India’s Coal Crisis: how were government policies responsible?

Energy security concerns are a crucial component structuring Indian national and international policy impacting our country’s national development and economic self-sufficiency, its global positioning as an economic and political power and its strategic advantages in international relations. Energy security also emerges as a particularly relevant concern given the contrast between India’s aims of increasing digitalisation and technological development accompanied with economic self-reliance as it advances into the future and its status as a ‘net energy importer’. India is the world’s fourth largest energy consumer with its expanding consumer markets and its huge population accounting for its increased energy consumption. Thus, a consistent rate of energy self-sufficiency is crucial for the sustained economic growth and development of a developing country such as India. However, India is yet to achieve such a condition due to its energy-deficiency.  

One of the most recent developments in India’s energy sector has been the fact that India is confronting an aggravating domestic energy crisis with rising energy demands and increased consumption accompanied with depleting supply of primary energy sources in the form of fossil fuels such as coal. 

Exploring the Development of the Coal Crisis and its Immediate Causes 

Conditions of a critical crisis were in development for months following India’s economic recovery plan to kickstart economic growth which took a major hit after the global pandemic. This caused power demands to witness an acceleration of around 17% within a duration of 2 months. In addition, the recent 40% upsurge in the price of coal in the global market has accentuated the situation preventing domestic shortages from being sufficed through coal imports. Electricity demands for domestic and commercial purposes have surged in October 2021 following a heavy monsoon period which typically stalls coal mining and production. During this period, heavy monsoons also disrupted solar power production furthering reliance on thermal power plants to meet bloated energy demands. These circumstances intensified the strain on India’s domestic coal supply with speculations foreseeing that present coal shortages would continue on for a five- or six-month period.  

Amidst the air of panic that India was on the brink of an unprecedented power supply crisis due to the insufficiency of coal, state governments in Delhi, Tamil Nadu, Andhra Pradesh, Odisha, Punjab and Rajasthan either imposed power cuts, demanded an increase in coal supply to power plants and began stressing on judicious electricity consumption in apprehension of power blackouts due to a deficit in coal supplies. 

In light of these developments, the power ministry went on to refute any claims of an oncoming power crisis. It rejected allegations by opposition party leaders as well as reports that the unavailability of fuel hampered power generation on the pretext that such statements were fuelling a situation of a panic and spreading misinformation about India’s fossil fuel capacity. The ministry further instituted penalties for any power plants aggravating tensions by resorting to load-shedding practices despite adequate coal stocks being ensured to power plants in the words of ministry spokespersons.   

However, the power ministry’s stance on India’s coal capacity exhibited a self-contradicting nature. This is proved by the fact that according to a quote from The Indian Express, the Hon’ble Cabinet Minister Shri R.K Singh, the Union Minister for Power, New and Renewable Energy, in October, stated that India’s capability to bridge the gap between the supply and demand of coal would be a “touch and go affair” implying that there was a great degree of uncertainty whether the existent coal supplies and stocks would be sufficient to meet the rising demands. R.K Singh also revealed his qualms over the fact that India may not be in a comfortable position for the upcoming months. This proves that there was indeed, substantial cause for concern. 

Elucidating further, the gravity of the threat posed to India’s power and energy security due to the drastic reduction in coal stocks is evidenced through the graph attached below. The chart depicts that by September 2021, coal stocks dropped to an alarming all-time low of 4 days as a culmination of increasing demands for coal-based power due to the re-opening of the economy accompanied with limited coal imports.

Fortunately, prior to any further escalations in the crisis the coal demand to supply ratio attained a stable level. This was indicated by this official statement released by the Ministry of Power, “On Saturday, the total despatch of coal from all sources – Coal India, Singareni Collieries, captive mines and imports – was 1.92 million tonnes, while the total consumption was 1.87 million tonnes…Thus, the coal despatch has exceeded the consumption, thereby indicating a shift to gradual building up of coal stock.” 

India’s Coal Crisis: temporary mismanagement or deeper policy problems? 

Energy experts such as Sunil Dahiya consider that the crisis was a result of poor management and lack of foresight on part of power companies. With coal stocks declining since 2020 and the possibility of increased demands in the coming year, energy companies should have maintained coal stocks to reasonably tackle any exorbitant rise in demand. There were severe operational lapses such as the lack of a timely uptake of coal stocks with power plants based on demand projections prior to the worsening of the situation in September-October 2021. They are of the belief that the crisis does not speak to India’s coal power capacity; rather, it could have been averted with timely demand projections and prudent planning and action on coal stocks. 

Contrarily, it must be emphasised that the reason for the unprecedented coal shortages endured by India in the past months can neither be solely attributed to the immediate effect of post-Covid resurgence of economic activity nor on the role of major stakeholders such as Coal India, an organisation which is itself in the throes of the crisis. In fact, it is possible to trace the roots of the contemporary unprecedented fuel supply situation back to India’s long-term energy and climate policies and targets.  

In recent international climate negotiations, India has been demonstrating its long-term policy goal of increasing the renewable energy component in its total energy usage. At the 2015 United Nations Climate Change Conference in Paris (also termed as COP 21), India had set aspirational targets in the Nationally Determined Contributions (NDCs) to ensure that 40% of India’s power capacity is produced from renewable, non-fossil energy sources. Furthermore, in 2021, at the COP 26 Glasgow conference , India revised its NDCs and committed itself to raising the share of renewable energy in its total energy production to 50% by the year 2030. In light of these international targets which India has remained in pursuit of alongside its development priorities, the country has witnessed a transformation of the energy sector and changing national energy priorities. There was a burgeoning emphasis laid on making solar power accessible as a cost-effective and popular energy source as evidenced in the efforts of the National Energy Efficiency Mission. This policy push contributed to the renewable energy sector’s tremendous growth which will enable India to accomplish a large part of its Paris Conference commitments ahead of 2030. Moreover, renewable energy contributed 34% more to electricity generation in September 2021 than in 2019 according to a CREA report. 

However, these changing energy priorities demonstrate a mismatch between the broader framework shaping India’s energy policy and targets and the socio-economic realities of the energy sector. While the UN Climate Change Conference commitments under Prime Minister Modi have been aimed at boosting renewable power generation sources in the immediate future, India’s aspirational energy targets fail to factor in the ground reality that a significant portion (more than 70%) of the energy sector product share is occupied by cheaper and more reliable energy sources like fossil fuels. Furthermore, coal-based energy sources also remain the crucial provider facilitating electric power generation.  

The growing emphasis on renewable energy sources caused traditional energy sources such as coal to take a hit. In addition to dismal infrastructural development in the coal sector over the past decade, coal-based energy was further relegated to the status of a second-tier priority amidst attempts to increase the scope of renewable solar energy. The recent coal shortage in India therefore appears to be not only the immediate after-effect of increased post-pandemic economic activity but an indication of the long-term outcome of energy priorities of the government.  

Policy-making and ensuring development in the infrastructural and technological spheres of the coal industry was dangerously neglected whilst pursuing the expansion of renewable energy. As a result, after facing an economic downturn due to the pandemic-induced lockdown in India, the coal sector in India found itself majorly incapacitated to fulfil the ever-rising demands of the recovering Indian economy in the post-pandemic period. Dr. Arup Roy Choudhury has highlighted how the increasing thrust on non-fossil fuel energy sources in the latter half of the decade was achieved at the cost of coal energy. Infrastructural facilities such as power evacuation systems and transmission lines were overloaded with the transmission of both solar and coal-based power.  

Despite the increasing contribution of renewable sources to India’s energy needs , a complete transition from non-renewable sources of energy such as coal to more energy-efficient sources is neither practically plausible nor economically desirable as a large chunk of India’s economy continues to thrive on coal as a source of energy. Following an solar power policy based on the principle of ‘Putting All Eggs in One Basket’ in the words of Outlook India may not be a prudent solution as it will divert policy efforts on a single source of energy without a back-up in the form of coal power opening up possibilities of facing continual crises similar to what was recently witnessed.  

India’s commitment to the ‘green economy’ and energy-efficient sources in its national climate policy as well as in international forums is a futuristic and prescient move and emerging as a  global champion for solar power will prove to be beneficial for India in the long run. However, India’s growing incapacity to efficiently handle increasing energy consumption without imports is a looming threat for India’s energy security requiring immediate attention and forethought in solution-building. Additionally, India must also tackle the age-old debate on which energy priority should be given the foremost position- its international commitments towards renewable energy or its coal-based energy generation sources which are a crucial safeguard for India’s pressing energy needs.