in check, at perhaps no more than 10% above current levels.”
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