Slowly dying out: Even CIL is pessimistic about coal's long-term future as RE expands in India

COAL & OIL: CIL foresees no new coal mines till 2030, India to share excess power with neighbours, big banks still backing fossil fuels

Coal India Ltd. (CIL)’s 2030 Coal Report is of the opinion that India will not need “any new coal mines till 2030” as aggressive capacity addition for renewables increasingly adds to baseload power capacity, supplemented by rapidly falling costs of energy storage. The conclusion is expected to hold true even as the country’s estimated 300 billion tonnes of coal reserves will be opened up to commercial exploitation by private firms to feed India’s temporary spurt in coal consumption.

Coal’s economic competitiveness against RE is also likely to decline in the long term under stricter emission norms for new thermal power plants, complying with which will raise thermal power tariffs.

India to supply excess power to neighboring countries

Power Minister R.K. Singh has said – in an apparent lifeline to ailing assets – that India was keen to supply its excess power to Bangladesh, Sri Lanka and Nepal, which are currently at a power deficit. Most of the export will be from India’s thermal power plants – operating at below 60% PLFs – to strengthen their PLFs to about 80%.

Major banks and insurers still financing fossil fuels

The European Investment Bank (EIB) has approved a €1.5bn loan for the Trans Adriatic Pipeline (TAP) – a €3.5bn project to pipe natural gas from Azerbaijan to southern Italy. TAP will also be financed by World Bank and Asian Infrastructure Investment Bank (AIIB), even as environmentalists call it a squandered opportunity to move Europe away from fossil fuel dependence. Poland’s upcoming 10GW of thermal power plants – to be powered by heavily polluting lignite – have likewise been underwritten by Allianz, Generali and Munich Re.

More worryingly, the world’s biggest lenders have financed $600bn worth of coal power projectsworldwide – from 2014 to Sep 2017. Fossil fuel projects worth $23bn are earmarked for financingby the G20 countries alone, particularly China, Japan and South Korea. Singapore’s DBS bank, OCBC and UOB are also financing coal projects in Vietnam and Indonesia, disregarding even the most basic due diligence protocols under the Equator Principles.

US shale oil to dominate global oil supply

Drilling for shale oil is at an all time high in the US – production having spiked by 1.3 million bpd over 2017 – as the Trump administration looks to cash in surging oil demand in India and China. OPEC countries – particularly Saudi Arabia – and Russia, however fear that cheap US shale oil output – projected to top 12 million bpd by 2019 – may flood the global market with more oil than there is demand for, which would eat into their profits and OPEC’s iron grip over global oil dominance.

Meanwhile, the Philippines is dragging Big Oil to court over its role in climate catastrophes, and Norway’s decision to allow drilling in the Arctic has again been challenged.

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