Need for an Orderly Transition from Coal to Renewables : Daily Current Affairs

Relevance: GS-3: Infrastructure: Energy, Ports, Roads, Airports, Railways; Conservation, Environmental Pollution and Degradation

Key Phrases: Panchamrit, Inflation, Imported Coal, WPI, NCI, Triple Bottomline Approach;

Context

India’s Panchamrit’s targets of generating 500 GW from Renewables and achieving Net Zero Emissions by 2070, announced at Glasgow Summit are important in taking care of its climate commitments.
But, for a developing economy, where Coal is contributing around 75% of the total power generation, the transition to greener and cleaner fuel must be gradual.

Key Highlights

Why is there a need to phase out Coal?

To meet Emission Targets
- Coal is chiefly responsible for legacy GHG (Green House Gases) emissions.
- In 2018, it contributed 30% of global CO2 emissions.
For reducing the air pollution
- Coal Based Thermal Power Plants contribute
  - 50% SO2 emissions.
  - 30% NOx emissions
  - 20% PMs (Particulate Matters)
For checking water pollution
- The coal-based plants produce more than 100 million tons of coal ash every year, which eventually finds its way to the water sources, harming the marine and riverine ecosystems.
Safeguarding Human Health
- As per reports, burning Coal and its associated pollution is responsible for 8 lakh global deaths every year.
Reduction in the price of renewable energy leads to a greener and more affordable source of energy.
- As per International Renewable Energy Agency, the Price of power generated from renewable sources will become cheaper than that of conventional sources by 2025.
Saving forex reserves

Challenges in sudden Phasing out of Coal in India

Denying the resource-rich states the right to development
- India has the 5th largest reserves of coal.
- Approx. 70% of these reserves are present in Jharkhand, Chhattisgarh and Odisha.
Reduction in associated revenues
- In FY 2020, the Centre has collected 29.2 K Cr as GST compensation cess. Removal of Coal power generation will lead to revenue loss.
Proliferation of NPAs
- As has been observed in some G20 Countries, the sudden stoppage of Coal Powered Plants has resulted in the creation of stranded assets (Non-performing Assets).
Interlinkages in logistics will get negatively affected
- Coal contributes to approx. 40% of total freight revenue of railways.
- Potential revenue losses to railways and affect business sentiments due to disruption in the movement of goods.
Job losses due to closure of mines and coal-fired plants
- Around 7.5 L permanent employees are working in different Coal based thermal plants. (2021 Data)
- Along with contract employees, captive mine workers, employees in coal transportation, etc will lead to huge job losses.

Developments Regarding Coal

Ukraine-Russian War has increased the global commodity prices manifold.
- It has contributed to inflation.
- Inflation in the US is around 9.1% (a 41-year high)
- Inflation in India has been above 7% in the last 3 months (April, May and June).
Issues with Wholesale Price Index (WPI)
- WPI doesn’t include the price of imported coal.
- As the volatility increased in the market, WPI failed to reflect the imported inflation prevailing in the wholesale products available in the market.
Introduction of National Coal Index (NCI)
- This index was created to provide a benchmark for revenue-sharing contracts being executed after the auctions for commercial mining of coal.
- Unlike, It factors in the prices of imported coal.
- In the last 6 months, it has reflected the rise in the price of coal in the international market by jumping from 165 to 238.
- Meanwhile, WPI has remained stuck at 131.
Increased domestic coal production
- The domestic Coal manufacturers have increased their production in order to reduce the inflationary pressures introduced by imported coal.
- They have increased their production by 30% (From April to June).

Way Forward

Increasing the domestic coal production
- Sensitizing the financial community to the need of increasing domestic coal production to meet the growing energy demand.
  - The Power ministry has released a draft National Electricity Policy (in May 2021).
- A dedicated regulator for overcoming the concerns of Private players
  - Any increase in domestic coal production will require a significant Private Sector Contribution.
  - A single point of contact for the industry in the form of a dedicated regulator would provide Ease-of-Doing-Business to the new entrants.
- Diversification of production base (Public + Private) is required.
  - This would involve the utilization of 50 contracts of Commercial mining floated out in the last 2 years.
Ensuring Climate concerns
- Increased usage of Energy-Efficient Appliances
- Encouraging States, UTs, and ULBs to make Carbon Neutral Plans
  - Mumbai Climate Action Plan, 1st in South Asia, aims to achieve Carbon Neutrality by 2050.
- Adopting Green Energy at a steady pace
  - As per TERI, India should achieve 90% of the energy mix from renewable sources by 2050.

Conclusion

The path to achieving 500 GW of renewables needs to be gradual, ensuring an orderly transition as coal is unavoidable in the near future. Reducing coal imports and increasing domestic production of coal needs focused attention. In this way we will balance the need of the people and the planet, thereby satisfying the Triple Bottomline Approach (of People, Planet and Profit)

Source: Indian Express

Mains Question:

Q. What are the disadvantages of relying on coal for power generation? How can India fight the volatility in Coal prices in the world market? Suggest a suitable way forward.