India and the case for a national energy transition plan : CarbonCopy

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Despite wide recognition of eventual drawdown of coal and thermal power, there is little to suggest that India is prepared to navigate the tremors of these tectonic shifts

On 7th December, Coal Minister Pralhad Joshi told Lok Sabha that the country has no plans to introduce a Just Transition policy. The transition away from coal “is not happening in the foreseeable future” and regardless of a push for renewable energy, “the share of coal in the energy basket is going to remain significant in years ahead,” he said. This was then followed up on 12th December in a meeting between officials from the Ministry of Power, National Thermal Power Corporation (NTPC) and the Central Electricity Agency (CEA) where Power Minister R.K Singh instructed no further retirements of thermal power units until 2030, but rather measures to ensure the extension of lives of plants that are slated for retirement. The reason— an expected growth in India’s energy demand over the current decade.

These statements merit further assessment and critique because hundreds of coal mines and power plants have already shut down, raising questions as to what happened thereafter. According to estimates by the coal ministry, 293 coal mines had shut down as of April last year, most operated by Coal India Limited. And as per details made available by the CEA, overall 259 units of thermal power stations have been shut down. Of these, 191 units (accounting for a capacity of almost 17 GW) were run on coal and lignite. Reasons for shutdown were largely depletion of coal reserves (or shortage of coal supply, in case of power plants) and financial non-viability. The National Electricity Plan 2022, released mere months ago, also lists more than 4.6 GW of thermal power as scheduled for retirement between 2022 and 2027. Now consider the scale of deliberate drawdown that is expected to happen in line with India’s international climate commitment to reach net-zero by 2070, even if the pull back from coal accelerates only in the decades to come.

The coal minister too referred to 2040 as a potential peak year for coal. So why then, despite a clear recognition of the fact that coal power usage will reduce in the future, is there no clear nationwide Just Transition strategy? The need for one is also not widely recognised among workers. In Chhattisgarh, explained Nathulal Pande, member of Hind Mazdoor Sabha (HMS), coal mines still have a lot of life because of the high availability of reserves. “So there are no serious concerns about job loss at present,” he says. HMS is one of the largest trade unions in India.

But there is “no contradiction” between the government’s hawkish protection of thermal power, current patterns of increasing coal production and working towards a Just Transition, says Sandeep Pai, a researcher working on coal transitions in India.

Consider Coal India, for example, which directly employs around 2,50,000 people. Then there are informal workers engaged on contract basis. In Jharkhand’s Ramgarh district, the proportion of informal workers in the coal mining sector was nearly three times the formal workforce. And indirect dependence further downstream in the coal value chain like workers in the transport sector, for example. And if power plants are retired in line with discussions around a 25-year lifetime, around 192,028 formal and informal workers would lose employment.

“If you add up mines and power plants that have shut down and will shut down in the next decade, the number of impacted people and communities is more than the whole coal transition in Europe,” Pai explained, contrasting the scale of closures in India for reasons other than Just Transition to those in Europe as part of deliberate transition initiatives in coal regions. Now consider how Germany alone has set aside €40 billion for coal phase out. How much would India need? Drafting a transition plan could be the first step to arrive at such calculations.

There are also other coal dependencies in India like freight revenue for the Indian Railways and the cross subsidisation of passenger fares, tax revenue for the Indian government and coal-consuming sectors like cement and steel. There is also a need to develop expertise within the country’s financial sector. A recent study published by the Global Environmental Change journal found that less than half of the 154 finance professionals who were surveyed were familiar with environmental issues like climate change mitigation and adaptation, greenhouse gas emissions and transition risks. It also states that only four of ten financial institutions that were surveyed collected information on social, environmental, and governance (ESG) variables that affect companies’ financial positions i.e. ESG risks. In essence, there is a lot that needs to be planned for and accounted for.

The possibility of utilising abandoned mines and retired thermal power units to host renewable energy infrastructure, including solar power plants and storage solutions such as pumped storage and gravity storage, have also emerged in recent years as a potential solution to the challenge of transitioning away from coal and dampening employment loss implications. Additionally, Just Transition plans could not only channel workers into other booming sectors like solar energy but also toward repairing local ecology and providing jobs in the process. Like turning abandoned open-cast coal mines into fisheries. This would require analysis of region-wise resource availability, suitability of land for other purposes, potential for new industries etc.

The other point to consider is that while closures of coal mines and power plants have so far occurred as a result of domestic reasons like depletion of reserves and inefficiency, going forward another factor will demand consideration: global climate change concerns. “This was not provided for in the financials of these projects. So the bill needs to be picked up by someone else,” Anil Kumar Jain, former secretary, union ministry of coal, told CarbonCopy. “The collaboration with the World Bank was about understanding the implications” he added, referencing ongoing talks between the Union coal ministry with bodies like the World Bank and also the German development agency GIZ for developing a comprehensive closure framework with Just Transition principles for closed and abandoned mines.

As far as international finance to support the energy transition goes, the past 15 months or so have seen the emergence of Just Energy Transition Partnerships (JET-Ps) as the avenue of choice. JET-P deals, which seek to channelise finance from developed countries to developing economies to facilitate a shift away from coal, have already been struck in South Africa, Vietnam and Indonesia. While these deals stand at different stages of implementation, a similar deal in India will likely hinge on a plan for eventual coal and thermal power retirements being in place. This is a condition that has caused some consternation in India’s coal and power ministries.

Although larger shifts away from coal might happen over coming decades in line with the net-zero commitment, “in the short-term, India still needs a plan for the mines and power plants that are already in the process of closing down,” says Pai. One could also look at the task at present as pilot projects to assess what the larger transition could entail in terms of funding requirements and policies for workers and communities. Doing so could also make climate policies more acceptable to sections of society that are most exposed to transition risks.

Mine closures at present and a need for more

At present, India has a coal mine closure guideline that includes compensation for employees and rehabilitation of the land. There are also labour laws that call for severance packages etc. But there is a lot of room for improvement.

“Workers who were employed in coal mines that have shut down have been relocated to other mines and wages and other facilities [as were provided earlier] continued,” Pande said. Such arrangements to move labourers from one mine to another are likely part of agreements and understanding between the management and the mine workers. But there are impacts on larger communities that have remained unaddressed.

“An entire basti comes up around coal mines and there are kirana stores… even the land which was mined should be returned to the people who owned it or reclaimed [and made productive for other purposes] but this doesn’t happen,” he explained, adding that at best, the companies undertake plantation work that rarely entails benefits for local communities. Echoing similar sentiments, Surendra Pandey, member of the RSS-affiliated Bharatiya Mazdoor Sangh (BMS) said that larger coal-dependent communities “become unemployed.” BMS is also one of the biggest trade unions in the country.

The coal mine closure guideline is also only that i.e. a guideline that imposes no real legal obligation on mining companies. Interestingly, another loophole in the guidelines is that companies can just abandon the mines and never formally declare them as closed which could entail some responsibilities.

Pandey explained that at present, there is “no real engagement” between the top management at coal companies and workers with respect to Just Transition. “Even coal-dependent communities have not been engaged and they have no idea how bad their situation will be once the mines close down,” he added.

As for coal power plants, research by International Forum for Environment, Sustainability & Technology (iFOREST) found that there are no laws in India that mandate decommissioning, remediation and repurposing of the plants after retirement “Unlike the coal mining sector, power plants and industries are not required to prepare decommissioning plans. The existing laws and regulations related to the environment, labour, land and finance are either ambiguous or are silent on decommissioning, leaving enough space for nonstandard approaches,” the report concluded.

Late last year, Jharkhand formed a task force to study what exactly a Just Transition would entail, including impact on workers and communities and needs like financing. But while the need to develop a Just Transition strategy is slowly being institutionalised, it is still a very new topic in India. “Even in the research and think-tank world, the topic is only around three years old,” Pai pointed out.

So a nation-wide strategy, Jain pointed out, is “work-in-progress.” And those currently studying the topic have their work cut out. Understanding regional differences in socio-economic dependence on coal is one of the first steps in chalking out Just Transition plans. In India, however, datasets on district-wise location of coal mines and their production are not publicly available, according to Pai’s research. Other researchers too have arrived at similar conclusions that “Lack of robust datasets has been a stumbling block for serious research and analysis on energy in India, evidenced, for instance, by limited data-driven analysis in top journals.”

Developing such plans also requires “very heavy number crunching” on India’s energy and electricity demand and likely sources of supply in the coming years, he elaborated. And precisely because these are uncertain, it is important to create scenarios and start planning. “After the revised NDCs were submitted on India’s commitment at Glasgow, our ministries got the mandate to start working on a [Just Transition] plan. If 2070 is the net-zero target, the earlier you start planning, the better it is.”