Coal Mining

Given the global trend towards sustainable finance, the Government of India has limited options to sell its stake in IDBI. Without a commitment to a “no new coal” policy, major international financial institutions would be reluctant to invest in the bank. India already has ambitious renewable energy plans, but coal shortages and a failure to articulate a coal phasing out plan are hindering its development. The Government of India finds itself in a challenging position as it seeks to sell its stake in the Industrial Development Bank of India (IDBI). Most recent news reports suggest limited interest from domestic and global financial institutions. Apart from Kotak Mahindra Bank, CSB Bank and Emirates NBD, no other financial institution made it to the list of contenders.

There is a growing global trend among major financial institutions to enforce a “no new coal” policy for all new investments. A study by the Institute for Energy Economics and Financial Analysis reported that more than 200 significant financial institutions globally have established coal exclusion policies. Meanwhile, only two Indian commercial banks have a coal exclusion policy, Federal Bank and Suryoday Small Finance Bank. The coal exclusion policy of both Suryoday Bank and Federal Bank was a result of the intervention of the International Finance Corporation (IFC).

The steady upward trend in coal production highlights India’s commitment to meeting its energy demands and promoting sustainable economic growth. India records highest ever coal production of 223.36 million tonnes in first quarter of FY 2023-24. Coal India Limited (CIL) recorded a production of 175.48 MT between April and June 2023, a growth rate of 9.85 per cent, as compared to 159.75 MT during the same period last year. This shows an increase of 8.55 per cent during FY 2022-23 as compared to production of 205.76 MT during the same period.

Thermal power plant 

Will India’s banks being careful about funding thermal power plants affect their energy production targets? Questions like when India’s drive to increase coal production is likely to meet rising energy demand is being raised because of banks’ reluctance to finance newly auctioned mines, although most lenders are willing, analysts and officials at a coal mine near Ranchi told PTI, many are far from abandoning fossil fuels forever. Of the 87 mines auctioned to private companies in the last three years under a campaign called “Unleashing Coal”, only four are operational, the rest await funding, said a federal coal ministry official. Coal is an economically risky bet, according to an analysis by the Institute for Energy Economics and Financial Analysis. Despite Indian banks being wary of funding coal plants, a 1,600 MW plant is proposed in the Mahanadi basin in Odisha. While another plant of 500 MW capacity is proposed in Chhattisgarh in collaboration with the state government, Chhattisgarh Chief Minister Bhupesh Baghel on Saturday laid the foundation stone of a modern thermal power plant with a capacity of 1320 MW in Korba district of the state. Obra-D in the state was also approved for 1,600 MW capacity. CIL will be driven to produce more than 1 billion tonnes of coal by the financial year 2025-26. The cost of thermal power has increased by 4.29% between FY20 and FY22. Energy Minister.

Emissions in Thermal Power Plants

All thermal power plants in the country are required to comply with the emission norms notified by the Ministry of Environment, Forest and Climate Change (MoEF&CC) and the directions given by the Central Pollution Control Board (CPCB) from time to time. To comply with the Sulfur Dioxide (SO2) emission norms, thermal power plants are installing Flue Gas Desulphurization (FGD) equipment. MoEF&CC vide notification dated 05.09.2022 has specified timelines for SO2 compliance for non-retired thermal power plants to comply with emission norms . Presently, only 22 units with a total capacity of 9280 MW have completed FGD in their facility. Installed and commissioned.

The Ministry of Coal assured the nation on July 18 that thermal power plants stood at 33.46 million tonnes (MT), showing a growth of 28 per cent over the same period last year. The Prime Minister of India announced at the 26th United Nations Climate Change Framework Conference (COP- 26) that India will increase its non-fossil energy capacity to 500 GW by 2030 if the dependence on coal is not worked out. Not only this, by 2030, 50 percent of its energy needs will be met by renewable energy. that cannot be fulfilled. 

Electricity sector

The minister told the House in a separate written reply that during the April-June period, 4,07,762 million units of electricity was supplied against the demand of 4,08,621 million units, resulting in a shortfall of 858 million units or 0.2 per cent. “The power generation program for 2023-2024 has been fixed at 1,750 BU (billion units). A total of 75.66 percent of electricity will be generated from thermal power plants, with an average plant load factor (PLF, or capacity utilization) of 66.90 percent.

He also said that there is negligible difference between electricity requirement and electricity supplied due to discoms like constraints in distribution network, financial constraints and commercial reasons. Thermal plants will generate 76% of India’s electricity requirement in 2023. The country has sufficient capacity available to meet the growing electricity demand, with an estimated energy surplus of 56,796 million units (3.6 percent) and a peak surplus of 1,717 MW (0.7 percent) in 2023-24.

As of June 30, 18 coal-based thermal power projects with a total capacity of 25,440 MW and a gas-based thermal power project with a capacity of 370 MW were under construction. In addition, 42 hydroelectric projects (over 25 MW each) with a total capacity of 18,033.5 MW are under construction. And projects to increase nuclear capacity to 8,000 MW are in various stages of construction.Then why more thermal power plants in the name of development?

India’s power giant NTPC’s net income rose 9.4% to $495 million. NTPC Ltd reported a 9.4% rise in first quarter earnings as the utility was able to recover higher fixed charges from its power distribution customers. India, the world’s third-largest emitter of greenhouse gases, plans to more than triple its clean-energy capacity by the end of the decade and reduce emissions to zero by 2070. Despite this, it is also being said that India expects coal to remain the largest source of electricity generation until at least 2030 and additional new plants are also needed.

Rising demand for electricity in India has prompted NTPC to restart building new coal-fired power capacity after years, while the company aims to reduce its dependence on fossil fuels in the long term. The country has even talked about adding record amounts of wind and solar power to help meet Prime Minister Narendra Modi’s climate goals.

The same company has obtained board approval for demerging its coal mining business into a separate entity. NTPC said coal production from its own mines rose 52% to 6.2 million tonnes from a year ago.

Centre for Financial Accountability is now on Telegram. Click here to join our Telegram channel and stay tuned to the latest updates and insights on the economy and finance.