United Nations Secretary-General António Guterres stated at a recent gathering for the Powering Past Coal Alliance that all coal plants in OECD (Organisation for economic co-operation and development) nations should be decommissioned by 2030, and everywhere else, including India, by 2040, to satisfy the world's climate targets. "Coal towns' needs must be addressed, and actual solutions must be delivered at a very local level," he added.
The International Energy Agency's Executive Director, Fatih Birol, underlined these concerns: "As an international society, we must help those nations and people who may face major economic problems as a result of putting coal behind."
The Indian government, on the other hand, sees coal as a potential source of electricity generation. Even though around 50 GW of coal capacity is set to be retired, new higher-efficiency plants with even more capabilities are being built or planned.
As the country's economy improves and individuals can buy products such as air conditioners, India's latent electricity demands continue to grow. While the COVID-19 epidemic has delayed boosting economic growth, India's latent power demand, if addressed by expanding coal-fired power plants, might have long-term consequences for local air pollution and climate mitigation.
The US and the international community would have to make a compelling offer to persuade India to alter its mind about coal. New Delhi's (and other national governments') long-held position has been that the wealthier countries should fulfill their climate financing pledges as part of the Paris Accord.
In June, the largest year-over-year volume rise for US thermal coal came from exports to India. India received 940,938 tonnes of steam coal from the United States. Although this was the lowest monthly total since January, it was still more than four times the amount delivered to India in June 2020.
The second wave of Covid-19 and the monsoon season have slowed economic activity in India in recent months, but the pace is faster than the previous year. According to preliminary official figures, India's cement output in June was 4 percent higher than a year ago.
Exports of coking coal to India and Japan were also higher than a year before, although not as much as thermal coal shipments.
While India charges an Rs. 400/tonne (metric tonne) cess on coal, which also applies to imports, this equates to just around $5.5 per short tonne of coal. It's only a bit over $3/tonne CO2 if this is converted to an implied carbon tax. It will be difficult to impose a high carbon tax, especially considering the consequences of power prices (the dominant use of coal).
Between August and September, India's average electricity demand climbed by 23 GW year on year to 186 GW. According to Global Platts Analytics, average electricity consumption will be 167 GW from October to December, with coal-powered output at 126 GW, up roughly 12 GW year on year.
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