Future of India's coal ecosystem
- India is the third largest economy in Asia, in terms of Gross Development Product.
- To keep the national GDP at somewhat higher level, coal has played a major role.
- Coal currently provides over 70% of India’s electricity and over 50% of its primary energy.
- However, still millions live in energy poverty, and India’s energy demand will soar as the country urbanizes and provides more energy services.
Need for phasing out coal:
- Coal is the most polluting form of fossil fuels.
- In India, coal-fired power plants contribute 40 per cent of India’s fossil fuel emissions and 13 per cent of the ambient PM 2.5.
- The increase in availability of alternatives such as solar and wind, have pushed the demand further to phase out coal.
Significance of Coal Industry in India:
- Coal is a reliable energy source, especially when compared with the seasonal and diurnal variability of renewables.
- The sector generates taxes and revenues, jobs, pensions, and Corporate Social Responsibility (CSR) spending.
Taxes and Revenues:
- Coal mining and power companies pay taxes and royalties to the central, state, and district governments.
- Coal India Limited and National Thermal Power Corporation (NTPC), collectively contribute 3% of the Centre’s total annual revenue.
- Coal India Limited (CIL) is the largest coal miner in the world; it pays around INR 40,000 crore annually in royalties, cesses, and levies.
- The Indian Railways is acutely reliant on revenues from coal transport.
- Coal is also a key source of revenue for at least six states and 50 districts.
Jobs:
- Coal mining and power sectors also provide nearly four million direct and indirect jobs.
- Apart from this,
- Millions work in coal based industries such as steel, cement and brick;
- Hundreds of thousands provide services to meet the consumption needs of directly and indirectly employed coal workers.
- Several million informal coal workers who scavenge coal for self-use or to sell on the open market.
Pensions:
- there are nearly 600,000 coal pensioners whose pensions rely on the survival of the coal industry.
CSR (Corporate social responsibility) Spending:
- In 2020, coal and power companies spent over ₹1,000 crore building schools, hospitals, and roads.
Coal Dependency:
- Overall, nearly 40% of Indian districts have varying levels of coal dependency.
- The most pronounced dependency prevails in the eastern and central Indian states of Jharkhand, Chhattisgarh and Odisha.
Challenges:
- In India, a just transition may be a challenge due to the country’s massive regional coal-dependency and limited financial and technical capability.
- Such transitions require long-term and multi-decadal commitments.
- Any unplanned coal phase down might adversely impact the entire coal ecosystem by;
- Affecting local jobs
- Cutting state government revenues
- Lowering railway revenues.
- Numerous global studies show that closures can turn coal-dependent regions into ghost towns, with massive consequences for people and communities.
Road ahead
India can resort to multi legged approach to phase out the coal industry completely without having adverse effect on the economy.
- To start the just transition planning process, the central government should initiate the creation of a multi-stakeholder body to guide the process.
- This has been done successfully in other countries such as South Africa that are also navigating coal transitions.
- To ensure that the planning process is inclusive, the body should have representatives from various central ministries, state/district governments, coal companies, local communities, civil society, and trade unions.
- The Centre will need to take the lead in coordinating just transition policies and providing finance for policy implementation.
- A recent just transition study focusing on Jharkhand (where 11 out of 22 districts are coal-dependent) found that the state has the potential to diversify into sectors such as tourism, non-coal industries and renewable energy.
- However, this diversification process will require evidence-based policies, and massive investments.
- There is an urgent need to sensitize and build capacity among state-level stakeholders, as they will lead the implementation process for just transition policies.
- This is a key step and will require support from national and international actors.
- India can seek funding from rich countries, if it can lay the groundwork for just transition planning and implementation.
- Recently, a coalition of European countries and the US committed to an $8.5 billion fund that will support South Africa’s just energy transition programmes.
- Indonesia has made its coal phase-out conditional on climate finance from rich countries.
- Developing the agroforestry, fishery and ecotourism sectors could provide alternative sources of employment and economic opportunities to coal-dependent communities
Summing up
- India, being a tropical and a peninsular country, has wider access to various renewable energy sources like solar, wind and tidal energy.
- Thus, with proper investment and clear pathway, India has the potential to steer away from coal based economy and achieve its individual climate goals.
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