Why India’s Coal Sector Continues to Resist the Green Energy Transition

India’s key coal stakeholders are increasingly facing pressure due to energy transition and climate change push. Coal accounts for 44% of India’s primary energy supply as well as 70% of the overall power supply. Reducing or changing this will be difficult as India has massive reserves of cheap coal which makes change or transition difficult. Besides India has a massive capital base around the coal supply chain which will get stranded if the country aggressively moves towards clean energy.

India is facing pressure from developed nations to make a net-zero pledge and reduce carbon emissions as the world increasingly faces challenges due to climate change. However, India is still a developing nation and can ill afford to divert capital towards energy transition away from its developmental priorities. India is always burdened with very high energy imports as it has negligible reserves of oil and gas. India’s coal minister said that he does not see India’s share of coal in the overall power supply will go below 50% even in 2030. This looks optimistic given the sharp fall expected in solar and wind costs and storage increasingly coming into the mix to balance the variability of RE energy.

India also has heavy investments around coal mines, logistics as well coal generation plants. These are depreciated projects which means the power generation through coal is very cheap and helps India’s development. While RE costs will go low, it is now meeting incremental demand and not replacing existing demand. However, to meet climate change targets, India will have to look at also replacing the 160 GW plus coal-powered capacity with solar / wind with storage. That will require heavy investments and also a major transformation which could lead to organizations and individuals losing out in terms of livelihoods and revenues. India has not committed to a net-zero target despite other major countries committing to 2050 or 2060 targets. India wants developed nations to commit more resources and support to developing nations like India as they are more responsible for the carbon stock in the atmosphere. However, no such capital commitments have come to date and most of the support has been more in name only rather than very serious money.