Coal mining in India. Coal-fired plants contribute 60 percent of India’s energy capacity and are a large source of the air pollution that is taking a toll on people’s health and their livelihoods. Photo credit: The Hindu

By Chaitanya Kumar
NEW DELHI, Mar 19 2015 (IPS)

In November last year, India’s power minister Piyush Goyal announced that he plans to double coal production in India by the end of this decade and, in an effort to enhance production, the Indian government has started a process of auctioning coal blocks.

Coupled with the auctions is the disinvestment of Coal India Limited (CIL), the world’s largest coal mining company, and both actions can provide short-term reprieve to India’s energy and fiscal deficit woes.

However, there are four reasons why investors and the government should be wary of investing in coal for the long run (10-15 years).

The first stems from the fact that it is rapidly becoming clear to big business and governments around the world that a large proportion of coal and other fossil fuels should be left in the ground. The second is that coal consumption is declining in many parts of the world, with economics increasingly in favour of alternate sources of energy, such as wind and solar.“A systematic effort is now under way to dilute environmental, land and forest laws … The latest land ordinance passed by the [Indian] government has done away with two key pillars of the process of land acquisition: social impact assessment and community consent”

Reasons three and four have to do with growing resistance from tribal and grassroots communities, and the fact that India will be forced to take some form of action as air pollution becomes increasingly dangerous.

Despite its plans for coal production, the Indian government has been giving the right indicators on its pursuit of renewable energy, but this ambition – though welcome – is being counterbalanced by the country’s continued lust for more coal.

Call it an addiction that is hard to let go or sustained pressure from big corporations and their existing investments in coal, the Indian government has turned its eye on the vast domestic reserves in the country.

Growing resistance from tribal and grassroots communities

A systematic effort is now under way to dilute environmental, land and forest laws in the country. The latest land ordinance passed by the government has done away with two key pillars of the process of land acquisition: social impact assessment and community consent. The ordinance is facing stiff resistance from opposition parties and the general masses of India.

Any project, either private or under a public private partnership (PPP), previously required the consent of 80 percent of the community that the project impacted but no such consent is now required.

Social impact assessments that factors in effects on the environment and human health, among others, were mandatory for projects and while such assessments were shoddy in the past, doing away with them completely sets a poor precedent for industrial practices and gives even less of a reason for companies to clean up their acts.

A lack of social impact assessment also adds to the ambiguity that exists in offering the right compensation as part of the rehabilitation and resettlement plan embedded in the land ordinance.

In the context of coal, the efforts of the government to re-allocate 204 coal blocks and begin mining will be met by stiff resistance from impacted communities. “There is a fear that we will witness greater state violence on people as they begin resisting projects that have immediate impacts on their lives and livelihoods”, says Sreedhar, a former geologist who now runs a network of activists called Mines, Minerals & People.

The Mahan coal block, forcefully pursued by the Essar company, is a case in point where local communities have been resisting open cast mining for several years. The mine is located in what is one of the last remaining tracts of dense forests in central India. Mahan has subsequently been withdrawn from the auctions, a victory celebrated by the local communities.

Foreign investors are especially wary of pumping money into projects that can see resistance from local communities. The high profile cases bauxite mining plans by British resources giant Vedanta in ‘sacred’ hills in eastern India and the plans of South Korea’s POSCO steel-making multinational to open a plant in the eastern state of Odisha have become strong deterrents for big money to enter India.

While the government’s efforts at allaying fears may work, there is a difference in rhetoric and on-the-ground reality because it will not be easy to simply wish away people’s concerns.

Visible resistance has taken shape in the state of Chhattisgarh where twenty tribal gram sabhas in the Hasdeo Arand coal field area of the state passed a formal resolution under the forest rights act against coal mining in their traditional forest land.

“There has to be an assessment of India’s energy needs alongside an evaluation of the forests that we stand to lose from coal mining. Allocation of coal blocks in dense forests is imprudent,” says Alok Shukla, an activist from Chhattisgarh who is mobilising tribal communities to uphold their forest rights.

These struggles might only intensify as government efforts are aggressively under way to further dilute tribal rights and open up inviolate forests for coal mining.

Air pollution is becoming hazardous and India will be forced to act

As the pressure to act on air pollution builds, India will have to enforce strict emission norms on coal plants and their operators. Installing flue-gas desulphurisation scrubbers should be mandatory on any new plant that is set to operate in coming years. These devices are very effective in limiting dangerous pollutants from escaping into the atmosphere but come at a heavy cost for investors and coal power generators. 

But why would the government work towards increasing operational costs for power plants in the pipeline? Here’s why – air pollution is killing Indians every year and is now the fifth largest contributor of deaths in the country. The fact that 13 of the world’s 20 most polluted cities are in India is a cause for great alarm. A study has indicated that one in three children have shown a reduction in lung function in Delhi.

The World Health Organisation (WHO) report, which makes this claim, advises that fine particles of less than 2.5 micrometres in diameter (PM2.5) should not exceed 10 micrograms per cubic metre. Delhi tops the list at 153 micrograms of PM2.5 per cubic metre and it is only getting worse.

In Delhi, for instance, coal roughly contributes 30 percent of recorded air pollution (particulate matter) and the numbers are higher in the coal clusters of the country. Coal-fired plants contribute 60 percent of India’s energy capacity and are a large source of the air pollution that is taking a toll on people’s health and their livelihoods.

A recent report on coal pollution in India by Urban Emissions and Conservation Action Trust reveals a shocking statistic – in another 15 years between 186,500 and 229,500 people may die premature deaths annually as a result of a spike in air pollution caused by coal-fired power plants.

In dealing with air pollution, curbing the effects of harmful pollutants like nitrous and sulphur oxides from coal power plants is critical and there is growing pressure on the central government to introduce strict emission standards. India is the only major coal-powered nation that does not have any concentration standards for these pollutants, a requirement that should soon be in place.

Both domestic and international pressure can move India to clean up its air. The government cannot afford to have an ‘airpocalypse’ on its hands.

All is not well with the coal industry in India  

Undaunted, Narendra Taneja, energy cell convenor of India’s ruling Bharatiya Janata Party, has claimed that coal and gas will remain the mainstay of the country’s economy for the next 50-60 years.

The impossibility of this claim becomes apparent when we look at the actual reserves of extractable coal. Only one-fifth of the coal reserves of CIL are extractable and if the ambitious doubling of domestic production happens, the known reserves are expected to last for less than two decades.

Coal mines that expire before the lifetime of new coal plants scream for greater economic prudence from investors.

India’s ambitious renewable energy expansion plans need to be complemented by a phase-out plan of coal. The world needs stronger political leadership from India as it tries to tackle the twin challenges of poverty and climate change.

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

Indian coal workers. India announced in November last year that it plans to double coal production to a whopping 1 billion tonnes per annum before the end of this decade, a feat that is going to be highly improbable to pull off. Photo credit: Jaipal Singh/EPA

By Chaitanya Kumar
NEW DELHI, Mar 18 2015 (IPS)

India’s Government under Narendra Modi is in overdrive mode to please businesses and investments in the country. The much aggrandised ‘Make in India’ campaign launched in September 2014 is a clarion call for spurring investments into manufacturing and services in India and all eyes have turned to the power sector which is expected to undergo dramatic shifts.

Piyush Goyal, India’s power minister, announced in November last year that he plans to double coal production in India to a whopping 1 billion tonnes per annum before the end of this decade, a feat that is going to be highly improbable to pull off.

In an effort to enhance production, the Indian government has started a process of auctioning coal blocks, which were de-allocated by the country’s Supreme Court as a result of the coal scam that hit the country in 2012 (and resulted in notional losses of 30 billion dollars to India’s exchequer).

With domestic miners already having shown an aggressive interest in bidding at the first auction last month, a total of 204 coal blocks are set to be auctioned over the next 12 months. The first 32 auctioned blocks have yielded more than 35 billion dollars, exceeding the nominal losses from the coal scam.“[Indian] Prime Minister Modi has made it clear that he does not intend to give into … pressure [to take further action on climate change and rethink its energy options] from any nation but he also cannot afford the ignominy of being singled out as a country that is blocking progressive climate action in Paris”

Coupled with the auctions is the disinvestment of Coal India Limited (CIL), the world’s largest coal mining company. A 10 percent stake sale in early February resulted in a mixed bag response. Another state owned firm, LIC India, lapped up 50 percent of the stocks alongside a couple of international investment funds and a few Indian firms. The move generated 3.6 billion dollars in revenues for the government.

The auctions and the disinvestment of CIL can provide short-term reprieve to India’s energy and fiscal deficit woes, but there are four reasons why investors and the government should be really wary of investing in coal for the long run (10-15 years). The following are the first two.

Unburnable carbon

The reality that a large proportion of coal and other fossil fuels should be left in the ground is rapidly becoming clear to big business and governments around the world. By signing on to a global agreement that pledges to limit the rise in the earth’s surface temperature to 2 degrees Celsius, India along with other major carbon emitters have effectively signalled the imminent decline in the use of fossil fuels in order to avoid the worst impacts of global warming.

To achieve this much needed and agreed upon limit on temperature rise, 82 percent of known global coal reserves should remain unextracted. This roughly translates into 66 percent of known coal reserves in India and China that should be left in the ground, according to a study published in the reputed journal Nature.

These stranded assets, or unburnable carbon, is what the Intergovernmental Panel on Climate Change (IPCC), the scientific body that informs climate policy around the world, also highlighted in its recent report on climate change mitigation.

This new reality is unravelling quicker than expected and gaining credence from the most unlikely of places. Even the International Energy Agency (IEA), which has faced consistent criticism in underplaying the role of renewable energy in favour of nuclear and fossil fuels, stated recently that “no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 degrees C goal”.

IEA’s Chief Economist Fatih Birol warned that “we need to change our way of consuming energy within the next three or four years,” because, otherwise, “in 2017, all of the emissions that allow us to stay under 2°C will be locked in.”

Coal is fast losing the rug under its feet. Nick Nuttall, the spokesman for the UN Framework Convention on Climate Change (UNFCCC) said of divestment: “We support divestment as it sends a signal to companies, especially coal companies, that the age of ‘burn what you like, when you like’ cannot continue.

This proposition will be contested fiercely by the Indian government as much as by any fossil fuel company, but as nations – under pressure – prepare to deliver a strong global climate agreement at the U.N. Climate Change Conference in Paris in December, long-term investments in coal in this rapidly growing economy will stand on very thin ice.

Even U.S. President Barack Obama’s statements during his recent visit to India suggest diplomatic pressure on India to take further action on climate change and rethink its energy options for the immediate future.

Prime Minister Modi has made it clear that he does not intend to give into such pressure from any nation but he also cannot afford the ignominy of being singled out as a country that is blocking progressive climate action in Paris.

Thermal coal reaches retirement age – it’s time for renewable energy

A new report from Goldman Sachs starts with this gem of a sentence:  “Just as a worker celebrating their 65th birthday can settle into a more sedate lifestyle while they look back on past achievements, we argue that thermal coal has reached its retirement age.”

The latest data reveal that coal consumption is declining in many parts of the world, including across Europe as a whole, the United States and now, surprisingly, even China registered a small but historic decline in its coal consumption last year. The retirement of dirty coal plants in developed economies is set to cement this trend in the coming few years.

The most recent blow comes from the world’s largest sovereign fund, as Norway’s Government Pension Fund Global (GPFG), worth 850 billion dollars, announced that it had dumped 40 major coal mining companies from its portfolio on environmental and climate grounds.

Besides the climate concern, economics is increasingly in favour of alternative sources of energy, such as wind and solar.

In 2014, we saw a precipitous drop in the cost of solar energy in India. Bidding prices came down as low as 6.5 rupees a unit, a 61 percent drop over the last three years, compared with the average unit price of conventional energy like coal at around 5.5 rupees a unit.

Coupled with dramatic drops in costs of solar equipment such as panels, alongside operational, capital and maintenance costs, the path is clearly open for solar to achieve grid parity by 2017.

Meanwhile, onshore wind has in fact become the cheapest way to generate electricity in the world, laying the claims of cheap coal to rest. A report from the International Renewable Energy Agency (IRENA), an intergovernmental research organisation, has laid bare the facts.

According to the report, the levelised cost of energy or LCOE (that is, all costs considered except externalities like subsidies or environmental impacts) for solar and wind already makes them highly competitive with fossil fuel-based electricity.

The oft cited issues of high capital costs and intermittency notwithstanding, prices of small-scale residential rooftop solar systems also dropped in the range of 40-65 percent between 2008 and 2014 in Europe and the United States.

What does this mean for coal in India? If the above numbers are any measure of the future of the energy sector, heavy investments in coal beyond this decade would be economic suicide.

Coal plants once established have a lifetime of at least 30 years and given the market volatility for coal, owing to rising costs of mining and uncertain fuel supply agreements, greater prices for end consumers is inevitable.

Many pundits in India appreciate this reality and the government has given the right indicators on its pursuit of renewable energy. With a target of 165 GW, India has set an ambitious goal of adding 60 percent to its total current capacity from just solar and wind by 2022.

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

Estimates suggest that Pakistan can generate around 1,1000 megawatts of electricity through solar and wind sources. Credit: WWF-Pakistan

By Farrukh Zaman and Chaitanya Kumar
KARACHI/NEW DELHI, Jun 1 2014 (IPS)

Mukhtar Ali is one of the many Pakistanis who are furious at politicians and authorities for failing to provide citizens with a regular supply of electricity during the smouldering summer months.

Life for the 42-year-old shopkeeper in Karachi, Pakistan’s financial hub, becomes especially unbearable when his business suffers due to load-shedding (rolling power cuts), or when he tries to sleep at night without a fan to cool him.

“This has been going on for years now,” Mukhtar told IPS. “We have been promised on several occasions by previous governments and even the present one that the energy crisis will be resolved in their tenure. But so far, things remain the same. I cannot even express my anger towards such hypocrisy.”

“Pakistan has been [badly] impacted by extreme weather disasters due to climate change [...]. We will only be adding to the problem if we expanded the use of coal and other fossil fuels.” -- Umama Binte Azhar, a sustainability expert at Brunel University
The ongoing energy crisis is certainly one of the greatest challenges that Pakistan is facing. The current power shortage in the country has been estimated to be around 6,000 megawatts, with the industrial sector being hit the hardest due to the shortfall.

Since 2011, almost 70 percent of industries have either shut down or have outsourced their operations to countries like Malaysia and Bangladesh. The Economic Survey of Pakistan notes that during 2011-2012 around 4.8 billion dollars, or two percent of gross domestic product (GDP) was lost due to power outages.

As a result, after years of massive blackouts that have plagued the country and destroyed much of its industrial sector, energy-starved Pakistan is setting its eyes on a coal-fired future. Recent discoveries of massive ‘low’ and ‘low to medium’-quality coal reserves in the southern part of the country have led many to endorse the decision to compensate for the current energy deficit by setting up coal-fired power plants.

An economic and environmental nightmare

Regarded as the dirtiest of all fossil fuels, coal is considered one of the largest contributors of carbon emissions that are causing rapid climate change. Around the world, coal has been the cause of several social and environmental conflicts, and has resulted in massive human displacements in recent history.

Additionally, coal-related industries are responsible for creating water scarcity and food risks in countries where the use of water for energy is prioritised over agriculture and food production. This has led many experts and specialists in the energy and climate sectors to show reservations towards coal-fired power plants.

“Coal is exhaustive and an unsustainable resource for Pakistan,” Umama Binte Azhar, a sustainability expert at the London-based Brunel University, told IPS.

“Pakistan has been one of the worst impacted by extreme weather disasters due to climate change in recent years. We will only be adding to the problem if we expanded the use of coal and other fossil fuels.”

Despite this, the recent discovery of coal reserves in the Thar Desert in Pakistan’s southern Sindh Province has sparked both domestic and international interest. For example, China is set to invest around 1.5 billion dollars in Thar Coal. Similarly, Burj Power, a UAE-based company, has signed a deal worth 700 million dollars to set up four coal plants at Port Qasim, near Karachi.

Many UK and Czech-based companies are also expected to make such investments in Pakistan for the same purpose. A recent agreement signed between the Pakistan government and the Asian Development Bank (ADB) stipulated that the latter would provide 900 million dollars worth of assistance to help Pakistan set up a power project in Jamshoro, a district of the Sindh province.

An estimated four coal plants are poised to become operational by 2016 at various points around the country to generate electricity. What is alarming about this plan is that running the plants will require coal to be imported in huge quantities from countries like Indonesia and South Africa since most coal deposits in Pakistan have low energy density.

The operation will be extremely costly, and will hold Pakistan hostage to imports and international markets for many years to come. Neighbouring India is learning this lesson the hard way, with high import prices of coal making thermal power plants economically infeasible without massive government bailouts and soaring energy prices to the end consumer.

Regional experiences

Pakistan is not the only country with plans to exploit coal for energy. Developing countries around the world and primarily South Asia are fixated on the notion that coal is cheap and therefore a viable source of energy for growing the economy and fighting poverty.

With almost 450 coal-fired power plants proposed to come up in the region, India’s hunger for this dirty fuel is rising. But the truth is that a majority of these plants will likely fail to come into being, as the last few years have shown.

Domestic coal production has hit a plateau as poor mining and transport infrastructure, as well as corruption scandals, have crippled Coal India Limited (CIL), the world’s largest coal miner. Efforts are underway to import coal from countries like Indonesia and Australia but rising coal prices have put a spanner in the industry’s works.

Over 30 power plants went on a distress sale last year as enthusiastic entrepreneurs built coal plants in haste but were unable to run them owing to massive coal shortages. This has become a recurring theme in India that is pushing coal-financing institutions to completely rethink their investment strategy.

Bangladesh is another example of where coal is being looked at as the panacea for poverty. But the recent eruption of public dissent against the proposed 1,320-MW Rampal power plant in the southwestern Khulna district – which is known in Bangladesh as the gateway to the ecologically sensitive tidal forest area called the Sunderbans – shows that the industry will not have it easy.

As coal plants begin competing for people’s need for land and negatively impacting agriculture, health and livelihoods, opposition for them will only rise as witnessed in pockets across the subcontinent.

Sri Lanka is steadily increasing its coal dependence as it projects 70 percent of its energy by 2025 to come from coal but that growth is mired in complex geopolitics that questions the primary motive behind coal expansion: is it to satisfy the capital interests of a few or the energy needs of the masses?

The story in Pakistan could turn out to be the same, as coal prices continue to head northwards and international financial institutions like the World Bank and the ADB grow increasingly wary of their investments in this fossil fuel.

Solving the crisis with renewables

Among the available alternatives, renewable energy sources such as solar, wind, and biomass have vast potential in Pakistan. Despite their high installation costs, renewable energy systems incur far fewer operational and maintenance expenses, making them highly profitable in the long run.

Globally, the cost of renewables has decreased drastically. Considering that the prices for solar panels have fallen from five dollars/watt to less than a dollar per watt in just a few years, solar energy has proven to be an affordable and practical option for Pakistan, especially since the country falls under a sun belt.

The wind corridor at Gharo-Keti Bunder in coastal Sindh is another potential source of power generation waiting to be fully explored. It has the potential to generate about 11,000 megawatts of electricity, according to a report published by the Pakistan Meteorological Department.

Regrettably, “inadequate investments, power tariffs, and institutional constraints have resulted in the dismal situation where renewable sources are not being fully tapped,” Asad Mahmood, the technical manager at the Energy Conservation Fund (ECF), told IPS.

Experts say Pakistan can avoid the trap that rapidly emerging economies have fallen into, and instead draw up a blueprint for large-scale decentralised renewable energy deployment. In a rapidly changing climate, nothing less would be acceptable.

(END)