LITTLETON, (Colorado): India’s plans to stop building new coal-fired power plants beyond those already under construction mark a significant victory for climate campaigners keen to cap pollution from the second-largest coal user after China.
The new draft policy, which still has to be approved by the federal cabinet, would signify more aggressive climate targets by the world’s fifth-largest economy, and would leave China as the only major nation openly adding new coal capacity.
However, if imposed the new coal capacity restrictions may pose a serious challenge to several of India’s key states which are major contributors to the national economy and remain overwhelmingly reliant on coal for electricity generation.
India’s three largest states by gross domestic product (GDP) are Maharashtra in the west, Tamil Nadu in the south, and Uttar Pradesh in the north, data from India’s Ministry of Statistics and Programme Implementation (MOSPI) shows.
Collectively, they account for more than 30% of the country’s GDP, are home to roughly a third of India’s population. All are major manufacturing hubs that rely on low operating costs to ensure global competitiveness.
All three states are also heavily reliant on coal-fired power for electricity, with more than 75% of their collective electricity generation coming from coal in 2022, according to data from think tank Ember.
That means that the main drivers of India’s economy are at risk of being hobbled by any sudden curtailment to low-cost energy generation if the new proposals are enacted and result in reduced supply of coal-fired power.
Other major states in terms of GDP contribution include West Bengal (5.8%) in the east and Telangana (4.6%) in the south, which are even more coal-reliant than the average of the three largest states. Overall, the heavy coal reliance of state energy systems throughout the country underscores the challenge facing New Delhi as it tries to craft an effective national decarbonisation road map that does not jeopardise economic momentum and job growth.
The new proposals make clear that whatever coal capacity is already under construction in India will proceed. A total of 32,000 megawatts of new coal power is currently being built in India, according to the Global Energy Monitor (GEM). Once completed, that would boost current operating capacity by close to 14%, and lift total Indian coal capacity to beyond 266,000 MW, GEM data shows.
More than 40% of the capacity under construction is in India’s three largest states, and a further 20% is in West Bengal and Telangana. The states of Jharkhand and Bihar in the east of India also have significant coal capacity expansions under way, GEM data shows. Alongside the widespread swell in coal capacity is even faster growth in renewables energy supply capacity across India. Total India electricity generation from clean sources has jumped by 22% from 2019 to 2022, with sharp growth occurring in big states like Uttar Pradesh, Tamil Nadu and Telangana.
As India’s electricity generation from coal has grown by 16.6% over the same period, clean energy generation is generally growing faster than coal-fired generation in key areas, and will continue to accelerate thanks to strong support from the central government and incentives for local businesses.
However, coal remains king throughout the country’s largest power-consuming hubs of Maharashtra, Uttar Pradesh and Tamil Nadu, as well as large swaths of the east, as power producers try to keep pace with rapidly rising energy demand growth and work to keep power costs as low as possible.
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