India’s Coal Crisis
October’21 started with reports coming out of various Indian states such as Punjab, Maharashtra, Bihar, Delhi, Rajasthan & Jharkhand that they were experiencing a shortage of coal, therefore, resulting in shutting down of thermal power plants and/or operating at a reduced level of production. The situation escalated into such a critical stage that various leaders such as the CMs of Punjab & Delhi had to contact and urge the Prime Minister to intervene and avert a possible power crisis with the potential to last for an unprecedented period of time.
According to the power ministry, almost more than half of the country’s 135 thermal power plants are running on fumes given that coal stocks are running critically low.
70% of our electricity is generated using coal and the crisis is bound to hamper the post-pandemic recovery.
The coal crisis did show some early signs of its conversion into a full-fledged power crisis with reports of protests coming out of Punjab against the power cuts which stretched up to 6 hours. The government of Punjab called these domestic power cuts necessary and reiterated its commitment to ensuring a smooth supply of electricity for agricultural and industrial activities.
Power-cuts were also experienced in both urban and rural areas of Rajasthan, some parts of Maharashtra reminding the population of the old times before India’s exponential rise of power supply in the last two decades without any major dipping throughout this period.
Factors Responsible for The Shortage
The current situation, although still in an infant stage, did provide flashbacks from the 2014 coal crisis which was averted through meticulous planning and execution of improved coal and power strategy by the central government.
According to a report in the ‘The Print’, there has been a gradual decline in the production of coal ever since a record production in 2015-16 citing stagnation in the coal sector. However, a crisis of this sort is believed to be fueled by both demand and supply factors.
1. Recovering Economy
The pandemic of course amongst other things has indirectly contributed to this crisis too, with stability returning to markets an unprecedented 7.3% contraction suffered in the last fiscal year.
There is now more and more pressure on the industries to spearhead the economy around this festive season which in turn has put a lot of pressure on the thermal power plants resulting in widening of the gap between available electricity supply and peak demand to more than 4 gigawatts already, as per data provided by the central government.
The government of India maintained that proper information regarding the possibility of the current scenario was given to the state governments and they were asked to stock coal by themselves as there is a limit to the stocking capabilities of Coal India to avoid the risk of fire.
The state governments, especially Rajasthan, West Bengal and Jharkhand who happen to have their mines have blamed heavy erratic monsoon rains and subsequent flooding for hampering domestic coal production which contributes to 70% of our total energy consumption.
3. International Prices
We have found ourselves placed in a rather vulnerable situation, however, we are not alone. A report published in ‘The Hindu’ analyzing our recent coal crisis highlights that our thermal plants have cut short their imports due to the high prices in the international market, the report further states that “The price of natural gas in Europe, for instance, has risen by over 400% since the beginning of the year while the price of electricity has risen by over 250%. China’s factory output in September shrunk for the first time in 18 months, thus putting the brakes on the country’s recovery from the coronavirus pandemic, owing to power disruptions caused by inadequate coal supplies. The Chinese Government has resorted to rationing power to manage the crisis.”
To summarize, there indeed has been a power crisis at large which has led to an inflation of international coal prices meaning that if we try to compensate for our reduced production of domestic coal by way of imports then we would have to pay a hefty sum which could have further rippling effects on our economy.
The role of private entities is being questioned while many sources criticize the policy of understocking pursued by various stakeholders in the anticipation of a third wave that never came just to play safe.
While it’s difficult to zero down on something specific as an origin of a domino effect, the good news is that the power industry is recovering and a crisis would most probably be averted for now as per ANI which reported the government on record saying that “There is no shortage in the daily supply of coal to States and power companies and we are maintaining 5 days stock, in a month’s time the situation will be back to normal.”.
Given these circumstances, it has never been more essential to talk about climate, renewable energy, and the pathway towards it.
4. Climate and Energy
The government of India has set a target of 1bn tons of domestically produced coal, which is to be achieved by 2024. This is directly contrary to its pledge under the Paris agreement of achieving 40% of electric power installed capacity from non-fossil fuel sources by 2030.
There have already been talks of how this recent crisis could be used as a scapegoat for more mining access into the protected areas further endangering India’s tribal communities living in the forests which cover India’s largest coal reserves, and who have already suffered enough due to the disastrous environmental consequences of mining.