economy

Is India starting to say `No` to coal?

By Anders Lorenzen

India, the world’s second-most populous country and predicted to overtake China soon as number one, and with a growing middle class and a growing economy the demand for energy is huge and surging.

Coal has long been king in the country and is continuing to be the backbone for growth in energy provision. But due to concerns about climate change, there is growing pressure on the country to adopt cleaner sources of energy.

And there are perhaps some signs that the shift to renewables is shaping up and the appetite for coal is waning.

No investor confidence

The country received no bids for 48 out of 67 coal mines that were up for sale as part of a plan to open up coal mining to private companies, which demonstrated little investor appetite for a sector clouded by environmental concerns and low margins.  But in a statement released late on Friday last week (9th July) after a deadline for the submission of technical bids, the coal ministry said that only 19 of the 67 mines had drawn interest. The ministry added: “Four of these mines are coking coal mines and the remaining 15 mines are non-coking coal mines.” The statement added that only 8 mines received more than one bid. Auction guidelines stipulated a minimum of two technical bids before financial bids would be considered valid.

This would have been largely disappointing for India’s conservative Prime Minister, Narendra Modi, after he last year offered financial incentives to the private sector and removed restrictions on the end-use of the fuel. This was an attempt to reduce imports and make India a net coal exporter as production in India has largely been restricted to state-run Coal India Ltd and another smaller government-controlled company.

India has the world’s fourth-largest coal reserves and is the second-largest coal consumer, importer and producer.

Even though coal still accounts for over 70% of India‘s power production, the country has pushed an ambitious renewables policy with a major focus on solar power which aims to increase clean energy capacity more than four-fold by 2030.

In most European countries and the US, coal is rapidly on its way out, and climate advocates will be hoping that India is heading in the same direction.

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