The supply challenge

At Copenhagen, the Indian delegation offered to reduce the country’s carbon intensity by between 20 and 25% by 2020 from its 2005 levels.But India’s real position had already been unveiled in June 2009 when environment minister, Jairam Ramesh, said his Government would reject any international treaty to reduce greenhouse gas emissions.Nearly 70% of India’s electricity is produced by coal. This figure is unlikely to decline despite talks that India will use more LNG, piped gas, oil, renewable energy sources, and even nuclear energy in the future.However, planners are growing increasingly worried about a looming coal shortage as India's domestic coal production increasingly falls behind demand growth, and as the country faces increasing competition from China for imports.

Coal supply shortage fears
The Ministry of Power has warned that India could face a severe coal supply crunch, with shortfall predicted to rise to 120 million t by 2012.Taking a more neutral stance, the Planning Commission predicts the country’s coal supply shortage will reach 81.03 million t by 2012. It expects a near-term shortage of around 70 million t. However, it agreed that India’s worsening coal supply shortages could spell increased power blackouts and failures throughout the country.

Pressure on CIL to raise coal production
Unwilling to let the Government fully liberalise the coal business, Coal India Ltd (CIL) is under pressure to step up domestic production, as well as acquire coal mining companies abroad.

The Standing Committee on Coal and Steel has written to the Ministry of Coal to let CIL take over the 138 blocks. Separately, the coal minister said CIL plans to revive operations at 18 abandoned mines. CIL aim to start production of these mines, with an estimated 1.6 billion t of reserves, sometime next year.

The Indian Government said it may consider introducing competitive bidding for the allocation of coal blocks to encourage domestic production.India has 201 coal blocks with the potential to produce 47 billion t of coal, but only 25 blocks are operational. Currently, only state-run firms are allowed to mine for commercial use.

Challenges must be faced
The environmental consequences of India's high dependence on coal must be faced. Coal-based power generation is responsible for 60% of India's carbon emissions.

There is also the immediate threat of rising prices as India must compete against China and the US.

The Government must also worry about the size of India's domestic coal reserves. A leading think tank reports that India has only 45 years of commercially-exploitable coal reserves, not 200 years as widely publicised by the Government and the industry.

The Indian Government sees underground coal gasification and energy efficiency as potential long-term solutions. It also announced that it has set aside Rs 740 billion over the next five years to improve energy efficiency and reduce carbon emissions from power generation.

In addition, CIL will invest Rs 25 billion to set up 20 new washeries, with a total capacity to treat 111.1 million tpa of coal, by 2017.

World Bank to aid modernisation
The World Bank said it has approved a US$ 180 million loan to help the Indian Government upgrade and modernise old, inefficient and polluting coal-fired power plants. The project will be jointly financed with a US$ 45.4 million grant from the Global Environment Facility (GEF).

The project will rehabilitate and modernise around 200 – 220 MW of capacity at each of the following plants: Bandel, West Bengal; Koradi, Maharashtra; and Panipat, Haryana. It has been designated the first phase of India’s National Renovation and Modernisation Programme, which, over the next decade, aims to rehabilitate old and inefficient power plants with a cumulative capacity of 27 000 MW, or almost 20% of India’s installed power capacity of 145 000 MW.

A parallel focus on better operations and maintenance practices in the plants will help sustain the improvements. This combined emphasis will allow India to adopt a lower-carbon path to energy generation.

NG Weng Hoong

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