We need to talk: US sanctions on Iran’s oil exports have left India in a diplomatically awkward position

India asserts national interest over Iran oil sanctions

4GW of coal-fired power cancelled in Andhra Pradesh, India’s thermal power reeling under bad loans, competition from renewables

NTPC’s 4X1000MW ultra mega thermal power project in northern Andhra Pradesh has reportedly been shelved after a central directive to develop it on domestic – instead of imported – coal supplies was found to be operationally unviable. The cancellation is just the latest in the pipeline of approximately 547GW of coal-fired power projects cancelled or shelved in India since 2010 – prompting speculation that the country’s peak thermal coal power may be breached sooner than expected.

India’s thermal power sector is also reeling under the prospect of liquidation of about 40GW of thermal power plants – a potential crisis for public sector banks as well – that may not be resolved despite the Centre’s newly announced Sakshat scheme to repurpose bad loans made to power sector NPAs (non performing assets). Thermal power tariffs may also have to rise to absorb the prices of costlier imported coal – which would make it even less competitive against already cheaper renewable power tariffs and may therefore throttle its demand even further.

India’s coal shortage to persist for 2-3 years, MoEF being pushed for clearances to new coalmines

Power Minister R. K. Singh has clarified that India’s acute coal supply shortage is likely to persist for the next 2-3 years, during which states have been allowed to import coal to keep their thermal power plants running. The shortage has tightened on the back of rising power demand from industry and domestic loads, despite Coal India Ltd. (CIL)’s year-on-year supplies to coal power plants alone (for 2018’s first quarter) rising by 15.4%.

The power ministry is also pushing the environment ministry for quick environmental clearances to a number of new coalmines that have already been started to tide over the supply shortfall. Meanwhile coal minister Piyush Goyal has assured the Delhi government that coal supplies to the NCR will be increased from about 300 rakes/month at present to 2000 rakes/month within the next few months to avoid any blackouts.

US refusal to budge on Iran oil sanctions leaves India in diplomatic quagmire

 India has been pushed into a potential diplomatic standoff with the US after the country’s refusal to make any exceptions for any of its allies dependent on Iranian oil exports. Iran is India’s 3rd largest oil import source – behind Iraq and Saudi Arabia – and supplied 18% of its imports (33 million tons) last year. However with the US deadline of November 4th to stop buying Iranian oil inching closer, global as well as Indian insurance firms are starting to decline insurance cover for refineries importing Iranian crude oil.

 This makes it untenable for major refineries such as MRPL and HPCL to import the fuel; Reliance Industries has already announced that it will stop its Iranian imports before November 4th. However, keeping in mind the economic impacts of a potential increase in oil prices if India switches suppliers, petroleum minister Dharmendra Pradhan has insisted that India’s response to the sanctions will be taken in national self-interest – a stance that may be unwelcome to the Trump administration.

Big Oil champions natural gas as permanent fuel for energy security

Natural gas has been backed as a permanent solution to the world’s growing energy demands at the World Gas Conference – by the largest oil firms – on the back of its abundant supplies and relatively cheap extraction prices. This is despite calls by concerned climate scientists for a rapid move away from burning fossil fuels. The fuel has also been called a “mainstay, and not a transition fuel” by GAIL’s chairman – in reference to much anticipated scenarios where renewables alone could meet all of the world’s energy needs.

India incidentally plans to double the share of Natural Gas in its energy mix to 15% by 2022 by tripling LNG imports. However, more than twice the gas is leaked to the atmosphere than is extracted within the US alone – which may accelerate global warming as Methane (that makes up about 94% of the gas) is nearly 86 times more potent than CO2 in retaining atmospheric heat for the first 20 years.

Rhode Island first US state to sue Big Oil, California court dismisses climate change lawsuit against oil majors

The US state of Rhode Island has become the first US state to sue 14 oil majors for deliberately contributing to climate change. The state joins cities and counties – such as New York, King County (Washington) and Boulder (Colorado) – in arguing that drillers intentionally prioritized short-term profits over warnings about the adverse environmental impacts of fossil fuels.

Meanwhile a California federal court has dismissed a climate change lawsuit by the cities of San Francisco and Oakland against BP, ExxonMobil, Chevron, ConocoPhillips and Royal Dutch Shell. The court ruled that the issue required a solution much larger in scope than could be delivered by a district judge and jury. Shell has since reiterated that the issue required a government policy revamp and not legal battles, possibly as a safeguard against similar lawsuits already in court.

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