India Accentuates Coal Reliance in its New Economic Policy Brief

By Vijay Jayaraj

Most discussions of India’s annual budget are being dominated by the increased taxation of the middle class. But many media entities—both in India and the West—overlooked the country’s decision to increase its coal consumption.

An economic survey released as a prelude to the financial budget often indicates the country’s future direction in various areas of governance, including energy and environment. This year’s survey—like those in the previous years—clearly indicates that the country will neither reduce its consumption of coal nor back away from its commitment to the economic development that requires affordable and plentiful energy for hundreds of millions of people.

Future is Coal

Coal dominates India’s energy landscape, comprising over 55% of the nation’s primary commercial supply. In the power sector, coal’s role is even more pronounced, with coal-fired plants generating approximately 70% of India’s electricity. It is also a critical source for various manufacturers, including those of steel, sponge iron, cement and paper.

With the country’s energy demand projected to at least double by 2047, the survey makes clear that coal will remain the backbone of India’s energy mix for an extended period.

“Despite being one of the fastest-growing economies in the world, India’s annual per capita carbon emission is only about one-third of the global average,” said the survey in an apparent rejection of Western criticisms of Indian emissions of carbon dioxide, the bogeyman of climate extremists.

In addition, the survey says, “India’s dependence on petroleum imports should not be replaced by dependence on solar photovoltaic panel imports.”  It recommended a balanced response to climate change and criticized policies making reduction of emissions a top priority at the expense of development.

The Indian government also took the opportunity to criticize carbon import taxes levied on its products by the European Union. The survey points out the hypocrisy of developed nations criticizing India’s CO2 emissions while simultaneously increasing their own emissions and fossil fuel consumption. This paradoxical behavior is labeled a “comedy.”

No Way but Coal

At 35 quadrillion Btu (British Thermal Units), India’s primary energy consumption is the third highest in the world. The country is also the third biggest consumer of electricity.  As the world’s fifth-largest economy and home to over 1.4 billion people, India’s energy consumption is projected to more than double by 2040. The International Energy Agency forecasts that India will account for nearly one-quarter of global energy demand growth from 2019 to 2040.

Recent data from the Central Electricity Authority (CEA) shows that coal-fired power generation has been steadily increasing. In the fiscal year 2022-23, coal-based power plants generated 1,043 billion units of electricity, about 10% more than the previous year.

This upward trend has continued into 2023-24, with coal power generation reaching 919 billion units in just the first eight months of the fiscal year. In fact, CEA has said that coal will continue to be the dominant source of power generation at 54% by 2030.

The rate of growth in the production of coal in the country during the past three years has been the highest in the country’s coal production history. [GT1] New coal mine approvals earlier this year not only boosted production but also generated 40,560 jobs.

India’s enthusiasm for coal is driven by several factors: abundant domestic coal reserves, the need for reliable and affordable energy to fuel industrial growth and concerns about energy security. The significant budget allocations for coal production, infrastructure, and technology reflect a pragmatic approach to meeting the nation’s growing energy demands and supporting its ambitious economic goals.

The only sensible thing left for India to do is stop wasting time and resources on so-called renewables so as not to jeopardize its energy security. Besides, not even an unprecedented increase in wind and solar capacity would dethrone coal as the primary energy source.

This commentary was first published at BizPac Review on August 20, 2024.

Vijay Jayaraj is a Science and Research Associate at the CO₂ Coalition, Arlington, Virginia. He holds a postgraduate degree in energy management from Robert Gordon University and an M.S. in environmental sciences from the University of East Anglia, both in the U.K., and a B.S. in engineering from Anna University, India.