Synopsis
The uncertainty associated with coal supply and it price have been reported regularly in recent weeks. The impact on our society of the large number of coal power plants being planned, built and operated in the country should be viewed in this context. It is high time that the social, economic and environmental implications of the coal based power policy are carefully weighed in view of the vast experience available across the world.
The problem
There have been many news reports in recent weeks that a reliable coal supply has become a critical issue in the Indian power sector in recent years, and that because of it the power supply situation is likely to go from bad to worse. The issue has the potential to be a game changer. The international coal prices are going up steeply, and the supply reliability is being hit very hard. So much so that Tata Power and Reliance Power, which are developing 4,000-MW ultra-mega power projects at Mundra (Gujarat) and Krishnapatnam (Andhra Pradesh) respectively, are reported to be have asked the Power Ministry to allow them to increase the tariffs of their projects as the imported coal sourced from Indonesia for these projects has become dearer. The construction works on the first one is reported to have stopped and union govt. has turned down the request to intervene in renegotiating the contract price for the electricity from both these projects.
Many of the new power projects are being planned to be entirely dependent on imported coal. An increasing number of coal power projects, including few UMPPs and IPPs, are being forced to go for blending of domestic coal with 10 to 30% imported coal because of the domestic supply problems. NTPC is reported to be blending imported coal between 7 and 20 per cent across its various stations. According to industry estimates, in about five years, India could be forced to import almost 30 per cent of the total coal required by its power plants, compounding the worries for distribution utilities at large.
The coal supply from Australia, Indonesia and South Africa are expected to become costlier and/or difficult to source due to various domestic reasons in those countries. The unreliability associated with the import of coal was highlighted by the sinking of a coal carrying ship off the coast of Maharastra recently.
The price of domestic coal also increased recently due to Rs. 50 per ton of carbon tax imposed by the Union govt. The losses suffered by the country’s distribution utilities, which are estimated to be around Rs 70,000 crore in 2010-11, will go up further due to increased coal prices unless suitable remedial measures are taken.
During the last couple of months, the electricity tariff in Punjab is reported to have been raised by 9 per cent, and in Bihar it has been raised by 19 per cent. The supply companies in Karnataka have already announced their intention to increase electricity by as much as Rs. 0.80 per unit. Many other state utilities, including those in Delhi, are reported to be seeking to increase the electricity prices.
As per power sector analysts the Indian banks are at an increased risk of defaults on loans to companies linked to the power sector, as mounting losses in state electricity boards, costly coal and delays in execution of new power plants have made recovery difficult. Because of such a scenario banks/financial institutions are reported to have concerns to in funding the coal power projects. JSW Energy is reported to have said that it had put its Ratnagiri (Maharastra) expansion plans on hold due to costly imported coal. High cost of imported coal is reported to have already dented its profit. The company believes it would be wiser to defer the plan until there is some clarity on the issue of imported coal.
There are also reports that other new coal power projects dependent on imported coal, such as one in Konkan, are facing supply problems. Almost all coal power projects planned for coastal India are designed to be dependent on imported coal. Hence, for those of us who are worried about the large number of coal power plants in Konkan, coastal Orissa and coastal AP this situation may provide a ray of hope that the devastation of our coastal areas may be spared from complete devastation.
Even those coal power plants, which are relying on domestic coal, are facing highly unreliable supply. The Central Electricity Authority (CEA) reports indicate that during the last few years the loss of electricity production due to coal supply problems has been increasing. As per the Standing Committee of the Parliament on Energy, the shortage of coal is expected to impact new capacity addition plans to the tune of 15,000 MW in the current fiscal (2011-12). If NTPC, the high profile central govt. undertaking, cannot ensure adequate coal supply to its plants, one can imagine the plight of other state owned/private companies. Karnataka’s Raichur TPP has been known to be facing coal shortages for years. The proposals by Karnataka state govt. to set up additional coal power plants are halted because of the lack of coal linkage.
In this background there should be no doubts that coal supply situation in the country has become a major problem. Despite concerted efforts by the union govt. to dilute the existing environmental regulations to allow opening up of more coal mining, the coal supply situation is highly likely to go from bad to worse for a combination of reasons. Even some of those new coal mines, for which approvals have been accorded, have not got to the development stage due to various reasons. The coal ministry is reported to have withdrawn the allocation of 3 new coal blocks to a large public sector power company because the development of these coal mines was not undertaken within the stipulated period.
This coal supply situation is also consistent with what is happening all over the world. The true cost of coal supply is coming to the surface, and the fact that the global coal reserve/mining cannot match the maddeningly increasing number of coal power plants is no longer questioned. Though the industry observers have been warning of this situation and the need to shift to suitable alternative sources of electricity since many years, the governments all over the world ignored the writing on the wall. Now the situation is rapidly growing to be a crisis as being reported from many parts the world.
It is in this context that we have to consider the unbelievable rate of licenses being issued to set up additional coal power plants in the country. More than 150 coal power plants were reported to have been approved during 2010-11. The Power Ministry expects to see the capacity addition of over 80,000 MW in the 12th plan period (2012-17) at a rate of about 16,000 MW a year. Such a projection by the Power Ministry, and that by Integrated Energy Policy that the coal power capacity has to increase to about 400,000 MW by 2031-32 can be seen as unrealistic in this context. These projections seem to have been arrived at without considering the various constraints in achieving the targets and without due consideration to the social and environmental impacts on our society.
Coal Power Scenario in India
India’s power generating capacity continues to be dominated by fossil fuels, especially the coal (about 55%). India has approximately 80 coal-based thermal power stations generating about 98,400 MW, most of which are catered to by Coal India Limited (CIL). With about 90% power coal supply responsibility with just one state owned public enterprise, it is anybody’s guess how the reliability of coal supply is likely to be if our coal power capacity is to be increased by about 4 times in the next 20 years.
55% of the total installed power generating capacity in the country as at the middle of July 2011 is through coal based power, and all indications are there that during next few years the govt. will make efforts to continue such reliance on coal power.
In this scenario it can only be termed as unfortunate that the Integrated Energy Policy has projected the need for a coal based power policy even by 2031-32, wherein about 50% capacity may have to be coal based. If this target were to be realized it is difficult to imagine the chaos in the transport sector to move coal from one part of the country/ port to the power generation sites. Since the country’s coal and transport infrastructure is struggling to cater to the needs of the present installed capacity of about 100,000 MW, it is difficult to envisage the reliability of coal supply for about 400,000 MW capacity. In addition, the issues involved in procuring the huge chunks of land (about 0.5 Million Acres for the additional capacity) plus the huge quantities of fresh water will be serious issues to deal with. In view of the fact that there have been massive oppositions to acquisition of agricultural lands for setting up of any type of large sized industries, it is hard to imagine how this massive addition of coal based power plants can be realized. At a time when agricultural sector of our economy is demanding more of land and fresh water resources to meet the food requirements of a growing population, and other sectors of economy like housing, industry, infrastructure etc. are competing for a fair share of land and fresh water resources, its is inconceivable that about 300,000 MW of additional coal power capacity by 2031-32 will be get priority over other sectors to secure these resources.
Despite massive increase in the power generating capacity since independence (by about 180 times), about 40% of our population has no access to electricity, and the electricity supply to the remaining 60% of the population is far from satisfactory. Inadequate quality and quantity of electricity has come to be recognized as the major obstacle in all round development of our communities. The most glaring fact of our power sector is that the projected need for adding a lot many coal power plants has been due to the gross inefficiency prevailing in the power sector, and the consequent perception of power shortages.
The social, environmental and economic impacts
While the stated policy of the government is to reduce the GHG emissions, huge addition of coal based power plants as proposed will seriously aggravate the total GHG emission in the country. In view of the fact that about 24% of all GHG emissions and about 50% of CO2 emissions in India are associated with the fossil fuel burning in Power sector alone, the projected scenario of adding about 300,000 MW of coal power capacity by 2032 will seriously jeopardise our country’s international standing, besides serious environmental issues because of heavy contribution to Global Warming. There have been a number of reports, which have provided ample evidences of coal power stations adversely impacting the local environment, polluting the fresh water sources, and affecting the yield of agricultural crops. Forced displacement of poor people from their natural habitats, as being reported from Coastal Andhra Pradesh and Orissa, has the potential to turn into a major societal crisis if not addressed humanely. These impacts must be of major concern in a country with dense population and a large percentage of vulnerable sections.
The popular opposition to set up huge number of coal power plants in small geographic areas such as coastal Orissa, Andhra Pradesh, Konkan, Vidarbha, and Chattisgarh are clear indication of the people’s sentiments against the coal power plants. A less known report from USA states that the coal-fired power plants throughout the world are the major sources of radioactive materials released to the environment, and that there are several serious implications of such radioactive emissions. This report with the title ’’Coal Combustion: Nuclear Resource or Danger’’ by Alex Gabbard suggests that coal combustion is more hazardous to health than nuclear power, and that it adds to the background radiation burden even more than that by nuclear power. Another report from USA ’’Coal’s Assault on Human Health’’ by Physicians for Social Responsibility has listed a large number of health problems due to coal power plants, and has clearly recommended energy policy away from coal power. Another report ’’True Cost of Coal’’ from Greenpeace International, has discussed various costs of coal power around the world, which are not shown in the cost of coal power at all. One more report by Sierra Club, Washington, has discussed the Human, Social, and Environmental Damages Avoided through the Retirement of the US Coal Fleet. Another study indicates that the United States’ reliance on coal to generate about 40% of its electricity, costs the economy about $345 billion a year in hidden expenses not borne by miners or utilities, including health problems in mining communities and pollution around power plants, a study found. On the basis of such credible arguments Sierra Club has contributed to stopping more than 100 coal power plants in USA from getting commissioned.
to be continued…
Views are those of the author
Author can be contacted at shankar.sharma2005@gmail.com
