Rohit Chandra is a political scientist and economic historian who studies the Indian coal and power sectors.
A coal commission for India
As it transitions to renewable energy, the country needs to articulate a credible economic future for the coal belt.
In Germany today, there is an existential tug-of-war between the declining remains of a historic, deep-rooted and culturally significant coal industry and the country’s “coal commission,” (formally known as the Committee on Growth, Structural Change and Employment), which is slowly but surely setting targets for the phase-out of coal-based power generation from the country’s energy mix. The commission is made up of 28 members with voting rights, which includes trade union leaders, industry associations, academics, and regional representatives. This commission is a political settlement mechanism which will determine how and when coal’s phase-out will occur while preventing massive structural unemployment.
Why is this interesting for India? India is at the early stages of a major energy transition. After a few years of renewable energy (RE) deployment, supplemented by unprecedented declines in RE prices, the consensus around RE seems to be clear: Within a few decades, RE will become an increasing part of India’s energy mix. However, like in Germany, the how and when questions loom large. India’s thermal coal base, which still provides over 60 per cent of the country’s overall generation, is still growing (albeit more slowly). More importantly, roughly 15-20 million people in the coal belt are dependent on the coal industry, either directly or indirectly, for their livelihood. The comparative geography of India’s wind and solar resources versus coal makes one thing abundantly clear: RE jobs will not be coming to the coal belt in large numbers. Then what is the transition strategy for the coal belt? This will be the defining question for these regions, particularly in eastern India.
At various points in recent history, central government committees have been set up to look into mining and energy industries from beyond the traditional silos of line ministries. In the early 1970s, the Fuel Policy Committee under Sukhomoy Chakrabarty made influential recommendations about the direction of Indian energy policy after the oil price shocks, which rocked the global economy. In the 1990s, the Chari Committee made prescient recommendations about opening up India’s coal industry to private involvement. More recently, in the 2000s, the Hoda Committee made sweeping recommendations about changes needed in India’s mineral exploration environment to encourage private mining companies. More than a decade later, these ideas are slowly being implemented. And finally, the Integrated Energy Policy of 2006 articulated India’s energy security priorities while laying out a roadmap for phasing out capital subsidies and providing early support to RE.
The government should consider putting together such a committee to consider the future of India’s coal industry, and the PSUs engaged in these industries. While companies like Coal India face no immediate threat to either coal demand or their market power, in a multi-decadal timeframe both these concerns will become real.
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