Talk about coal

India must consider energy transition partnerships

India’s traditional energy sector has a complex map of stakeholders, from the Union and state governments to debt-ridden distribution companies to nationalised banks to coal-mining communities and Coal India Ltd. Ensuring a sensible green transition in the sector that keeps these stakeholders happy while also preserving growth in energy access and limiting costs is not an easy task. This may be one reason why the Union government has been unwilling to even discuss the drawing down of the country’s coal dependence at the international level. This historical stand of refusing to discuss the phase-out of coal even on a lengthy timeline is, however, insupportable, given major changes in the international environment, especially in terms of financing.

Just energy transition partnerships, or JETPs, have become a major option for large developing economies seeking to wean themselves away from coal dependence. A JETP for the South African coal sector was announced last year at the Glasgow Conference of Parties to the UN climate change convention with an $8.5-billion initial commitment from foreign governments and donors to help it pay for the costs of its coal phase-down. Indonesia, as part of its G20 presidency, announced that it is also setting up a JETP for its own coal sector that will mobilise global financing of $20 billion, of which half will be from public funds from the developed world. Given that Indonesia is a major coal producer, this is a major achievement for the government in Jakarta and the International Partners Group of Western governments.

This newspaper has reported, however, that the Indian government is not very forthcoming in discussing a possible JETP for the country’s own coal sector. It appears that negotiators from the US and from Germany are yet to receive official responses from India about proposals that they submitted six months ago. The Indian government does not want to discuss coal but instead funding renewable energy. This makes little sense, given that renewable energy is a mature sector in the country and is easily able to tap global markets for private finance. Constraints on its growth are technological — to do with storage capacity and grid design — and regulatory, not financial.

Given the amount that the Union government has repeatedly had to spend to bail out the coal-dependent power sector, it is uncertain why it is unwilling to examine the viability and usefulness of a JETP. The availability of a large pool of financing from both public and private sources would make budgetary planning a great deal easier. But it seems that discussions on this issue within the government are not taking place at a high enough level. The Union Ministry of Coal obviously cannot be driving concerns because it has an interest in protecting and perpetuating the sector. The Union Ministry of Environment may also not be adequately equipped to take the lead. The Prime Minister’s Office needs to step in, with the Union Ministries of Power and Finance, to better estimate what the costs and benefits of a JETP might be and come up with a clear financing proposal that will ensure an equitable transition away from coal power in India.