India’s dependence on coal will continue even after three decades

A report prepared by the NITI Aayog and the Institute of Energy Economics, Japan has stated that India’s dependence on coal will continue even after three decades from now, with an estimated share of 42 to 50 per cent of the country’s energy mix. This report also stated that the penetration of renewable energy will rise from 3.7% in 2012 to 14% in 2047. The Aayog clearly pointed out that this research report does not represent the views of the government by any means. 

India’s reliance on coal will remain persistent in 2047 with an estimated share of 50% in energy mix. India would like to use its abundant coal reserves which provide a cheap source of energy and also ensure the security of energy as well. India has the fourth largest coal reserves and it would like to use its abundant supplies efficiently in order to maintain an energy security.  India is expected to achieve its peak production of coal in 2037, after which the production will decline and India will have to depend on the imports to meets its requirements. Further, according to the report, the penetration of renewables is going to increase with its share rising to 14% in 2047 from 3.7% in 2012.

The total imports of coal have risen at 18% CAGR from 39MT in 2005-06 to 200MT in 2015-16. This reported further mentions that the share of coal in the energy mix for India is 58% and for the world is 29%, whereas that of natural gas for India is 6.5% and for the world is 24%. With an increase in the energy and electricity demand in India at a CAGR of 3.7% to 4.5% and 5.4% to 5.7% respectively until 2047, the pressure on natural resources to fuel the demand would only increase in the coming years. The report used data which said that with a share of 18% of the population of the world, India consumes only 6% of the world’s primary energy and it houses 304 million people without access to electricity, which is 25% of the global population without the access to electricity. There are 800 million people without the access to clean cooking fuels. The share of gas in the energy mix has dropped from 11% in 2009 to 6.5% in 2015 as domestic production in India started declining after 2010.

The Indian Government has taken major steps in order to reform the gas sector and to ensure that it moves towards a market based mechanism. The action on the ground is yet to be seen as the gas based power plants and steel plants remain stranded since they are not able to absorb the prices of the imported LNG and thus become uncompetitive. The growing population of the country could lead to a consistent rise in the demand for gas and electricity and this could mean an increased pressure on all the power plants situated in the country.