3. Discuss the primary factors responsible for India’s coal crisis. What short-term measures can be taken to address the crisis? What long-term measures would you recommend to address the crisis sustainably? (15 Marks)
Candidates need to discuss the primary factors responsible for India’s coal crisis. Also mention short-term measures that can be taken to address the crisis. Also mention the long-term measures to address the crisis sustainably.
Introduction
Coal is India’s primary source of electricity generation. It is estimated that around 70% of electricity is generated using thermal power plants. State-run Coal India is responsible for almost 80% of India’s coal output. It is reported that they would ramp up supplies to address the coal shortages across power plants. There is a combination of factors that is causing the coal crisis in India. If we take a look at the last four years of energy consumption and compare it with the latest, we can see that the usage is increased substantially.
The primary factors responsible for India’s coal crisis
The country’s industrial power demand has surged after the second coronavirus pandemic wave.
On top of that, a widening price gap between lower domestic prices and record global coal prices has led buyers to shun imports.
An increase in global coal prices and freight costs had led to a curtailment in power production by plants using imported coal, adding to the pressure on utilities using domestically mined coal to ramp up output.
An increase in coal prices generally has a knock-on effect on power prices and inflation, making a hike a politically sensitive decision.
Coal India has kept prices steady over the last year despite global coal prices rising steeply in the same period.
The short-term measures that can be taken to address the crisis
Ramping up production and mining to reduce the gap between supply and demand.
Coal fuelled power generation plants under the corporate insolvency resolution process can be allowed to commence operations immediately, regardless of the stage of the proceedings at NCLT. This will save the coal transport time and quantity limitations in coal transportation to non-pit head coal plants.
To avoid a situation where payment defaults of a state lead to supply crisis, the power ministry is devising a penalty for power generation companies states which do not pay Coal India Ltd on time.
The Centre amended rules to allow 50% sale of coal from captive mines. It will be applicable to both private and public sector captive mines. Availability of additional coal will ease pressure on power plants and will also aid in import-substitution of coal.
With the monsoon on its way out and winter approaching, the demand for power usually falls.
The long-term measures to address the crisis sustainably
CIL should focus on mining. Officers from the Union Government should go down to the States, convey a value proposition and sit with State-level officers to resolve issues related to land acquisition and forest clearances.
Non- CIL production will have to be augmented.
The financial crisis that is brewing in the power sector needs to be addressed.
An opportunity to transition towards gas.
Lastly, the current crisis affords an opportunity to India to push strongly towards this cleaner alternative.
Conclusion
The current coal crisis is a wake-up call for India and the time has come to reduce its over-dependence on coal and more aggressively pursue a renewable energy strategy.
