Why is there a coal crisis in India?

International coal prices started reaching record highs from 2021 because of the rise in industrial demand, international price fluctuations and the Russian invasion of Ukraine; all this has seriously affected India's coal imports

By DTE Staff
Published: Tuesday 03 May 2022

On April 28, 2022, India canceled several passenger trains to allow for faster movement of coal carriages. The Indian Railways are also planning to add 100,000 more wagons to their fleet and construct dedicated freight corridors to deliver goods faster.

On the other hand, Delhi’s power minister claims that its power plants are left with less than a day of coal which can cause blackouts and affect crucial services like the Metro and government hospitals. The country is facing a critical coal shortage.

Coal reserves at India’s power plants have declined almost 17 per cent since the start of April 2022 and are barely a third of the required levels. But the question is, why?

Seventy per cent of India’s power demand is met by thermal power plants. The country has both, a large-scale of domestic and imported coal reserves to meet these enormous requirements. India is the second-largest importer of coal after China.

But from 2021, international prices for coal started reaching record highs because of the rise in industrial demand, international price fluctuations and the latest being the Russian invasion of Ukraine. All this has seriously affected India's coal imports.

At the same time, India also has an increasing power demand. In 2022, the energy demand increased to 132 (billion units) BU per month from 106.6 BU per month in 2019.

The sudden surge in demand can be attributed to the country’s industries as they pick up operations after the second wave of the COVID-19 pandemic. And despite having the fourth-largest reserves in the world, the domestic producers of coal are unable to meet the demands.

The rising heatwaves have also added extra pressure on the nearly exhausted thermal power plants. According to reports, the country’s power demand crossed a record 201 gigawatt (GW) mark on April 26, 2022, as large parts of the country reeled under sweltering heat.

The coal shortage has disrupted the power generation of multiple states including Gujarat, Rajasthan, Delhi, Punjab and Tamil Nadu. The coal crisis comes at a time when India has been trying to reduce its dependency on non-renewable sources of energy to meet climate targets.

In November 2021, at the UN climate change meeting in Glasgow, Prime Minister Narendra Modi pledged that by 2030 India will generate 50 per cent of its energy from non-fossil sources and will also install 500 GW of renewable energy. But the current crisis shows India’s neck-deep dependence on coal and the challenges in meeting its climate change targets.

Subscribe to Daily Newsletter :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.