India's Coal Industry Remains Bullish On Demand Despite Climate Pledge

After a three-year pandemic hiatus, the Coaltrans India conference marked the industry’s return with a confident outlook on the rising supply from new mines and strong demand for imports. The industry’s bullish view stands in contrast to India’s commitment to phase down coal-fired power generation and achieve net zero carbon emissions by 2070.

Increasing Domestic Coal Output

India has successfully increased domestic coal output, with official government figures showing a 16% increase in production in the first 10 months of the April 2022-23 fiscal year. India’s full-year output in the 2022-23 fiscal year is likely to reach a record high, but it may still fall short of the target of over 900 million tons. Coal India, which accounts for about 80% of the country’s total output, must ramp up production to achieve this target.

Rise In Imports

In the short term, India’s imports of seaborne thermal coal are likely to accelerate, especially with the government invoking emergency measures to avoid potential electricity shortages as summer approaches. Although it is forecasted that this trade will cease by 2030, thermal coal imports may decrease during the upcoming years. The demand for higher-grade metallurgical coal is predicted to climb from roughly 63 million tons a year today to around 100 million by 2030.

Rising Renewables

India is accelerating the deployment of renewable energy sources like solar and wind while increasing hydropower capacity. By 2030, renewable energy is anticipated to account for at least 40% of India’s generation capacity and possibly even more. While India is building new coal-fired power plants, this capacity addition will only require another 100 million tons of coal annually, well below the 500 million tons extra the industry believes it will deliver by 2030.

Insight 

Overall, India’s coal industry’s positive mood is justified, especially in the short term, but their vision of massive increases in output and demand for decades to come may yet prove overly optimistic.

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