Gains from coal mine auction uncertain

Energy production and environmental compliance costs outweigh that from renewable power.

Updated - June 19, 2020 11:34 pm IST

Published - June 19, 2020 11:33 pm IST - NEW DELHI:

What lies ahead: Coal mines have to comply with strict environmental norms.

What lies ahead: Coal mines have to comply with strict environmental norms.

The benefits of the Coal Ministry’s proposal to auction 41 coal mines are uncertain as energy production and environmental compliance costs outweigh that from renewable power, said an expert associated with the Union Environment Ministry.

On Thursday, Prime Minister Narendra Modi said that coal would be brought out “after decades of lockdown ” and private sector involvement would help realise ₹33,000 crore of capital investment in the next five years. Analysts and environmentalists have said that this would involve opening up pristine forests to environmental degradation. Former Environment Minister and Chairman, Parliament Standing Committee on Environment Jairam Ramesh wrote to Environment Minister Prakash Javadekar that opening up coal blocks in dense forests would be a “triple disaster” as mining and transportation of coal would involve a heavy environmental cost; valuable forest cover would be lost and public health would suffer.

Narendra Modi launches auction process for 41 coal blocks for commercial mining

The technical expert associated with the Environment Ministry told The Hindu that while companies seeking blocks would have to comply with existing environmental provisions and, given diminishing demand for fossil fuel, climate commitments and the cost of fly-ash processing — managing the residue from burning coal — it was not a certainty that companies would come flocking to mine coal. “It’s a matter of changing ownership. Areas with very dense forest will not be opened up so easily and it might be profitable for some companies to export if market conditions are right. But that’s not so easy now,” the expert told The Hindu .

Not more than 60%

India has committed to ensuring that fossil fuels contribute no more than 60% of its energy production by 2030 as per the 2015 Paris Agreement.

Of the 41 blocks, 34 are “fully explored” and four are prospective says a document on the website of the Coal Ministry. The blocks are located in Maharashtra, Jharkhand, Odisha, Chattisgarh and Madhya Pradesh.

A report in March by Carbon Tracker, a consultancy, found that 60% of global coal power plants were generating electricity at a higher cost than it would have cost from sourcing from wind or solar energy.

“In India $80 billion (₹5 trillion) is at risk, with 37GW of coal power in construction and 29GW planned. It has 222GW of existing coal capacity and half — 51% — costs more than new renewables,” the report notes. On the other hand, the Environment Ministry has kept postponing the date whereby thermal power plants have to ensure that sulphur emissions are within a certain limit. The current deadline is 2022 and the Centre for Science and Environment warns that 70% of coal plants will not meet these standards even by that date.

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