By K Raveendran
The shift in the national focus from covid to coal has been prompted by fears of a nation-wide power blackout in the face of disruption in the movement of the vital commodity from the mines due to excessive rainfall, but the fact is that the energy crisis is part of a global post-covid phenomenon that is redefining the global energy scene, something that energy experts have been warning about in recent times.
From the prime minister’s special review meeting to take stock of the situation to assurances from the ministries of power and coal that things are under control, the Modi government is sparing no efforts to establish that the blackout fears are exaggerated and there is no cause for worry. But the states, irrespective of party affiliations, are unwilling to take the claim on its face value as they are busy planning for load shedding in the weeks and months to come.
What makes the covid energy crisis a distinct phenomenon is that it is not localised. The Chinese power crisis, which nearly crippled the high-growth economy’s industrial muscle, has turned the world’s attention to the seriousness of the problem. But experts have already been cautioning against such a development as the inevitable result of a pre-covid abundance in energy, which in turn led to loss of investment appetite for oil well investments, development of natural gas infrastructure as well as coal mine expansion. The growing pressure for decarbonisation also served to take the attention away from the traditional energy sources.
Simultaneously, there has been a notable preference for oil as the primary fuel to run power plants, taking advantage of the price advantage as oil shed significant values compared to its previous high levels. Asia, which is the prime candidate for increasing oil burning to produce electricity is also almost running out of coal, which is an extra bullish ping for oil traders, who then price in the general fuel tightness, adding froth to an already inflated oil price. According to projections, the shift could see an additional oil demand boost of nearly 1 million barrels per day for December 2021, half of which is likely to materialize from incremental oil-for-power generation in Asia. The demand boost from both price-induced fuel switching in the power sector and additional heating in the winter months would only come on top of the ongoing recovery in global oil demand.
Many countries around the world are relying on gas to transition away from coal and into renewables. But as far as India is concerned, despite the focus on less polluting renewable energy sources, power generation using coal is expected to play even a bigger part in the energy mix. According to projections, with tens of gigawatts of coal plants still under construction and in the planning phase, capacity from this source is expected to continue to increase and reach a peak of 265 GW by 2027.
Indian power generation from coal fell to a five-year low of 1,064 terawatt-hours (TWh) in 2020 due to the covid-19-induced slowdown. This was only a dip, however, as coal still makes up a gigantic 70 percent of the country’s total electricity production and is set to come back with a vengeance, growing by 43 percent to 1,523 TWh in 2037, by which time coal power is expected to finally peak.
India’s power generation is set to grow exponentially to 3,565 TWh by 2037, more than double 2020’s figure. Electricity production will already exceed 2,000 TWh from 2025 and is set to breach the 3,000 TWh ceiling from 2034 as a result of an electrification boost and economic growth. Electricity generation is expected to increase with an average annual growth of 4.2 percent, effectively tripling its current level over the next 30 years.
Millions of people depend on coal mining directly or indirectly for their livelihoods. Coal is particularly of vital importance of coal to major dependent states, such as Chhattisgarh, Jharkhand, Odisha, and to a lesser extent West Bengal and Madhya Pradesh. The opening of coal mining sector to the private sector is also expected to impart new dynamism to the industry. The government has auctioned 19 blocks, which witnessed keen interest from the private players. (IPA Service)