Will India use ‘coal shortage’ as an excuse to dilute its environmental laws?

The shortage of coal and the possibility of large-scale power outages have been the core of intense discussions in India in recent weeks, even as the government has denied a crisis and experts have dismissed it.

Energy sector experts noted that there is enough coal in the country, while a few among them observed that the shortage could likely be a way of setting the stage for further dilutions in important laws governing the coal mining and forest sector.

The central government, however, repeatedly asserted that there is no coal shortage even though several states and the capital, Delhi, warned of power outages attributed to the coal shortage.

Coal availability

Sudiep Shrivastava, an environmental lawyer who has been closely tracking the coal sector, told Mongabay-India that the availability of coal at the mines and the power plants are two separate things. “The situation is such that there is stock at the coal mines, but it is not there at the plants.”

Shrivastava’s argument found its echo in the points put forth by the Union power ministry as well. In a statement on October 9, the power ministry said there are multiple reasons for the depletion of coal stocks at the power plant end – an unprecedented increase in demand for electricity due to the revival of the economy, being primary among them.

Additionally, heavy rains in coal mine areas during September this year is adversely affecting the coal production as well as the dispatch of coal from mines. An increase in the price of imported coal to unprecedented high levels is leading to a substantial reduction in power generation from imported coal in power plants leading to more dependence on domestic coal.

Non-building of adequate coal stocks before the onset of monsoon and legacy issues of heavy dues of coal companies from certain states (such as) Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh, Rajasthan and Madhya Pradesh are some of the other reasons for the shortage, the ministry explained. It dismissed the coal-stock shortage and emphasised that various stakeholders involved in the chain, such as Coal India Limited and railways, are closely monitoring the situation.

Later, on October 10, in another statement, the ministry of coal and Coal India Limited assured that there is ample coal available in the country to meet the demand of power plants. “Any fear of disruption in the power supply is entirely misplaced,” said the central government in the statement. “The coal stock at the power plant is sufficient for more than 4 days’ requirement.”

Dumpers stationed at Gevra Open Cast Mine in Korba, Chhattisgarh. Heavy rains in coal mine areas in September this year is adversely affecting the coal production as well as the dispatch of coal from mines. Photo credit: Meemoprasad/Wikimedia Commons

Under the norms, a power plant is supposed to have coal stock of 15 days-30 days depending on their distance from the mine, but if the stock dips to an amount that will last for less than a week, it is considered critical.

Shrivastava said the reality of this shortage is that it is a logistical issue. “Why will Coal India Limited supply coal without any payment – many state PSUs [public sector undertakings] owe huge amounts to it already. So this means the problem is of funds as well.”

Past instances

The shortage of coal is not a crisis that is new to the Indian economy. In fact, it has been a regular feature in recent years with the country faced a shortage of coal in both 2018 and 2014.

Rohit Chandra, assistant professor at the Indian Institute of Technology, Delhi, who has been closely tracking the energy issues in the country, told Mongabay-India that the “short term causes behind the shortage are the increase in the international price of coal, monsoon impacting mining and transportation of coal, and the capacity of power generation companies in paying an upfront cost for the coal being procured”.

“On top of that, the larger spirit of cooperation between the central government and other entities including states to resolve the coal-related problems has deteriorated over the last decade,” explained Chandra while indicating a trust deficit between states and the central government.

Energy sector experts note that no one may want to manufacture such a crisis as it is “bad for politics on both national and international level” and emphasised that the issue of logistics especially railway and the lack of a dedicated freight corridor are also the reason behind the shortage of coals plants in some states – especially those who do not have any coal mining within their territory and depend on mines in other states hundreds of kilometres away.

The government also claimed that the revival of the economy and industry after the second wave of Covid-19 led to an unprecedented increase in demand and consumption of electricity. “The daily consumption of electricity has crossed beyond four billion units per day and 65%-70% demand is being met by coal-fired power generation only, thereby increasing dependence on coal,” the ministry said.

According to the central government, the increased pressure on domestic coal is also due to a dip in the import of coal due to factors such as “import substitution and rising prices of imported coal”. The central government has been pushing for increasing the coal production in the country and also cutting down on imports from countries such as Indonesia.

But due to shortage (even as it was being denied), the central government asked thermal power generators to import coal for at least 10% blending with domestic coal.

Energy sector’s growth

Over the last decade, the central government has been focusing on increasing the installed capacity of power plants across the country. Since 2014, the central government has been consistently speaking about ending the coal imports and taking domestic coal production to one billion tonnes by 2024.

For this, the government resorted to a series of policy measures such as reforms in the mining sector in the last six years, including allowing commercial coal mining in 2020. Last year, following the first Covid-19 lockdown, the central government, to revive the economy, announced several measures to boost the mining reforms which included a major focus on the coal sector.

In fact, Prime Minister Narendra Modi had said in a statement that self-reliance (of India) is not possible without a strong mining and minerals sector as minerals and mining are important pillars of the country’s economy. The government has repeatedly talked about making India a five trillion dollar economy within the next few years and, according to the government, the growth in the mining and energy sector is critical to those plans as well.

Experts also speculate that Coal India Limited, which is the world’s single largest coal producer, has not been allowed to grow and that commercial mining should have been given a nod much earlier.

Former chairman of the Coal India Limited, Partha S Bhattacharyya, while explaining to Mongabay-India about India’s energy policies, including the transition with a specific focus on clean energy, said that going forward, India is expected to have a balanced focus on the combination of coal and renewable power.

He stated that the coal stocks at power plants plummeted from an availability for 28 days, in March, to that for less than a week, in October, due to a variety of reasons which included a sudden increase in demand from the industry as the economy is reviving.

Transport of coal by railways in India. Coal India Limited and railways are closely monitoring the coal shortage of India. Photo credit: Suyash.dwivedi/Wikimedia Commons

“Over the past three years, a significant portion of the incremental energy demand was increasingly being met by renewable power but this year there was this sudden high demand and renewable power was not able to completely meet that,” said Bhattacharyya. “We also…

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