It should be a well-planned and pragmatic goodbye to coal

With climate change concerns growing by the day, reducing the energy sector’s dependence on coal-fired power plants is very much in focus. But balancing the energy mix for a just transition calls for carefully calibrated action.

This is because there is no universal formula to reduce dependency. What is good for one country may not be the right fit for another. India, with a population of over 1.4 billion, has indicated that it might have to tread cautiously while weaning away from coal-based plants. In fact, there is one view that there is need to continue investing in existing fossil fuel plants while simultaneously shifting to renewable energy to ensure a well-defined transition. The idea is to defocus from new coal plants, phase out existing ones and shift to renewable energy.

Weaning away from coal may not mean reducing its actual consumption. Notes Sunil Dahiya, Analyst, Centre for Research on Energy and Clean Air (CREA): “The term ‘phase down’ has various interpretations. At times, India has implied that coal’s projected decline in percentage share of the overall power generation mix by 2030 could be interpreted as the country phasing down coal, even as actual coal power capacity, generation and emissions are being phased up. However, to meet Paris climate agreement goals, there is simply no room or time to increase coal power generation.”

Electricity plan

In May 2023, the Central Electricity Authority released the final version of its new National Electricity Plan (NEP) that assesses the capacity additions needed to meet the projected demand in FY27 and FY32. The NEP has not paused new coal plants for five years as reported but calls for 46 to 54 GW of new coal generating plants which includes 26.9 GW under construction.

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However, the expert view is that India will have to start decommissioning coal-fired plants. Says Flora Champenois, Research Analyst, Global Energy Monitor (GEM): “In 2021, India pledged to reach net zero emission by 2070, and set important milestones to achieve this, including significant reductions by 2030. Phasing down coal-fired power generation is a vital step towards this commitment, as well as averting the worst impact of climate change.”

India as G20 leader

The G20 is home to 93 per cent of the world’s operating coal capacity and 88 per cent of the pre-construction coal capacity. Champenois is of the view that India, while heading the G20, must push for outcomes that reduce coal consumption. “For every 10 operating and proposed coal plants in the world, the G20 is home to nine of them. So, India has an opportunity to push for outcomes that accelerate shifts away from coal — the dirtiest fossil fuel,” she says.

According to experts, at a time when the already existing and under-construction coal-capacity is more than the anticipated demand for 2030 and beyond, India should restrain from granting permissions to new coal-based power plants as it will lead to creation of stranded assets.

Instead, India could focus on leveraging already invested money in existing stranded assets and operating the existing power plants efficiently, ensuring the majority of future electricity demand growth is met by renewable energy resources.

In fact, according to a CREA report, “Under the NEP’s 10-year coal projections, there is no need for any new projects to enter the pre-construction pipeline. If all pre-construction coal capacity was to come online, installed on-grid coal capacity would reach 275 GW, far exceeding projected requirement of 259.6 GW in FY2032…”

Adds Dahiya; “Electricity demand estimated in the NEP has always been over-projected compared to real demand. In the past, this has led to many coal power plants turning into non-performing assets. The ongoing push for more coal power proposals already exceeds requirements and could again lead to more stranded assets.”

This is an opportune time for India to push for a stronger outcome vis-a-vis the global coal to clean energy transition at the G20 leaders’ summit in Delhi next week. An orderly move towards clean energy will ensure that the investments in both coal and renewables will ensure a smoother energy transition.

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