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September 14, 2012

Risky Business: Kentucky May Not Get Paid for India Coal Deal

India Coal PlantsIn case you still think exporting coal to India might be a good investment, despite mounting evidence to the contrary, the media is raising questions about whether the Indian Company Abhijeet Group is financially capable of meeting its agreement to import Kentucky coal.

But wait! Isn't Asia supposed to have an insatiable and unlimited need for coal? A demand that will miraculously keep failing U.S. coal companies afloat as coal usage in the U.S. reaches its lowest levels in nearly four decades? The coal industry wouldn't lie to us or distort the truth, right?

Unfortunately for Big Coal, the truth is turning out to be a bit uglier than they acknowledged. A $33 billion "Coal-Gate" scandal is sweeping across India as anger grows over revelations that the government basically gave away public coal allotments to private companies, including Abhijeet. (If this sounds familiar, it's likely because we're facing a similar scandal here in the U.S.

After India's Central Bureau of Investigation (or CBI – equivalent to the U.S. FBI) raided 30 cities last week, outlets in India began questioning whether Abhijeet is capable of meeting its responsibilities to the Kentucky deal.

Of course, this wasn't exactly the first indicator that industry officials might be overstating the demand for coal in India. Coal-Gate is only the latest chapter in India’s ongoing coal crisis, in which we’ve seen projects relying on imported coal ask for government bailouts in the face of bankruptcy, while local communities rise up to oppose new projects despite violent crackdowns by companies and police.

With 400 million people without access to electricity, there's no denying that India desperately needs to solve its energy problems. But as we saw when over 300 million people lost power during the July blackouts, coal is an outdated energy source that is ill-equipped to meet Indian demands. When India's coal dominated grid failed, the lights stayed on in rural villages that rely on distributed solar instead.

And it's not just "crazy environmentalists" who are calling for clean energy. The International Energy Agency found that distributed renewable energy, not coal, is the only path to universal energy access (PDF).

Moreover, while coal companies are failing, clean technology is proving to be cheaper, more reliable, and a better investment in India and the developing world.

There is a healthier, more sustainable, and better way to power the future. Or we can keep relying on coal companies that might not be able to pay their bills.

-- Nicole Ghio, Sierra Club Campaign Liaison


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