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Why is India facing a massive coal shortage? India on brink of big blackout?

Why is India facing a massive coal shortage? India on brink of big blackout?


  • GS 3 || Economy || Infrastructure || Power & Energy


  • Coal is the largest source of electricity in the world. Recently, the UN Secretary-General urged wealthy nations to end coal use by 2030. But, about 30% of the primary energy supply of the G20 countries depends on coal. Further, only a negligible decrease in coal use(0.9%) is observed between 2012 and 2017 in G20 Countries. So phasing out coal is not an easy step despite setting Net Zero carbon emission by developed countries. Phasing out coal in India is a bigger challenge than in developed countries.

Present context

  • Amid rising demand following the second wave of the Covid-19 pandemic, India is facing a severe shortage of coal on the domestic front.
  • While Coal India has assured of scaling up production to meet the current demand, rising prices of imported coal has made it difficult for Indian firms to run their operations smoothly.

Current situation of coal stocks

  • According to theCentral Electricity Authority (CEA) data,16 of India’s 135 coal-fired power plants had zero coal stocks as of September.
  • Over 80%of the plants had less than a week’s stock left, while over half of them had stocks that would last fewer than three days.
  • Overall, the domestic coal power plants had only four days of coal left as of September 29.
  • India imports around 300-400 million tonnes of coal, primarily from Indonesia, Australia, and South Africa.
  • Coal India produces over 600 million tonnes of coal for domestic consumption.
  • Now, with a domestic crunch, India’s reliance on Indonesia for coal import has increased.

The capacity of Coal usage in India

  • India holds the 5thbiggest coal reserves in the world. Around 7% of the world’s proven coal reserves are located in India.
  • According to the Ministry of renewable energy, the total installed capacity of renewable energy is 368.98 GW. But still this only accounts for 23.39% of India’s energy mix. On the other hand, the coal sector accounts for more than 60% of India’s energy mix. This shows the importance of Coal in India.
  • In FY20, India consumed approximately 942 million tonnes (MT) of coal. Of that 730 MT was produced domestically.
  • India is also the 3rd biggest coal importer among G20 countries. Further, India also accounts for 12% of global coal imports.
  • According to the monthly production pattern of the Ministry of Coal, the Majority of Coal was used in Power production and Captive Power Plant(CPP).

Various issues associated with coal mining in India

  • Uneven coal distribution:Coal distribution is highly uneven throughout India. Most of the coal deposits occur in the north-eastern part of the Indian peninsula. Other parts of the country either have no coal deposits or limited reserves of poor-quality coal.
  • Poor transportation: Most coal lies in inaccessible areas of the country. Hence, transporting it to the location of its use posed additional challenges. Though trains are the most economical way of transporting coal, a large number of mines are not connected to a rail network. Thus, coal has to bear a very high cost of transportation from the mines to the consuming centers.
  • Manual labour: The coal mining techniques are old and outdated and most of the work is done through manual labour. This leads to high production costs in India. The burning of coal in factories and thermal plants releases many toxic gases which are harmful to labour. For example, the recent collapse in the coal mine of Meghalaya led to the death of 11 workers.
  • Delays in receiving approval and clearances:Environment and forest clearance are extremely cumbersome, involving numerous layers of bureaucracy. The process of seeking clearances is a long drawn process involving central and state ministries, and sometimes also lack clarity. This causes significant delays in production from the allotted blocks.
  • Poor quality of captive blocks offered to private players: The blocks offered to private players for captive mining are of poor quality and are generally not good. The blocks are often located in remote and undeveloped areas, which have challenging geographies. Sometimes the blocks are not divided scientifically.
  • Opaque & flawed policies:The process of allocation of captive coal blocks has been a source of controversies in the sector. This induced subjectivity in the process of allocation. There is a lack of accountability and transparency, weak planning, and inter-agency coordination. The recent coal-gate scam was the outcome of such opaqueness.

Suggestions to meet the demand

  • Earlier this week, Coal India said it would increase production to meet the domestic demand.
  • The announcement saw a significant effect on its shares as it was last trading 1.86% higher at Rs 188.35.
  • Shares of other power producers such as NTPC Ltd, Tata Power, and Torrent Power also have been rising rapidly this week.
  • However, the scaling up of production requires higher input costs, which is difficult in India as the state-run distribution companies have absorbed rising prices to keep power tariffs steady.
  • According to a report in PTI on September 13, Coal India has informally discussed the matter with board members and most of them have acknowledged the need to hike the prices of coal.
  • The state-run firm raised coal prices by at least 10-11%, which would be the first hike in dry fuel since 2018.

Way forward

  • Deployment of clean energy on a mass scale: According to The Energy and Resources Institute(TERI), If India needs to achieve a net-zero greenhouse gas emissions target, then the share of renewables in the power mix needs to climb to 90%(From 23.39% now). So India needs to deploy clean energy on a large scale.
  • Adopting net-zero emissions target: Various environmentalist and even the CEO of NITI Aayog wants India to embrace the Net-Zero emission target. It is important to note that there is also a Private member bill submitted in Lok Sabha, urging the Indian government to commit a net-zero emissions target by 2050. So, India needs to adopt such a target.
  • Focus on energy efficiency: Instead of phasing out coal immediately, India can move towards energy-efficient buildings, lighting, appliances, and industrial practices. This will help faster phase-out of coal in the future.
  • The government has to encourage all states and UTsto make their respective carbon-neutral plan.
    • The UT of Ladakh and Sikkim state are already planning such a carbon-neutral plan.
    • Further, at the local level cities like  Bengaluru and Chennai, the Panchayat of Meenangadi in Wayanad, Kerala are also planning such a carbon-neutral plan.
  • Other initiatives like,India also has to develop both natural and man-made Carbon Sequestration practices. 
  • Use of biofuels:Can help reduce emissions from light commercial vehicles, tractors in agriculture.

Mains model Question

  • Discuss various issues associated with coal mining in India?