Countries move away from coal even as India moves towards it

Germany, Japan, Spain and the US have all decided to move to renewable energy

By Kundan Pandey
Published: Monday 06 July 2020

Several countries have decided to move on from coal and coal-based thermal power plants — a major source of pollution — even as India announced the auctioning of its coal mines for commercial purposes last month.

The German parliament adopted a law to ensure the phasing out of coal power by 2038 in the first week of July 2020.

After two years of intense debate, the country finally reached the conclusion that it was better to do away with coal-based thermal power plants. There is still a concern over Germany not reaching climate targets, with the national government granting coal companies too much compensation.

The decision to phase out coal in the country, however, is indicative of a worldwide trend against coal.

Similarly, Spain ceased operations of around half of its coal-based thermal power plants on June 30. The country had 15 such plants and decided to shut seven in order to move towards clean energy sources. The move came a year and a half after the European country closed all its coal mines.

Electric companies in Spain realised — taking European regulations into account — that the reliance on coal-based thermal power plants for energy did not make financial sense, according to reports.

Other countries — including Japan and the United States — have taken major decisions to phase out coal as an energy source as well.

In the US, utilities in three states, including Arizona, announced plans to close one or more of their coal plants and shift to renewables. Japan decided to shut 100 of low-efficiency coal-fired power plants by fiscal year 2030. The Ministry of Economy, Trade and Industry in Japan has chalked out a plan to achieve the closing target of plants that emit large amounts of carbon dioxide.

The island country has 140 coal power plants, with around 110 considered to be inefficient.

These measures have been taken at a time when India and its neighbouring countries use coal for their energy needs. Prime Minister Narendra Modi inaugurated auctioning of coal mines in the country and said this was the biggest un-lockdown of the country’s coal sector.

This, when the performance of India’s coal power fleets declined by 21 per cent from 78 per cent in 2010 — a historical low — according to the India’s Clean Power Revolution report published June 26 by BloombergNEF.

Pakistan takes huge financial burdens for opening new coal power plants despite the fear that it would be tough for the country to pay back loans.

The country has asked China to restructure the loans and easier repayment terms for a few of its projects, including two Chinese-financed coal-fired plants in 2020, with more in the pipeline intended to meet overestimated demand growth projections.

Imran Khan, the country’s prime minister, said in April that it showed the Pakistan government’s awareness of its financial burden.

The total capacity payments to public, private and China-Pakistan Economic Corridor power generators can reach an unsustainable $9 billion in the next few years as more capacity is added.

Pakistan and Bangladesh both face lower capacity utilisation of their power plants as well.

In 2018-19, Pakistan’s overall thermal power capacity utilisation (including coal plants) was just 40 per cent in financial year 2018-19, according to the Institute for Energy Economics and Financial Analysis.

Similarly, the overall utilisation for Bangladesh — which has excess capacity and requires significant capacity payments to plants lying idle — was just 43 per cent in 2018-19, the report said.

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