Millennium Post

Energy economics

Energy economics

The auction of 41 coal blocks for commercial mining on Thursday by the prime minister is set to usher a number of changes for the country. In line with its 'Atmanirbhar Bharat Abhiyan', From the nationalisation of coal mining in 1973 — that made Coal India Limited the largest coal miner in the world — to its commercialisation in 2020, India has finally arrived at a significant confluence. Through this, India can bridge the demand gap as well as reduce its import bill for a commodity that it is capable of not just adequately producing but rather exporting in a comfortable ratio. While the Coal ministry has streamlined provisions to ensure ease of doing business, global mining players, who were hitherto barred from participating in India's coal map, can now bring in their best technology and investment to enrich the sector. The overall result will undoubtedly be a more efficient use of India's coal reserves besides fulfilling domestic coal demands and raising export capacity. It is also a pleasant change from the earlier regime wherein only the end-users were permitted to bid on coal blocks. Presence of exclusive miners will largely benefit these end-users of coals such as steel, iron, power industry etc., who had to divert their attention towards captive mining. They may now redirect their core focus on their products and directly purchase coal from professional miners. Besides, the presence of competition would ensure price stability in the market. The significant reduction in coal imports will benefit both our GDP and our resolve to be self-reliant. In fact, a high export figure would be a driver for growth in this sector. Reforms in the coal sector will also bring along supplementary benefits for the country in terms of employment and domestic production. The requirement of machines and manpower that increased mining operations would induce will create employment opportunities besides giving a push to the government's 'Make in India' policy.

While the commercialisation of coal sector paints a rosy picture for India's energy sector, India must also not forget that the underlying commitment in today's environmentally-sensitive world is to ensure a greener path to prosperity. While exporting coal and matching our domestic demand appropriately will yield us economic benefits, the increased use of coal is ultimately not prudent for our sustainable goals. Coal holds almost 60 per cent of India's energy sector share today while renewable energy accounts for approximately 16 per cent. Our climate change commitments also place a burden on us for prudent policymaking vis-à-vis meeting our energy requirements. Though it enjoys leverage in polluting space relative to the developed nations as per UNFCCC, India has been a leader in ushering greener reforms despite being a developing nation. Our push for the International Solar Alliance and an ambitious target of producing 175 GW of renewable energy by 2022 must not be overlooked. While coal reforms are opportune and beneficial, a similar focus towards proliferating the renewable energy infrastructure would suit the new India immensely. Global miners would be eager to bid in India's coal block also because India is a developing nation having a considerable space to pollute. But when it comes to export, we must remember that the global order is slowly inching towards renewable resources to usher in a sustainable world. The Powering Past Coal Alliance from COP 23, Bonn aims to realise the gradual phase-out of coal-fired power stations, which in turn, reduces their need to import coal altogether. While India can yield from coal reforms in short-run, the benefits will relatively diminish in years to come. Our solar and electric commitments would rather serve us more in the long-term path. It would be prudent to revitalise the National Solar Mission and FAME 2 as India has the potential to become a leader in renewable resources. The size of India's domestic market and the scope of renewable resources in the country are conducive towards such an objective.

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