The fast depletion of coal, a strategic resource and India’s fuel of choice currently, has huge implications for energy costs, according to K Sivadasan, a sectoral expert.
Projection of huge reserves will only encourage industries to use large quantities, resulting in accelerated depletion of the fossil fuel, says the former top official of the Kerala State Electricity Board.
BETTER DATA NEEDED
As much as 64 per cent of coal is used for power generation, while the rest is used for other purposes, Sivadasan said quoting statistics.
A TERI (The Energy & Resources Institute) document of 2013 said India does not have adequate extractable coal reserves to meet the current incremental demand or to make long-term supply commitments.
Sivadasan highlighted the need for generating better data in order to provide a reliable and transparent basis for assessing the future structure of our energy system.
According to a 2011 estimate, India holds seven per cent of the global recoverable coal reserves. “Extremely high figures” reported in this manner have created the false and risky notion that the country has comfortable coal reserves.
The fact is that between 1980 and 2005, only India and Australia revised upwards the figures against a global trend in which coal resource assessments have been downgraded by 50 per cent overall.
Many countries have not reassessed reserves for a long time, and if at all, most have downgraded them, contrary to what was expected.
OVERALL DOWNGRADE
India has reported total coal resources at 315 billion tonnes (bt) as on April 1, 2017. Australian hard coal reserves have been upgraded from 29 bt in 1987 to 38.6 bt in 2005.
Mining coal below 300 metres is generally not economically viable with current technology options. Coal resources in India within a 300-metre depth are assessed at 196 bt.
Of this, 154 bt are of poor quality, and is economically expensive. What this leaves us with is 42 bt, Sivadasan said.
It is necessary to mention here the concept of ‘extractable coal reserves.’ It indicates the portion of resources for which a feasibility study on technical and economical grounds has been conducted.
A large portion of the measured resources of 42 bt is in the forest, in tribal areas or under water bodies or other protected regions, which may be excluded from the reserves assessed.
PRICE SPIRAL FEARED
Given this, the TERI finding that India’s extractable coal reserves could be 21.8 bt is closer to the reality. Greenpeace had estimated in 2013 that Coal India could run out of stocks in 17 years.
Impending coal liberalisation, combined with the shortage of coal at a depth of 300 metres would trigger a price spiral and raise the cost of electricity generated.
This, combined with other inevitable structural changes in the energy economy, may require utilities to think of new business models involving renewables, Sivadasan said.
After all, with climate change issues at the forefront, financial institutions are reallocating capital from carbon-intensive to more sustainable sectors.
Several leading banks have decided to stop financing coal-based plants, including mining, fearing that such assets would become stranded in a few years.
Also, renewables have attained grid parity with coal. Soon renewable energy with storage would follow suit, which could ultimately eat into the revenue of utilities.
Source: The Hindu Business Line
