India is set to boost its coal consumption as it grapples with a significant drop in hydroelectricity production caused by inadequate rainfall, as reported by S&P Global Commodity Insights. The shortfall in hydroelectric power is expected to further increase India’s reliance on coal imports. Although the country has been making efforts to decrease dependency on imported coal, the decline in hydroelectric output has resulted in approximately 85 million metric tons of thermal coal imports in 2024 so far.
Coal Production Approaches 1 Billion Metric Ton Milestone: India’s coal production has approached the landmark 1 billion metric ton mark during the fiscal year 2023-24. The government has been working to lessen dependence on imported coal to meet rising power demands. However, S&P Global Commodity Insights highlights that the first half of 2024 is likely to see stronger coal imports compared to the second half due to the projected lower hydropower generation caused by the impact of El Nino.
Coal’s Role in India’s Energy Mix: Despite India’s commitment to achieving carbon neutrality by 2070 and significant investments in renewable energy infrastructure, coal remains a key component of the country’s energy mix. One of the primary reasons for this is the slow pace at which renewables are being integrated into the overall power generation framework. Achieving a balance between coal reliance and the transition to greener energy sources in order to secure energy and ensure environmental sustainability continues to be a critical challenge for policymakers and industry stakeholders.
Increased Steel Demand Drives up Imports of Coking Coal:Apart from catering to power demands, India’s focus on infrastructure development has significantly raised its demand for steel, subsequently driving the need for coking coal. India has emerged as the largest seaborne purchaser of coking coal due to its expanding steel industry. The nation aims to bolster its steel production capacity to 300 million metric tons annually by 2030, a 71% increase from current levels. Despite ongoing efforts to enhance domestic production and reduce imports, S&P Global Commodity Insights predicts that India’s coking coal imports could reach 100 million metric tons by 2030. As India juggles energy security, environmental sustainability, and infrastructure development, finding the right balance between coal reliance and the transition to greener energy sources remains a pressing concern for the country’s policymakers and industry stakeholders.
