India leads Asia's dash for coal as emissions blow east

China has promised to restrict public funding for coal and Indian Prime Minister Narendra Modi is trumpeting investment in renewable energy, but in Asia's biggest economies the reality is that coal is still regarded as the easiest source of energy.

"Environment is non-negotiable but we can't live without coal. You can't wish away coal," said Anil Swarup, the top official in India's coal ministry, who is leading the push to open new mines like Magadh, in poor but resource-rich Jharkhand state.

"There is a temporary drop in demand, but no question of reducing coal output. We are well short of coal required in the country."

ASIA KEEPS DIGGING

China, India and Indonesia now burn 71 percent of the world's newly mined coal according to the World Coal Association, with new European and North American consumption negligible as their countries turn to cleaner energy.

Other Asian nations are increasingly looking to coal to power their economies too, with Pakistan, the Philippines and Vietnam opening new plants, pushing the Asia/Pacific region to 80 percent of new coal plants.

"Coal is still the most cost competitive power generation fuel, and in the end that's what matters most for emerging markets," said Frederic Neumann, Co-Head Of Asian Economic Research at HSBC in Hong Kong.

Asia's developed nations, too, are finding it hard to kick the coal habit.

Japan's use has reached a record after shrinking its nuclear industry and it plans to build another 41 new coal-fired units over the next decade.

Australia's exports of thermal coal rose 5 percent to 205 million tonnes in the last financial year and are to increase by a further 1 million tonnes this year, driven by increased demand from Japan, South Korea and Taiwan.

The rush to burn more coal comes as the world's major economies, including leading emitters China and the United States, have agreed to start cutting greenhouse gases over the next 15 years ahead of the U.N. climate change summit in Paris.

India has rejected any absolute cuts, arguing that its per capita emissions are far below the world average and that it needs to emit more as it grows to beat poverty.

In a climate-change policy statement released last week, New Delhi promised to slow the rate at which its greenhouse gas emissions rise by a third by 2030.

Coal will remain the dominant source of its energy for decades, India said, but it pledged to invest in cleaner coal technology, modernise old power stations and plant trees to absorb up to 3 billion tonnes of carbon dioxide.

THE NEW CHINA?

Magadh mine is the biggest of the many New Delhi will open to hit an annual coal target of 1.5 billion tonnes by 2020, raising its production above the United States but less than half the amount China currently burns.

Some 20 km from Magadh, along a bumpy track through mud-hut villages, lies a second vast coal pit launched last year. By 2018 another two mines will open nearby - combined, the mines in this one district alone will at peak generate as much coal as Poland, the world's ninth largest producer, delivered last year.

The United Nations has agreed a goal of keeping warming below a ceiling of 2 degrees Celsius above pre-industrial levels to avoid the worst impact of climate change including more droughts, extinctions, floods and rising seas.

Sticking to that goal would require world emissions to start falling now and India's to peak within a few years, said Glen Peters at the Oslo-based Center for International Climate and Environmental Research, but India's coal drive makes that near-impossible as its extra emissions outweigh any savings from more solar and wind power.

Because of its low-quality, twice as much Indian coal is needed to produce the same amount of energy as the best Australian coal.

If India burns as much coal by 2020 as planned, its emissions could as much as double to 5.2 billion tonnes per annum - about a sixth of all the carbon dioxide released into the atmosphere last year - Peters said.

That would see India follow a similar path to China whose emissions, after growing slowly at the turn of the century, jumped when dozens of new coal power plants came on line.

"If these coal targets are met, there could be a turn (in India's emissions), with a steep increase. China is starting to stumble; India could replace that," said Peters.

He said India could replace the United States as the world's second largest emitter by 2025. "This is something no one would have expected."