Report: India Tells States to Increase Coal Imports for Three Years

Smoke rises from a coal-powered steel plant at Hehal village near Ranchi, in eastern state of Jharkhand, Sunday, Sept. 26, 2021. No country will see energy needs grow faster in coming decades than India, and even under the most optimistic projections part of that demand will have to be met …
AP Photo/Altaf Qadri

China, the world’s worst polluter, has been dramatically increasing its coal consumption without much criticism from the climate change movement. Indian government sources told Reuters on Wednesday that India is now urging its states to increase coal imports for the next three years to meet rising energy demands and create an emergency stockpile.

“The decision to boost imports underscores the severity of India’s fuel crisis as coal inventories are at the lowest pre-summer levels in at least nine years and electricity demand is seen rising at the fastest pace in nearly four decades,” Reuters reported on Wednesday.

India was already second only to China in coal imports, and not terribly far behind at that. India is not planning to reduce its coal consumption in the foreseeable future – the three-year surge of imports is meant to tide the energy industry over until privately-owned domestic mining companies can ramp up production.

Reuters quoted unnamed Indian officials who said plans are underway to beef up India’s railroad network to move all that coal around. State officials were urged to buy more railroad cars, in addition to signing long-term import contracts that would lock in prices that are already high thanks to the loss of Russian supply, but likely to go much higher.

One of the state officials who spoke to Reuters complained that India’s national government spent the past few months boasting that it would reduce coal imports, but “now they want us to import as much as we can, and are saying there are supply constraints.”

“This is a very confusing, mixed signal,” he sighed.

At the COP26 climate summit in November, India made a last-minute change to its pledge to “phase out” coal power, instead saying it would “phase down” coal consumption. Phasing out coal is simply impossible given India’s energy needs, as The Economist explained:

India’s population, currently 1.4bn, is growing and electricity use is soaring. India needs to add capacity equivalent to all of the EU’s output, over the next 20 years, according to the International Energy Agency. Today 70% of the country’s electricity comes from coal. The government has promised to increase renewable-energy capacity to 500 gigawatts by 2030, more than doubling the current output. But this would still account for just half of anticipated need. 

The creaking electricity grid needs an upgrade too. Distribution companies, straddled with a collective debt of $80bn, are ill-equipped to make the investments required to store and transmit renewable energy reliably. That makes solar power, an apparently obvious solution for India, harder to implement at scale.

Coal demand is increasing so quickly that India’s state-owned mining monster, Coal India, cannot keep up, which is why private mining companies were encouraged to take up the slack.

The confusion of state ministers mentioned above is understandable because the central government desperately wanted to reduce its dependence on expensive coal imports, but changed its mind and began ordering states to buy more foreign coal because there was no other way to meet demand.


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