Exclusive: Coal push may continue even after doubling capacity by 2030, says Pralhad Joshi

Pralhad Joshi, Union Minister for Coal, Mines and Parliamentary Affairs.

India plans to continue expanding its coal production capacity beyond the stated target of doubling it by 2030, prioritising its needs over mounting global pressure to cut the use of fossil fuels.

In an exclusive interview to Moneycontrol, Minister for Coal, Mines and Parliamentary Affairs, Pralhad Joshi, said the government will continue increasing coal production even beyond 2030 given the steep surge in the country’s power demand projected for the coming years.

“There is no question of any reduction in coal production after 2030. For the next 40 years at least, coal is going to stay (as a key energy source) in India,” Joshi added.

After declining in 2019-20 and 2020-21 due to Covid, coal production in India has picked up by nearly 13 percent in 2021-22 and 15 percent in 2022-23.

Coal accounts for about three-quarters of India’s power generation and its demand is seen to be rising despite the country’s renewables plans. India has seen spikes in peak demand for electricity in the last two years, even as it has struggled to add renewable energy capacity in line with its goal of 500 gigawatts (GW) of non-fossil fuel capacity by 2030.

Also read: Coal India to have Rs 80,000 crore capex over next 5 years: CMD PM Prasad.

“Power requirement in the country is going to double over the years, to say the least. Even if 50 percent of that is met by renewable energy sources, there is still going to be a huge need for thermal power,” the Minister said.

India, along with China, were among the countries that were against the complete phasing out of coal at the United Nations Climate Change Conference, more commonly referred to as COP, in 2021. Subsequently, the country has taken a stronger stand, and decided to add coal capacity.

Power surge

India’s peak power demand in 2023 hit a record 240 GW, surpassing the government’s projection of 230 GW. This is expected to touch 256.5 GW in 2024-25.

Talking about the coal ministry’s preparedness to meet India’s power demand in the impending summer and monsoon months this year, Joshi said coal production will be increased further if demand surpasses the government’s projections.

“In FY23-24, we are going to hit the 1 billion ton, or 1,000 metric tonne (MT), mark of coal production for the first time. For FY24-25, our production target is 1,111.6 MT. But in between if we see that this is not sufficient, we will increase our production further.’’

India's peak power demand

Evacuation challenges

Joshi said coal production is not the issue. “It is the legacy coal transportation which is the problem,” he explained.

The coal ministry is spending about Rs 50,000 crore on 15 rail projects (Rs 26,000 crore) and first-mile connectivity (Rs 25,000 crore) to resolve coal transportation issues.

“Some legacy logistics issues remain despite the railway ministry, under Railway Minister Ashwini Vaishnaw, addressing the situation very well. The railway ministry has increased the rakes for coal transportation by a record 20 percent. But it will take a year or two to streamline the issue further,” Joshi said.

Coal production in the past two years.

Joshi added that the coal ministry has opened other avenues to transport fuel. “Since the railways are congested, we have opened the rail-sea-rail route. Then we are also allowing coal transportation by road. The road-cum-rail mode is also available. Besides, 67 first-mile connectivity projects are underway, in which transportation from the mines to the coal handling plant or sidings is automated and hence, faster,” he explained.

Also read: MC Explains: The why and how of India’s 100 MT underground coal mining target by 2030.

The minister said that new power units should be built at coal pit-heads to avoid transportation issues and delays.

"Coal India Limited (CIL) and NLC India Ltd (NLCIL) will be building thermal power plants at pit-heads, as much as possible. Both my ministry as well as the Ministry of Power are now insisting that even private players who plan to set up thermal power plants should build pit-head stations," he said.

Joshi blamed the earlier UPA government for its "planning error," that has led to the logistical issues.

Export plans on the backburner

Asked for an update on the ministry’s plan to start exporting coal from 2025-26, the minister acknowledged that the same is unlikely to be realised in FY26, given the unprecedented spike in the country’s energy demand.

“Due to the robust Indian economy, the requirement of coal for energy needs has suddenly increased. So, our first priority will always be to fulfil our domestic needs,” Joshi said.

According to the Central Electricity Authority, India’s peak power demand will cross the 260 GW mark in 2025-26 and hit 277 GW by 2026-27.

Read the full interview and coverage on January 11 and 12, 2024.