Introduction
United Nations Framework Convention on Climate Change (UNFCCC) in its 26th Conference of Parties (COP 26), held at Glasgow, United Kingdom desired different countries to declare their resolve for Net Zero timelines. While USA fixed 2050 for meeting this requirement, China promised it to be by 2060 and India declared it to be achieved by 2070. Before we proceed further on the subject, it would be prudent to understand what is meant by “Net Zero” and what have been the pledges of India, as promised by our honorable Prime Minister. In this article an attempt has been made to assess the impacts of the pledges on the coal industry of India.
Understanding
Net Zero
Net Zero Emission
or Net Zero means not adding to the amount of greenhouse gases in the
atmosphere. Net-zero emissions will be achieved when all Green House Gas (GHG)
emissions released by human activities are counterbalanced by removing
GHGs from the atmosphere in a process known as
carbon removal. Achieving it means reducing emissions as much as possible, as
well as balancing out any that remain by removing an equivalent amount.
Greenhouse gases like carbon
dioxide (CO2) are released when we burn combustible material, such
as oil, gas, coal, and biomass, for our homes, factories, and transport.
Methane is produced through farming and landfill. These gases cause global
warming by trapping the sun's energy.
The idea
of “Net Zero” was promoted in a 2018 special
report from the Intergovernmental Panel on
Climate Change (IPCC) which demanded that countries bring greenhouse gas
emissions to “net-zero” by 2050 to keep global warming to within 1.5°C of
pre-industrial levels. The target for achieving this was kept as year 2050,
while limiting that to 2.0oC level was kept as year 2100.
Importantly,
the time frame for reaching net-zero emissions is different for CO2
alone versus for CO2 plus other greenhouse gases like methane,
nitrous oxide, and fluorinated gases. For non-CO2 emissions, the net
zero date is later, because models assume that some of these emissions — such
as methane from agricultural sources — are more difficult to phase out.
All
countries in the G7 - representing the world's largest advanced economies believe
that the human-caused emissions from fossil-fueled vehicles and factories,
should be reduced as close to zero as possible. Any remaining GHGs should then
be balanced with an equivalent amount of carbon
removal, which can happen through things
like restoring forests or using direct air capture and storage (DACS)
technology.
It is also
necessary that the transition from the current approach of energy generation
toward net zero is done in a just manner,
especially for workers tied to high-carbon industries and also the
population dependent on such activities for their livelihood. In fact, the
costs and benefits of transitioning to a net-zero emissions economy must be
distributed equitably.
Global action
for setting net-zero targets is growing fast, with major economies like China,
United States, India, and the European Union making all efforts to meet such
commitments. Bhutan was the first country to set a net-zero target in 2015. Now
over 90 countries, representing nearly 80% of global emissions, are covered by
a net-zero target.
It is
pleasant to note that most of the technologies needed to reach net zero targets
are already available and becoming increasingly cost-competitive with
high-carbon alternatives. Solar and wind now provide the cheapest power available
for most of the world. Markets are responding to these opportunities and to the
risks of a high-carbon economy, and they are shifting accordingly.
CO2 Emission in India by
Fuel Type
Even though coal accounts for only 55% of the primary energy in the country, it is responsible for more than 2/3rd of the CO2 emitted to the atmosphere. The chart below shows how the CO2 emission from coal has increased over the last 30 years.
Source: Global Carbon Project 2021
In the year 2020, though India, as a country, ranked third in global carbon emission (nearly 2.6 Gt of CO2), it had contributed only one fourth that of China (10.7 Gt of CO2) and nearly half that of USA (nearly 4.8 Gt of CO2). All other countries produced much lower CO2.
India’s Carbon intensity of Energy Production – Highest in the world.
With
the increasing use of inferior grade coal for power generation in India, the
amount of carbon dioxide (CO2) produced for one unit of power (kWh)
production in India is the highest now, at the level of around 0.275 kg/kWh, overtaking
China, which had been the topper in this category, so far. Most of the European
Union and North American countries produce CO2 in the range of 0.11
kg – 0.20 kg per kWh. The following graph shows the status of different
countries:
India’s Commitment at COP26
Hon’ble Prime Minister of India during his speech at COP 26 made the following pledges on India’s decarbonisation roadmap:
1.
Increase non-fossil energy capacity to 500 GW (gigawatts)
by 2030.
2.
Meet 50 percent of energy requirements from renewable
energy (RE) by 2030.
3.
Reduce the total projected carbon emissions by 1 billion
tonnes (BT) by 2030.
4.
Reduce the carbon intensity of the economy by less than 45
percent.
5.
Achieve net zero carbon by 2070.
Impact of COP 26 Pledges on Indian Coal Sector
Of the above 5 pledges, the first two relate to building up the capacity of renewable energy to 500GW by 2030, being 50% of India’s total energy requirement by this time. This indicates that the total installed capacity of fossil fuels-based power generation would be around 500GW by 2030 meaning thereby that coal being the major contributor of energy intensity amongst the fossil fuels, its share in quantum as energy provider will increase at least up to 2030, but in percentage terms it is bound to reduce from the current level of 55% in the total primary energy basket. This shows that power generation from coal is projected to increase in near future terms.
The major concern for the coal sector lies in pledge No. 3, which requires the country to reduce the total projected carbon emission by 1 BT by 2030. This is a radical pledge as it promises an absolute reduction in carbon dioxide (CO2) emissions by 2030. While the projected CO2 emission by 2030 is not known, its reduction by 1 BT would mean reduction of fossil fuel usage by about 590 MT coal equivalent from the projected level for 2030. This is a serious threat on usage of coal as energy provider.
The last pledge of achieving net zero status by 2070 gives us enough time to adhere to it. It also provides the scope of emitting or generating CO2 and planning for sequestering it through the trees and artificial processes to keep it at net zero level.
Past trend of coal consumption
in the country
The
trend of total annual coal consumption in the country, including domestic coal,
lignite, the imported coal, coke and other products is shown in the following
chart. It shows that there has not been substantial increase in the coal usage
in the country in the past ten years. Total consumptions in the last 5 years have
been hovering between 950 MT to 1100 MT. Years 2019-20 and 2020-21 saw a slight
declining trend while the past two years have seen increased usage of the solid
fossil fuel in the country.
Source: Data taken from Coal Statistics
2022-23
All India Power
Generation Capacity and Energy Generated in June 2023
India’s
target for capacity creation of Renewable Energy was 175 GW by December 2022,
which was missed. However, by the end of June 2023 it has surpassed that target
by increasing the capacity to 176.49 GW, out of the total power installed
capacity of 421.90 GW, which is 41.83% of the total. Compared to this the share
of energy generation has been only 23.83% from the renewables. Installed
capacity of renewable based (non-fossil fuel based) generators must be
increased to 500 GW by the end of 2030 as per the pledge, which seems to be
catching up.
Coal
based installed capacity of power generators by the end of June 2023 has been
212.52 GW (50.27% of total of 421.90 GW). This along with the gas and diesel
generators (thermal) contributed 72.82% of the total energy generated in June
2023. This indicates that even though the installed capacity of
renewables-based energy generators will increase, the load on energy generation
will continue to be on the fossil fuel-based generators.
Source – CEA
Growth of RE
installed Capacity in last 6 Years
In
the past 6 years, there has been substantial growth in the installed capacity
of renewables based generating capacity creation from nearly 50 GW in January
2017 to 176 GW in June 2023, largely due to increase in solar power from 9 GW
to 70.10 GW and wind from 28.7 GW to 43.77 GW. This is also an indicator that
the target of 2030 of 500 GW can be reached safely by enhanced drive in solar
and wind power.
Source - CEA
The Draft National Energy Policy of 2017, published
by NITI Ayog, mentions that the large power requirement and solid fuel demand in
process industries brings to fore the need for efficient coal exploitation,
investment in related infrastructure, and a forward-looking regime. The large
planned new coal based thermal capacity is likely to put pressure on coal
resources. It further mentions that Coal based power generation capacity is
likely to go up to more than 330-441 GW by 2040. This is likely to translate
into a coal demand of 1.1-1.4 billion tonnes annually. As per this assessment,
at high rates of coal demand, domestic coal supplies may plateau by the year
2035.
Source: Draft National Energy Policy, 2017
The overall coal demand for the country was estimated to be at 1300 – 1900 MT by 2030, as per the Coal Vision 2030 document of Ministry of Coal.
The
National Electricity Policy, 2021 also highlights the role of coal in
electricity generation. On thermal generation it clarifies that while India is
committed to add more capacity through non-fossil sources of generation, coal-based
generation capacity may still be required to be added in the country, as it
continues to be the cheapest source of generation, though compliance to
stricter environmental norms remain a challenge, particularly in older
stations. The Policy stresses that all future coal-based plants should only be
of Super Critical/Ultra-Super Critical technology or other more efficient
technology.
National Framework for Promoting Energy
Storage for Renewable Energy
India's
energy mix is set to undergo a transition from fossil fuel sources to
non-fossil fuel-based sources dominated by Renewable Energy (RE) in the future.
However, the incorporation of a
significant amount of variable and intermittent RE into the energy mix poses a
challenge for maintaining grid stability and uninterrupted power supply. Power
generation from the conventional energy sources as coal, hydro (with storage),
nuclear can be controlled and can meet any fluctuation in the power demand in
no time. However, the same is not the case with Renewable Energy (RE) sources as
these are to be used instantly, and in case they are not utilised they will be
lost forever.
Energy Storage Systems (ESS) can be used for storing energy available from RE sources to be used at other times of the day. Storage of energy will help in bringing down the variability of generation in RE sources, improving grid stability, enabling energy/ peak shifting, providing ancillary support services, and enabling larger renewable energy integration.
A National
Framework on Energy Storage System (ESS) has been issued by the Government of
India in August 2023 to encourage the adoption of Energy Storage for ensuring
an environmentally sustainable and financially viable power sector.
Estimation of Energy Storage Requirement and Capital Required
As per National
Electricity Policy (NEP), 2023 the energy storage capacity requirement is
projected to be 16.13 GW [(7.45 GW Pumped Storage System (PSP) and 8.68 GW Battery
Energy Storage System (BESS)] in year 2026-27, with a storage capacity of 82.32
GWh (47.6 GWh from PSP and 34.72 GWh from BESS).
The energy
storage capacity required for 2029-30 is likely to be 60.63 GW (18.98 GW PSP
and 41.65 GW BESS) with storage of 336.4 GWh (128.15 GWh from PSP and 208.25
GWh from BESS).
By the year
2031-32, this requirement is expected to increase to 73.93 GW (26.69 GW PSP and
47.24 GW BESS) with a storage capacity of 411.4 GWh (175.18 GWh from PSP and
236.22 GWh from BESS).
CEA has projected that by the year 2047, the
requirement of energy storage is expected to increase to 320 GW (90GW PSP and
230 GW BESS) with a storage capacity of 2,380 GWh (540 GWh from PSP and 1,840
GWh from BESS) due to the addition of a larger amount of renewable energy
considering the net zero emissions targets set for 2070.
To develop
this storage capacity during 2022-27 the estimated fund requirement for PSP and
BESS would be Rs. 54,203 Cr. and Rs. 56,647 Cr. Respectively, totaling Rs.
110850 Cr. Further, for the period 2027-2032 estimated fund requirement for
PSP and BESS would be Rs. 75,240 Cr. and Rs. 2,92,637 Cr. Respectively, totaling
Rs. 367877 Cr.
Actions Required for
Continuing Usage of Coal in Future
Several actions are required for continuing usage of coal in the future. Coal has to compete with other sources of energy generation both environmentally and economically. Cost of power generation from renewables has been decreasing over the years and has come to a level much lower compared to that from fossil fuel. The daunting task for coal is the cost of carbon removal. Entire chain of coal sector players, ie, producer, transporter and user have to work together to make coal-based energy cost competitive with renewables, including the cost of carbon removal, that is carbon capture and storage.
Carbon capture and storage Initiatives in India
The greenhouse gas emission footprint of coal-fired power generation could be reduced by carbon capture, utilisation, and storage (CCUS). India has created a programme for CCS and is interested in promoting it through Mission Innovation. Several oil and gas companies, including ONGC, are investigating the potential for CO2-based enhanced oil recovery and NTPC is interested in CCS.
R&D in CCS is being pursued by CSIR laboratories and academic institutions under the programme initiated by the Department of Science and Technology. As part of Mission Innovation, initiation has been made for funding opportunity in the Carbon Capture Innovation Challenge for joint R&D in the field of CO2 capture, separation, storage, and CO2 value-added products to be taken up jointly by Department of Biotechnology and Department of Science and Technology with member countries of Mission Innovation. Large areas of our subcontinent may not be suitable for onshore CO2 storage due to high seismic activity and population density, and any CO2 storage activity would need to protect subsurface aquifers, which are vital source of ground water for drinking and agriculture.
Greening of India
One of the actions identified in the country’s National Determined Contribution (NDC) under the Paris Agreement sets out plans to create an additional carbon sink of 2.5-3 billion tonnes of CO2 equivalent through additional forest and tree cover. NASA Earth Observatory also indicates that India is greening. Although, there have been replanting initiatives in the western parts, the north-eastern region has lost forest cover in recent times. With an aim to plant enough trees by 2030, it may be possible to absorb additional 2.5-3.0 billion tonnes of CO2 annually from the atmosphere.
Source: NASA Earth Observatory
Conclusions
India's energy mix
is set to undergo a transition from fossil fuel sources to non-fossil
fuel-based sources dominated by Renewable Energy (RE) in the future. Energy Storage Systems (ESS) can be used for
storing energy available from RE sources to be used at other times of the day,
for which massive investment is required. Investments in carbon removal
techniques are also necessary to keep continued usage of coal. The different
pathways assessed by the IPCC to achieve 1.50C by 2050 rely on carbon removal
to some extent. Though, futuristic
energy demand increase warrants huge investments in both sectors, ie, fossil
fuel based and RE based energy, the ultimate choice will hinge upon the most
economic and dependable supply system. Just transition is another issue that
will require to be addressed, as in India, currently most of the economic
activities are dependent on coal and other fossil fuels.
Different estimates
show different amount of coal requirement for the future. World pressure for
making all countries carbon neutral between 2050 and 2070, puts a huge
challenge on coal and other fossil fuel usage to continue for long. While in
the near future terms the requirement of coal may increase by, say up to 2040,
in the longer terms it all depends on the progress made in carbon capture,
storage and its utilization with its cost competitiveness with renewable based
energy generation and the extent of greening the country by massive plantation.
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