Published on February 27th, 2018 | by Joshua S Hill0
Coal India Concludes Renewables Will Substantially Decrease Demand For Coal
February 27th, 2018 by Joshua S Hill
A new report published by Coal India, the country’s state-owned producer of the majority of its coal, has concluded that demand for coal in India will “decrease substantially” due to renewable energy, and that “it is a matter of time” until clean energies will “displace coal.”
Coal India is the state-owned coal mining company that supplies the majority (84%) of the country’s coal. It is the world’s largest coal producer, but in a recent stakeholders consultation policy document — Coal Vision 2030 (PDF) — Coal India made the startling admission that “With the increasing threat of climate change impacting humanity (irrespective of the US position) and the global funding focus on renewables, it is a matter of time when alternative clean energy would displace coal.”
In a remarkable display of self-awareness — almost unheard of in the fossil fuel industry, not least of all in a developing country such as India — Coal India goes on to say that, “Standing in the midst of a change, it is very difficult for anyone to imagine its scale and often most people remain in a state of denial until the change is upon them.”
The key highlight of the Coal India document is its acknowledgement that recent trends suggest that coal demand, even in India, “is likely to decrease substantially.”
Hence the publication of the report which outlines the results of a study assessing the future demand for coal in India through to 2030.
All of that being said, however, the figures and predictions underlying the study do not necessarily reflect the clear forward-thinking espoused in the introduction to the report. Specifically, the analysis concludes that coal use will roughly double to between 1,300 and 1,900 million tonnes in 2030, leaving some experts to question the validity of its findings.
“The messages are extremely contradictory,” said Swati D’Souza, energy policy expert at the Delhi-based Energy and Resources Institute (Teri), speaking to Climate Home News. “The [coal demand] numbers are very high given current trends on solar and wind penetration in the power sector… The document does not really give clarity on how they arrived at these numbers.”
The authors of the report do admit that the growth of coal is likely to increase at a lower growth rate than previously — 3% CAGR (compound annual growth rate) compared to 6% over the past five years — but they nevertheless expect coal demand to be at between 900 and 1,00 million tonnes by 2020, and between 1,300 and 1,900 million tonnes by 2030.
“The demand scenario is influenced by economic growth, energy efficiency and emergence of alternate coal uses,” the authors conclude. “By 2030, of the overall coal demand, thermal coal demand is estimated to be 1,150–1,750MTPA and the balance is coking coal demand. While this appears to be a very wide range, the nature of uncertainties in the ecosystem are also quite wide.” The higher expectations reflect an Indian GDP of 8%, whereas the lower prediction reflects a higher energy efficiency scenario.
The authors of the report also highlight that “no new coal mines need to be allocated/auctions beyond the current pipeline” — which currently sits at around 1,500 million tonnes. But one wonders whether the report takes into account the growing trend that has resulted in coal mines being closed down, and import levels shuttered.
Only a year ago there was a flurry of news that seemed to hint at a change in course for India’s coal sector. In February of 2017, Indian newspapers reported that coal imports had declined by 21.7% in the month of January alone. Not long afterwards, the state of Gujarat cancelled 4 gigawatts (GW) worth of proposed ultra-mega coal power projects, which was immediately followed by more news that a total of 13.7 GW worth of coal proposed coal projects were being canned across India. In June of 2017, Coal India announced plans to shut down 37 underground mines.
To top it all off, in November, new research from the Institute for Energy Economics and Financial Analysis predicted that India would reach peak thermal coal demand within the next decade.
“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 new Coal India report also seems to underestimate the speed with which renewable energy technologies like solar and onshore wind will be cost competitive with coal — a trend being seen the world over, mind you. In the end — as it is with fossil fuel-reliant countries and fossil fuel companies the world over — predictions of a global transition to a low-carbon economy seem not to be infiltrating near-term expectations. This will likely be to the economic ruin of many.