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August 01, 2012

Coal Kills People, Tigers, and Now Our Finances

A guest post by Ashish Fernandes of Greenpeace India

Coal pileIt’s no secret that coal pollution kills people (http://huff.to/N3pfcc). But now it’s increasingly clear that expanding coal mining is destroying significant areas of tiger, leopard and elephant habitat in India. Recent GIS analysis by Greenpeace shows that coal mining threatens to destroy over 1.1 million hectares in just 13 (out of 40) coalfields.

A significant chunk of that is currently inhabited by the endangered tiger, which the Indian government has repeatedly claimed is a conservation priority. Also at risk are corridors connecting some of India’s famous Tiger Reserves (Kanha and Bandhavgarh among them), as well as other less renowned but equally important habitats. In fact, the Central Indian region, under which most of India’s coal reserves lie, is the Royal Bengal Tiger’s largest contiguous habitat.

If India remains dependent on coal – as government pathways currently predict – it will either have to pay dearly for expensive imported coal, or increase domestic production by at least 250% over the next 20 years, which will in turn mean opening up most coal reserves to mining, and sacrificing the forests that currently cover them.

So chalk up wild tigers and elephants alongside coal’s other victims – communities suffering from pollution, displacement and a rapidly changing climate. So what, you might ask? The main argument used to justify India’s reliance on coal at all costs has been the cheap electricity it delivers. But what if that very attribute no longer applies?

Delhi consumers have seen their power tariffs rise several times in the last 12 months. If you live in Delhi, you are now paying anywhere from Rs. 3.70 to 6.40 per unit. Compare that with wind energy tariffs, which range from Rs 3.38 (Maharashtra Wind Zone IV) to 5.31 (orissa). No typo there, wind power is already significantly cheaper than coal in many areas. Solar PV is expected to reach grid parity in India by 2016 or 2017; some analysts believe that mark could be breached even earlier.

The rise in global coal prices over the last two years has had corporation-shaking effects. S&P has downgraded Tata Power’s outlook to negative, on account of its Mundra power project, dependent on imported coal. Reliance Power is locked in legal tussle over its Krishnapatnam plant, where construction has halted after the rise in global coal prices threw the project’s economics out of whack. Four state governments have imposed a $72 million fine on the corporate giant and threatened to encash its bank guarantee. With international coal no longer attractive, Indian power projects that had planned to rely on coal imports are desperately clamouring for greater domestic supplies.

With large-scale coal imports pretty much out of the equation from here on in, can India’s domestic coal production pick up the slack? Not likely. Coal India Limited (CIL) has seen output stagnate at about 440 mtpa for the last three years. CIL and the Government of India have been locked in a tussle for the last six months arising from CIL’s reluctance to guarantee delivery of more than 65% of power station requirements for the next three years.

Expecting the company to produce even more coal to replace scheduled imports is ridiculous. The difficulties of land acquisition in a densely populated country, combined with growing environmental justice protests, make any rapid growth in production unlikely, and certainly more expensive. But of course, that won’t stop the government and at least some private corporations from throwing good money after bad, and trying to weaken or skirt environmental laws wherever possible. And all this for what could be less than 40 years worth of coal.

The Government’s response to the coal crisis would be funny if it wasn’t so tragic for millions of Indians. Instead of doubling down on quick build renewable technologies that are capable of solving India’s power crisis, the Power Ministry is now suggesting that CIL import coal and offset the high costs by “price-pooling” with domestic coal.

While the exact mechanism is still unclear, what this would likely mean is that import-dependent plants would get (high calorific) imported coal at a discount to international prices, and existing plants reliant on (low calorific) domestic coal would have to foot the difference. If this happens, electricity rates for Indian consumers would go up across the board! This has the makings of another coal scam.

Where the smart money is headed

Recent reports have estimated that India has enough wind potential alone to meet its electricity needs for the foreseeable future – ignoring solar, biomass and other sources. Energy efficiency is the other big untapped potential – efficiency measures in the appliance, agriculture and industry sectors, along with a reduction in transmission and distribution losses can result in a saving of 255 billion kWh for India, according to the Indian Government’s Interim Report of the Expert Group on Low Carbon Strategies for Inclusive Growth.

The writing is on the wall, and savvy investors are reading it clearly – coal is dying, renewables are on an upswing. Bloomberg New Energy Finance reported that India led nations in the growth of renewable energy investment in 2011, with a 52 percent jump to $10.3 billion, helped by a growing wind sector and accelerating solar market. Also from Bloomberg, lending to coal power producers is already more costly than lending to wind or solar farms. Not surprising considering that the return on equity for wind (between 19 to 24%) is significantly better than it is for coal at 15.5%.

The stage is set for an epic battle – if the government doesn’t change course, if it continues its push into unbroken forest areas for the coal that lies beneath them, expect to see more legal battles, ground fights and project delays, as forest-dependent communities and civil society groups fight to protect what is left of Central India’s forests. Sadly, that fight will mean more innocent casualties – animal and human.

-- Ashish Fernandes is a Coal Campaigner with Greenpeace.

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