MUMBAI: Every year in October, cash registers ring in shops dotting east India’s mining hubs during the Hindu festival season of Dussehra, when the country’s biggest coal company, Coal India Ltd., hands its workers a bonus.
Researchers and unions are calling for this coal cash - which fuels spending in homes and local economies - and the revenue local governments earn from coal mining firms to be mapped as a first step towards planning for a post-coal economy.
India is aiming to more than triple its renewable energy capacity by 2030 - but state support for renewables projects is still a fraction of that for fossil fuels, as coal production is also being ramped up to meet rising energy demand.
Researchers are calling for a large increase in spending on renewable energy to help ensure that coal mining communities do not lose out as India shifts to a more climate-friendly economy.
“India needs to go back to the drawing board to map its financial challenges as it transitions to green,” Prateek Aggarwal, programme associate with the Council on Energy, Environment and Water, told the Thomson Reuters Foundation.
“In coal-dependent economies, a majority of the expenditure depends on coal revenue. And these states need to diversify - for where will they get the money from for the state’s development and social welfare?” said Aggarwal.
He co-authored a report released in May - Mapping India’s Energy Policy which shows that coal continues to enjoy more investment and state subsidies than renewables and argues that the balance needs to be tilted towards clean energy.
A phase-down of India’s coal production and use in the future is inevitable, policy experts said, calling on the country to immediately begin planning for alternative industries and building renewable energy capacity.
Kavita Rao, director of the National Institute of Public Finance and Policy, a think-tank, said coal in India would not disappear for another three decades, so jobs may be protected for now, but that will not last as the sector stops expanding.
“Our challenge is gross energy production - and if we move to solar and other sources of energy incrementally, a just transition can be managed,” she added.
FOLLOW THE MONEY
India, the world’s number-two coal producer, aims to build 500 gigawatts (GW) of renewable energy capacity by 2030, up from about 150GW now, and has pledged to reach net-zero climate-heating emissions by 2070.
It is betting heavily on large solar and wind projects to meet these targets, incentivising investments and launching water and energy security schemes to phase out fossil-fuel use in the farming sector.
But to achieve its 2030 goal, India needs to invest $20 billion-$27 billion per year in renewable energy, double what it is now spending, according to the renewable energy ministry.
While the government cut coal subsidies to $1.7 billion last year from $3 billion in 2014, they are still higher than support for renewables, which stood at about $1 billion last year, up from $0.6 billion in 2014, said the study Aggarwal co-authored.
But what the state gets back for its investment is a big barrier to change.
More than 80% of India’s total energy revenue of about $94 billion - mainly in the form of taxes and duties - comes from oil and gas, followed by coal and electricity at about 16%, while less than 1% comes from renewable energy sources, calculations in the new report show.
Coal mine closures will have a cascading effect on local economies and services such as health and education.