Amid a significant drop in hydroelectricity production caused by inadequate rainfall, India is gearing up to increase its coal consumption to satisfy rising power demands, according to S&P Global Commodity Insights. This shortfall in hydroelectric power is anticipated to perpetuate India's reliance on coal imports.
During the fiscal year 2023-24, India's coal production approached the 1 billion metric ton milestone, reflecting the government's strategy to lessen dependency on imported coal. Nonetheless, the country has already imported approximately 85 million metric tons of thermal coal in 2024 due to the decline in hydroelectric output.
"The first half of 2024 could potentially show stronger coal imports than the second half amid a likely lower hydropower generation because of the impact of El Nino,? noted Pat See Khoo, Senior Analyst (Global Power and Renewables) at S&P Commodity Insights.
Despite India's national commitment to achieving carbon neutrality by 2070 and significant investments in renewable energy infrastructure, coal remains a cornerstone of the nation's energy mix. This is primarily due to the slow pace at which renewables are being integrated into the overall power generation framework.
Furthermore, India's focus on infrastructure development has substantially increased its demand for steel, subsequently driving up the need for coking coal. India has become the largest seaborne purchaser of coking coal, propelled by its expanding steel industry. The nation aims to boost its steel production capacity to 300 million metric tons annually by 2030, a 71% increase from current levels.
S&P Global Commodity Insights also predicts that India?s coking coal imports could reach 100 million metric tons by 2030, despite ongoing efforts to enhance domestic production and curtail imports.
As India navigates the challenges of energy security and environmental sustainability, the balance between coal reliance and the transition to greener energy sources remains a critical issue for the country's policymakers and industry stakeholders.
