Opinion
Coal's deadly grip over development is coming to an end
Summary
Incomes in large swathes of UP depend on power supply disrupted by coal shortages while coal-fired electricity generation loses economic viability in our clean-energy shift.
Strolling the streets of Tanda or Jalalpur in Uttar Pradesh (UP) on any given evening, you can’t miss the rhythmic click-clacking of power looms emanating from rows of one-room shacks—each housing, on average, seven power looms that work in tandem to produce the lungis, gamchhas and rumaals sported by men in eastern UP. The income of over half a million people in my constituency, Ambedkar Nagar, and close to 8 million in UP has entirely depended on them for the past three decades. But this income, already under duress due to an increase in prices of yarn, drop in wages, a new electricity tariff regime (bit.ly/2Zovhp7) and the economic fallout of covid, faces yet another setback: power cuts.
The post-covid boom in economic demand, coupled with flooding in coal-producing regions, has led to major shortages of coal at power plants across the country. By October, some coal plants had dangerously low stocks of only two days; in a country where 70% of the power is generated from coal, this spells disaster. Given the global energy supply crunch, the precarious situation of coal plants in India could prevail for the next six months (bit.ly/3BciXoX). To mitigate the pressure on coal supply, the government has ordered the temporary closure of some power plants and reduced electricity supply, particularly across rural India.
These random power cuts that last 5-7 minutes hurt commercial operations more than the long scheduled cuts—this is especially true for small-scale industrial outfits with basic operational setups (like power loom shacks) that employ a vast majority of workers in India, upon whose backs rides India’s development trajectory.
Although economic growth remains inextricably linked to coal in the medium term, India has never been more primed for increased investment in renewable energy technology. This is partly because the economics of new coal plants (bit.ly/3vEUFCC) does not make sense. Most of the 33 gigawatts (GW) of coal power generation capacity under construction and the 29GW in pre-construction stage will end up as stranded assets. According to a report authored by Kashish Shah, research analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), there have been no new coal plants announced and no movement on the 29GW of pre-construction capacity in the last 12 months. This, according to Shah, is because “coal-fired power simply cannot compete with the ongoing cost reductions of renewables. Solar tariffs in India are now below even the fuel costs of running most existing coal-fired power plants."
From a policy standpoint too, India is creating a favourable investment climate in the renewable energy tech sector. It has set a target of 450GW of renewable energy capacity (including solar, wind, hydro and biomass) by 2030. To meet this ambitious target, the government has been taking sustained steps to attract foreign investment partnerships, partly as an antidote to the weak debt financing ecosystem. Existing regulation allows 100% foreign direct investment in renewable energy projects, without prior government approval. A $600-million incentive scheme for new solar power projects will boost the production of polysilicon, wafers, cells and modules over the next five years. Most importantly, there is also an appetite to reform the power distribution sector, if budgetary allocations are an indication of the government’s inclinations.
There are economic, environmental and moral imperatives for foreign investment in renewable energy. While India is the third largest carbon emitter after the US and China, its per capita energy consumption is a third of the world average. The increase in per capita household consumption of energy will be a key driver of growth in the global energy market. India needs more energy, and it needs that energy to be cheap, reliable and clean. How it fulfils this energy demand will determine the success of the global climate action movement. With less than three days to go for CoP-26, any country or bloc serious about curbing emissions should remember that it is in its best interest to help India wean itself off dirty fuels.
This seems easier now than ever before. While coal ostensibly remains a powerful political constituency, providing jobs in some of the country’s poorest regions, necessity breeds change. As Coal India, the state-run giant that accounts for nearly 80% of domestic coal output, automates and upgrades its infrastructure, its recruitment has fallen below its retirement level. With little commercial interest in new coal mines, the obstinate power of coal as part of India’s development story may finally be in for a shake-up. The government must read the headwinds and introduce fiscal incentives like tax breaks and excise relaxations for research, development and production of renewable energy technology, particularly off-shore wind and hydro power.
People, especially the smartphone-armed children of the power loom generation, want more. More power that is more reliable and more affordable. Future elections could be fought over power, but this time, it could be the public making the power cuts.
Ritesh Pandey is a member of Parliament representing Ambedkar Nagar, UP, and the floor leader of the Bahujan Samaj Party in the Lok Sabha
