India’s coal-fired power stations had an average of four days’ worth of stock at the end of September, the lowest in years, and down from 13 days at the start of August, as per a report by NDTV. Coal inventories at Indian power plants fell to around 8.1 million tons at the end of September, about 76% less than a year earlier, according to government data. Average spot power prices at the Indian Energy Exchange Ltd. jumped more than 63% in September to 4.4 rupees ($0.06) a kilowatt hour.
The squeeze on India’s coal supply is triggering a power crisis that’s threatening to stall the economy. More than half the plants are on alert for outages. With coal used to produce almost 70% of electricity, spot power rates have surged, while supplies are being diverted away from key customers including aluminum smelters and steel mills.
Commitment to Paris Agreement
With the news of depleting coal reserves, dependence on imports and a commitment to Paris Agreement it is now time for India to be judicious with its use of the fuel as experts have warned that nearly 60 percent of the world’s oil and gas reserves and 90 percent of the coal reserves need to stay in the ground by 2050 to meet climate goals of the Paris Climate Agreement, as per a report by FirstPost.
China and India are scrambling to provide electricity to a growing population and relying on coal power plants to meet demands despite the environmental costs.
While India has the world’s fourth-largest coal reserves, it heavily relies on the international market for its coal needs and is globally the second-largest importer and consumer of the mineral.
The S&P Global Platt report says India finds itself “blindsided by both high prices and lack of supply” after it “waited for too long to start restocking, thinking that prices would soon correct”. It now faces the prospect of seeking supplies amid a further surge in prices with Chinese authorities saying they will ramp up coal procurement at “any price to ensure heating and power generation in winter”, as per a news18 report.
Even the continuing rains in India is causing mines to be flooded, further affecting the production.
To maintain adequate supplies and avoid a pressure on power generation, the Union power ministry is said to have asked thermal power plants to enhance imports. The CRISIL report noted that while the monsoon season normally marks a dip in coal production, “production in July and August 2021 remained high at 48MT on average compared with the historical 41MT, with domestic producers ensuring increased supply”.
But given that the monsoons — which is the peak season for both hydro and wind power generation — are winding up, the dependence on coal-based generation is likely to continue, CRISIL said.
The Paris Agreement and its ramifications
The Paris Agreement is a legally binding international treaty on climate change which was adopted by 196 parties at the 21st Conference of Parties in Paris, on December 12, 2015, and was enforced on November 4, 2016.
While countries need to phase out coal by 2040 to achieve the Paris Agreement goal of limiting global warming to 1.5ºC, consumption in key markets is forecast to increase for the next few years and coal-fired electricity generation could hit a record in 2022, to the International Energy Agency.
Ahead of the 2020 Paris climate summit, former environment minister Prakash Javadekar had said, “Climate change hasn’t happened in a day. It is the result of historical emissions over one hundred years. US has 25% of historical emission; EU has 22% of historical emissions; China has 13% and India has only 3%. We haven’t caused this problem but as a responsible nation, we will be a part of the solution.”
If India plans to meet its pre-2020 climate pledge, also called the Cancun pledge, made in 2010, it has to now reduce its dependence on traditional fuel sources like coal and focus on alternate clean fuel options.
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Published on: Tuesday, October 05, 2021, 05:29 PM IST