By Business India Editorial

Close on heels to India’s ambitious declaration at COP 26 in Glasgow last month of going net-zero in 50 years and having 500 GW renewables, two reports have said that coal will remain the country’s mainstay energy source and it will shape global coal demand this decade.

NITI Aayog, the central government’s think tank, said in a report that coal demand will be in the range of 1192-1325 million tonne by 2030, led by usage from the electricity sector. The International Energy Agency (IEA), in its annual coal report said, stronger economic growth and increasing electrification will drive demand growth of four percent per year.

Coal-based utility electricity generation capacity in India is likely “to peak at about 250 GW” by the end of this decade or immediately thereafter, said the NITI report. It added that coal-based utility electricity generation in India will slow down, and is likely to peak a few years later, i.e. later 2040.

IEA said iron and steel production use coal and there are not many technologies to replace the fuel immediately. “India’s growing appetite for coal is set to add 130 million tonnes (Mt) to coal demand between 2021 and 2024. Continued expansion of India’s economy is expected during 2022-2024, with annual average GDP growth of 7.4 per cent, fuelled at least partially by coal. We forecast coal consumption to increase at an average annual rate of 3.9 per cent, to reach 1185 Mt in 2024,” IEA’s Coal 2021 report said.

It said India’s push to domestic coal mining through both Coal India and auction of coal blocks to private companies, coal usage in India will increase as it plateaus in other parts of the world, including China. It also said India is set to overtake China as the world’s largest metallurgical coal importer.

The NITI report said while coal-based thermal power generation will grow in absolute terms for the next decade, its share in the total power generation mix of the country will decline to a 50-55 per cent (from current 72 per cent) in the next 10 years. This, it said would be due to the changing capacity mix with increasing share of renewable energy.

Even IEA noted in its report, the pledges to reach net zero emissions made by many countries, including China and India, should have very strong implications for coal – “but these are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action.”

NITI Aayog cautioned against the target versus achievement of renewable energy in India. “India is unlikely to achieve its target of 100 GW of solar and 60 GW of wind capacity by 2022. Given the current “surplus capacity” in the system, distribution utilities are reluctant to sign fresh power purchase agreements, given their already distressed financial situation. Investments are likely to be constrained following the COVD-19 pandemic. For all these reasons, the development of the renewables sector needs to be tracked carefully.”

“They should also be very cautious of adding new coal capacity beyond 2030 as it risks locking in resources. India must enhance investments in the deployment of clean coal technologies throughout the coal value chain. Government power utilities must show the way by investing in the deployment of advanced clean coal technologies,” it said.