Cheap Coal Era Ends, Solar Age Begins

Justin Guay, Sierra Club

The bright lights of Diwali have further exposed the depth and breadth of India's coal crisis bringing a 21st century reality into painful focus: Geologically speaking coal is abundant, economically speaking cheap coal is not. India may be the first country to face this harsh reality, but it will not be the last.

Fortunately, the clean energy sector is soaring, spurring wind and solar wars as nations fight to ensure they are not left in the black fog of the coal era. The question India now faces is whether it will seize the opportunity this crisis presents, or swim against the tides of history.wind

India's reaction to the coal crisis is critical because the fallout is only getting worse. When they can secure coal supplies plants are forced to charge prohibitively expensive rates that are bankrupting state electricity boards and distribution companies. But for the most part coal is hard to come by as the supply situation is so bad that Coal India has taken the dramatic step of no longer guaranteeing fuel supply contracts to power plants. The result is power plants are now facing critical shortages that pose systemic default risk causing leading credit rating agencies to issue a warning on the sector.

india coal The situation is dire but the response coming from the industry and the government is even worse. Thus far it has largely been to decry "environmental hurdles" standing in the way of coal mines and power plants while demanding more coal be secured at any cost. The problem is that "strict environmental clearances" have been anything but. The "bogey of green clearances" has been thoroughly debunked by the Center for Science and Environment who showed that environmental clearances have actually doubled over the past five years. This spin was targeted at former minister of environment and forests Jairam Ramesh whose record for clearing or rejecting projects was basically no different from his predecessors'. Between August 2009 and July 2010, Jairam cleared 535 total projects and rejected a whopping six.

 india coal The harsh reality is that the era of cheap and abundant coal in India is over. What's left of the cheap stuff can only be found under thickly forested areas inhabited by populations weary of the coal curse (see Greenpeace India’s recent report on Singrauli). These communities are rightly fighting the displacement and economic depravation that comes with it demanding the country Move Beyond Coal. The result is that the social, environmental, and direct economic cost of getting at this coal is, as it should be, prohibitively expensive.

Weary of this fight the government and industry has increasingly turned its gaze to the international coal market. But imports are no solution as they leave the nation at the whims of an increasingly expensive and volatile international market place. The desperately needed bailout of Tata Mundra and construction halt at Krishnaptnam attest to the folly of this course of action.

solar india All of that is the bad news. The good news is that the government need not double down on the disastrous path of digging for more coal, or buying up foreign mines. It has another option: build the foundation for a sustainable energy future on its booming solar industry. Record investments are pouring in as solar prices are set to fall 40% over the next 4 years while the market grows at a whopping 178% Compound Annual Growth Rate to reach 9 GW by 2016. It's growing so fast that installed capacity is expected to grow to 2 GW by 2013 up from just .05 GW last year. That's why the US Export Import Bank is clamoring to finance ever more solar projects in India after setting a record of $575 million earlier this year.

The drastically different trajectory of the solar sector gives India a clear choice: Double down on terribly expensive, destructive and heavily polluting coal or move now to capitalize on this solar boom and ensure they get it right. The global community is now focusing its attention on the United Nations campaign to deliver Sustainable Energy for All. A full quarter of the global population lacking access to electricity resides in India. Where centralized coal investments have failed, solar is poised to deliver. Now is the time to seize the opportunity this crisis presents and pursue a radical departure in energy policy that unshackles the country from coal’s destructive legacy. It's time to recognize the era of cheap coal is over, and that the age of cheap solar is now dawning.

 

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  • Posted on Nov. 21, 2011. Listed in:

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