Coal in India 2019 Report

Further information
For more information or to comment on this publication, please email: chiefeconomist@industry.gov.au
Project team
Monica Philalay, Nikolai Drahos and David Thurtell
Acknowledgements
The authors would like to acknowledge the contributions of:
Lauren Pratley, Lou Brooks, Thuong Nguyen, Joseph Moloney, Elke Wakefield, Melissa Bray,
Richard Samuels and Radhika Tomar.
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Foreword
The role of coal in future energy systems
will be determined by the balancing of the
priorities of energy security, energy equity,
and environmental sustainability. Nowhere
do these issues come more to the forefront
than in India. India is experiencing rapid
economic and population growth, and
consequently rising demand for energy.
Emissions are growing at a faster rate
than any other major nation, but per capita
emissions remain low, and access to
reliable energy remains a key challenge.
This report provides an update to the
Coal in India1 report that we released As always, anticipating the future is
in 2015. underpinned by considerable uncertainties
and risks. Consistent with the 2015 report,
Since the 2015 report, India has emerged there remain several factors that will
as the world’s second largest producer influence the outlook for coal in India over
and consumer of thermal coal, and coal the longer term. This report contributes to
continues to play a key role in India’s the debate by examining the key drivers,
economic growth and development. current trajectory and main uncertainties
The 2015 report provides a source of that could impact on future developments.
reference material for coal fundamentals
and the baseline for this report, which
includes an update on the latest statistics
and developments underpinning the outlook
for Indian thermal coal consumption,
production and imports.
We examine the latest developments David Turvey

in India’s energy, electricity and mining
policies and regulatory settings, and how Acting Division Head
these could impact on the future of thermal
Analysis and Insights Division
coal in India. In doing so, we discuss the
Department of Industry, Innovation
opportunities for Australian producers and
and Science
mining equipment and technology services
companies in meeting India’s growing
demand for coal.
iii
Executive Summary
India’s energy future will help shape seaborne — are needed over the next five years. Given
thermal coal markets for decades to come. India has overbuilt its coal-fired power capacity for
India is the world’s second largest importer of current levels of electricity demand, and
thermal coal, and has the potential to be an coal-fired power generators are running well below
ongoing source of demand growth — a bright capacity, India already has sufficient coal-fired
light for thermal coal exporters confronted with power capacity for coal consumption to lift during
falling demand in Europe, North America and the 2020s. A reversal of this trend would require
North East Asia. But while India is one of the India to prematurely close coal power stations
great hopes for thermal coal exporters (alongside before the end of their planned lives, and to
Southeast Asia), it also presents significant risk. rapidly address the huge challenges — regarding
If India’s thermal coal imports decline, there could grid stability — that these closures would bring.
be substantial implications for seaborne markets. Thermal coal is expected to remain a major part of
As Australia already exports large volumes of India’s energy mix for decades.
metallurgical coal to India, this report primarily
focuses on the more uncertain, but much larger, In the long term, the outlook for thermal coal
thermal coal market. usage in India depends heavily on the prospects
for other energy sources, particularly the pace of
India’s future energy needs are difficult to expansion in renewable generation in India. India
understate. India is the world’s third largest has set itself ambitious renewable energy targets,
energy consumer. It has the world’s second and recently signalled a potential target of 500 GW
largest population and is one of world’s fastest of installed renewable capacity (excluding
growing economies. The twin pressures of large-scale hydro) in 2028, up from 79 GW in
economic and population growth are expected mid-2019. To achieve its renewable generation
to propel future energy demand in India. The target, India would need to overcome major
nation has made significant progress in reducing technical, political and economic challenges.
energy poverty, but there were still 168 million
people without access to electricity in 2017, and The pace of India’s coal production growth
reliability is an ongoing issue. India also faces a will be the key driver of its future thermal
range of other challenges in its electricity market, coal import needs. India is the world’s second
which have flow-on effects to the coal sector. largest producer of thermal coal, and production
These include inefficient state-owned generators, is dominated by the state-owned company Coal
overcapacity in power generation, bottlenecks in India Limited, the world’s largest coal producer.
transmission, distortionary subsidies, and financial Coal India has ambitions to raise domestic coal
pressure on distribution companies, due to losses production to 1 billion tonnes by 2025–26. While
and the underpricing of electricity. India has lifted growth in thermal coal production
over the last few years, it is still tracking well short
India’s thermal coal consumption is likely of the production levels required to meet this
to continue to increase next decade, and target. India’s coal output is expected to grow, but
possibly beyond, in order to meet India’s at a slower pace than government targets.
increasing energy requirements. Since we
released the first Coal in India report in 2015, India’s coal sector continues to face substantial
India has become the world’s second largest challenges, and although reforms have moved in
coal consumer. Further growth in thermal coal a positive direction, the pace of change remains
consumption is likely, despite India’s authorities slow. India’s complex bureaucracy, socioeconomic
indicating that no new coal-fired power stations issues, and financially-strained power sector are
— beyond the ones already under construction all impacting negatively on output. Approvals
and land acquisition remain the primary factors
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weighing on production growth, with other quality Australian coal), compatibility issues
issues — productivity, competition, investment, between Australian coal and India’s largely
transport and domestic pricing schemes — sub-critical coal-fired power generation fleet,
further compounding the challenges. The Indian and limited Indian investment in Australian
government will need to continue to pursue thermal coal mines (with the notable exception
reforms and policy changes to address remaining of Adani’s Carmichael coal mine in the Galilee
barriers to production growth. Basin in Queensland). Indian investment has the
potential to lift thermal coal exports by vertically
The outlook for India’s thermal coal imports is integrating coal mines overseas with power
finely balanced. With around 80 per cent of India’s plants in India, thereby reducing market risks.
thermal coal requirements satisfied domestically,
the future for India’s thermal coal imports depends There are opportunities for Australia to
on small movements in the balance of India’s lift thermal coal exports to India, although
future coal production and consumption. In the barriers will remain. The commencement of
short-term, imports are likely to remain high, as Adani’s 10 million tonne Carmichael mine could
domestic output falls short of usage. In the longer triple Australia’s thermal coal exports to India —
term, there are more uncertainties. It is possible although from a low base. The development of
to imagine a scenario where India’s imports lift other Indian-owned mines in Australia, and the
rapidly on the back of strong growth in energy prospect that Indonesia and South Africa may
demand, challenges integrating renewable not meet all of India’s thermal coal import needs,
generation into the electricity grid, and barriers could further boost Australian thermal coal exports
to increasing domestic coal production. But it is to India. India has also made changes to plant
also possible to see a scenario where imports efficiency and coal quality standards, which should
fall, due to lower than expected energy demand, be more favourable for Australian suppliers of
the rapid reduction of barriers to higher domestic high-energy, low-ash coal. There are also other
coal output, and a faster than expected uptake opportunities for Australia in India, particularly in
of renewables. We reach no firm conclusions the mining equipment, technology and services
in this report. Rather, we highlight the key (METS) sector. Australian METS companies are
drivers, current trajectory and main uncertainties well placed to assist with India’s desire to improve
likely to influence future developments. the productivity of domestic coal mines through
advanced technology.
The Indian government is aiming for
self-sufficiency in thermal coal, but faces India’s metallurgical coal demand and imports
considerable barriers to achieving this goal. are expected to grow, and the outlook is
Illustrative of these challenges are statements in characterised by fewer uncertainties. While
November 2014 by the Indian energy minister that our analysis is focused on thermal coal, we also
India would stop importing thermal coal within two consider metallurgical coal at various points in
or three years. While India’s thermal coal imports this report. The outlook for metallurgical coal
did fall back after peaking in 2014, they recovered in India is less uncertain than for thermal coal.
to near their previous levels in 2018. India has ambitious targets to increase its steel
production, and little in the way of domestic
Australia is currently not a significant supplier metallurgical coal resources. As such, India will
of thermal coal to India. In 2018, Australia likely need to import more metallurgical coal
exported just 5 million tonnes of thermal coal over the next few decades. For Australia — the
to India — 2.3 per cent of Australia’s thermal world’s largest metallurgical coal producer and the
coal exports, and just 4.5 per cent of India’s supplier of over 70 per cent of India’s metallurgical
thermal coal imports. There are a number of coal imports — growing Indian demand will
reasons for limited Australian thermal coal continue to represent a major opportunity.
exports to India. These include regulated
electricity prices in India (which make it difficult
for utilities to pay price premiums for higher
E X E C U T I V E S U M M A RY | v
vi | C O A L I N I N D I A 2019
vii
Contents
Foreword iii
Executive Summary iv
Glossary x
Chapter 1: India’s energy sector 1
1.1 India’s energy and electricity use 2

India’s energy consumption 2
Electricity consumption in India 4
1.2 Structure of India’s energy and electricity sectors 7

India’s energy sector 7
India’s electricity sector 8
India’s electricity challenges 10
1.3 Government policies and reforms 11

Economic policy 11
National energy policy 12
National electricity plan and electricity market reform 12
Climate change, renewables and air pollution 13
1.4 India’s coal sector 15

India’s coal supply 15
Coal imports 19
Coal consumption 20
Chapter 2: Outlook for coal in India 25
2.1 India’s energy mix 26
2.2 India’s coal consumption 29

Government policies 29
IEA World Energy Outlook 30
2.3 Coal-fired power capacity and generation 30

Coal-fired power capacity 31
Coal-fired power generation 33
Key factors influencing coal-fired power capacity and generation 34
2.4 India coal’s production 37

Outlook for India’s coal production 37
India’s coal production: challenges and recent reforms 38
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2.5 India’s coal imports 43
IEA World Energy Outlook 43
IEA Coal Market Report 43
Key factors influencing India’s thermal coal imports 44
Chapter 3: Implications for Australia 49
3.1 Australia’s coal exports to India 50

Metallurgical coal 50
Thermal coal 52
3.2 Australian thermal coal exports to India: opportunities and barriers 53

Australia’s METS sector 53
Price 54
Compatibility 57
Indian investment in Australia 59
List of tables
Table 1.1: Conversion equivalents between units of energy 3
Table 1.2: India’s installed electricity generation capacity, June 2019 6
Table 1.3: Key power providers in India 8
Table 1.4: India’s projected installed capacity 13
Table 2.1: Key IEA WEO assumptions for India 28
Table 2.2: Projected coal requirements in India’s National Electricity Plan 29
Table 2.3: Coal-fired power station status in India 31
Table 3.1: Australia’s metallurgical coal exports by destination (million tonnes) 51
Table 3.2: India’s metallurgical coal imports by destination (million tonnes) 51
Table 3.3: Australia’s thermal coal exports by destination (million tonnes) 52
Table 3.4: India’s thermal coal imports by destination (million tonnes) 53
Table 3.5: Investment in Australian thermal coal projects by Indian companies 59
ix
List of boxes
Box 1.1: Energy measurement 2
Box 1.2: India’s coal market structure 17
Box 2.1: IEA World Energy Outlook scenarios and assumptions 27
Box 2.2: Electricity technology costs in India 36
Box 3.1: Coal-fired electricity generation technologies 58
Glossary
AUSC Advanced ultra-supercritical (coal plant)
BNEF Bloomberg New Energy Finance
CAGR Compound average growth rate
CCS Carbon capture and storage
CEA Central Electricity Authority
CERC Central Electricity Regulatory Commission
CIL Coal India Limited
COP Conference of parties
CO2 Carbon dioxide
CPS Current Policies Scenario
CSP Concentrated solar power
DMO Domestic Market Obligation
DWT Deadweight tonnes
EU28 The 28 member states of the European Union
FDI Foreign direct investment
FOB Free on board. Seller clears export, buyer pays freight.
FSA Fuel-supply agreement
FYP Five-year plan
Gcal Gigacalorie
GDP Gross domestic product
GW Gigawatt
GWh Gigawatt hour
HELE High efficiency, low emissions
HHV Higher heating value
IEA International Energy Agency
IGCC Integrated gasification combined cycle
INDC Intended Nationally Determined Contribution
INR Indian Rupees
kcal Kilocalorie
kWh Kilowatt hour
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LCOE Levelised cost of electricity
VALCOE Value adjusted levelised cost of electricity
LNG Liquefied Natural Gas
MBtu Million British thermal units
METS Mining equipment, technology and services
MNRE Ministry of New and Renewable Energy
MOC Ministry of Coal
MOP Ministry of Power
MOPNG Ministry of Petroleum and Natural Gas
Mtce Million tonnes of coal equivalent
Mtoe Million tonnes of oil equivalent
MW Megawatt
NDC Nationally Determined Contribution
NEEPCO North Eastern Electric Power Corporation
NHPC National Hydroelectric Power Corporation
NITI National Institution for Transforming India
NPS New Policies Scenario
NTPC National Thermal Power Corporation
OECD Organisation for Economic Co-operation and Development
PCC Pulverised coal combustion
PPA Power Purchase Agreement. A contract between the power
generator (seller) and distribution company (buyer)
PSU Public sector undertaking
PV Photovoltaic
R&D Research and development
ROM Run of mine
SCCL Singareni Collieries Company Limited
SDS Sustainable Development Scenario
TJ Terajoule
TWh Terawatt hour
UHV Useful heating value
UMPP Ultra-mega power plant
UNFCC United Nations Framework Convention on Climate Change
USC Ultra-supercritical
WEO World Energy Outlook
WEPP Platt’s World Electric Power Plants database
xi
xii | C O A L I N I N D I A 2019
India’s
energy
sector
This chapter examines India’s energy sector, focusing on its
electricity and coal markets, and the broader governance
structures and policy targets that underpin those markets. India is
a large energy consumer and producer by world standards. While
its energy requirements have grown rapidly, per capita energy
use in India remains low. Coal has played a vital role in meeting
India’s energy needs, and India has become increasingly reliant on
imports as demand has continued to outstrip domestic production.
India’s energy sector is governed by a complex set of institutional

arrangements. Both central and state governments are heavily
involved in the energy sector, and policy reforms require a high
degree of co-ordination and cooperation between both levels
of government. As a result of this complexity, reforms to India’s
energy sector can be difficult, with flow-on impacts to the outlook
for coal. Energy policy in India aims to deliver energy affordability
and energy security (with an emphasis on self-sufficiency), while
also supporting economic growth and contributing to climate and
air pollution goals. In the electricity sector, India has announced
ambitious targets for renewable generation, but faces challenges
in achieving these targets.
INDIA’S ENERGY SECTOR | 1

1.1 India’s energy and
electricity use
India’s energy consumption in India’s energy demand: over the past two
decades, the country’s energy consumption has
India is the world’s seventh largest economy,
more than doubled. Today, India is the world’s
with the world’s second largest population.2 The
third largest energy consuming country after
twin pressures of rapid population and economic
China and the US (Figure 1.1).
growth have driven substantial increases
Figure 1.1: Total primary energy demand
Source: IEA (2018) World Energy Outlook, International Energy Agency
Box 1.1: Energy measurement
The following concepts are used extensively in discussions about energy, and assist in
understanding developments in world energy markets. In the context of this report, energy
use refers to primary energy — the use of fuels such as coal, oil and gas that have not been
transformed into another energy source (such as electricity or refined petroleum); imports
of refined petroleum and electricity (but not consumption of refined petroleum and electricity
produced domestically, because the energy is already captured prior to transformation); and use
of nuclear, hydro, wind and solar.
Fuels, such as coal, oil and gas, are measured for trading and monitoring processes that
produce or use them. These can be either physical units for solid fuels (tonnes or kilograms) or
volume units for liquids (cubic metres or litres). These units can be converted into energy units,
to facilitate the aggregation of different fuels in different physical states. Commonly used energy
units are joules, calories, British thermal units (Btu) million tonnes of oil equivalent (Mtoe), million
tonnes of coal equivalent (Mtce) and gigawatt hour (GWh). The conversion equivalents are
expressed in Table 1.1.
2 | C O A L I N I N D I A 2019
Table 1.1: Conversion equivalents between units of energy
To: TJ Gcal Mtoe Mtce MBtu GWh
From Multiply by:
Terajoule (TJ) 1 238.8 2.388 x 10-5 3.412 x 10-5 947.8 0.2778
Gigacalorie 4.1868 x 10-3 1 10-7 14-7 3.968 1.163 x 10-3
Mtoe 4.1868 x 104 107 1 1.428 3.968 x 107 11630
Mtce 2.9307 x 104 76 0.7 1 2.777 x 107 8141
Million Btu 1.0551 x 10-3 0.252 2.52 x 10-8 3.599 x 10-8 1 2.931 x 10-4
Gigawatt hour 3.6 860 8.6 x 10-5 1.228 x 10-4 3412 1
Source: IEA (2019) Unit converter
The conversion of a fuel from a physical or volume unit to an energy unit requires a conversion
factor that expresses the heat obtained from one unit of the fuel. This conversion factor is
referred to as its calorific value. The quality of fuels, and hence their calorific values, varies
across deposits and countries. The calorific value of coal is described in terms of kilocalories per
kilogram (kcal/kg).
This report employs both physical units (tonnes) and energy units (tonnes of coal equivalent, tce),
depending on the source used. To convert tonnes to tce, the calorific value of the coal must be
known. 1 tce is equivalent to 7 million kilocalories (kcal), or the net heat content of a tonne of coal
with energy content of 7,000 kcal/kg. For example 1 mtce with a calorific value of 6,000 kcal/kg is
equivalent to 1.17 million tonnes of 6,000 kcal/kg coal (1 * 7,000 kcal / 6,000 kcal/kg).
Electrical capacity is the maximum electricity output that can be generated at a plant under
certain conditions. Capacity is typically measured in multiples of watts. The choice of multiple
(kilo, mega, giga or tera) depends on the size of the plant.
Electricity generation and use is the amount of electricity produced or consumed over a certain
period of time. Generation and consumption are measured as a multiple of watt hours. Many
electricity plants do not operate at full capacity all the time; output is varied based on operating
conditions, input costs and requirements.
Source: IEA (2005) Energy Statistics Manual
India’s energy mix
The composition of India’s energy mix has natural gas, renewables and nuclear — have
shifted noticeably over the past few decades remained a relatively minor part of India’s energy
(Figure 1.2). The share of biomass (such as mix over the past few decades.
wood used in heating and cooking) and waste
in the energy mix has been declining. Coal has In 2016, coal accounted for 44 per cent of India’s
taken on an increasing role, although its share energy mix, followed by oil at 25 per cent, biofuels
has edged back since its 2014 peak. Oil’s share and waste at 22 per cent, natural gas at
has also picked up, driven by growing transport 5 per cent, renewables (including hydro, wind and
and petrochemicals demand. Other fuels — solar) at 2 per cent, and nuclear at 1 per cent.

Figure 1.2: India’s energy mix
Notes: renewables includes hydro and other renewables (wind, solar etc.). Electricity and heat from non-specified combustible
fuels are excluded for the purposes of the chart.
Source: IEA (2018) World Energy Balances
Electricity consumption in India

The power sector accounts for 40 per cent of Since the 2014 national elections, the Indian
India’s total primary energy demand, and has government has made access to electricity a key
been the largest contributor to growing energy policy priority. The Indian government launched
consumption in India since the turn of the the Saubhagya scheme in September 2017,
century.3 However, in recent years, electricity which is designed to provide free or low cost
demand growth has been slower than expected, electricity connections. In April 2018, the Indian
with economic and industrial production growth government announced it had achieved its goal of
lower than original expectations. As outlined in providing electricity to every village in India.5
Chapter 2, this slower than expected growth has
been a key contributing factor to the emergence Attention has now turned to providing all
of excess capacity in the power generation sector, households with electricity access, and India is
which has placed some Indian generators under aiming to achieve universal electricity access
financial pressure. by 2022.6 According to the latest data from the
International Energy Agency (IEA), almost
Much like total energy demand, increasing 168 million people in India were without access
electricity consumption has been underpinned by to electricity in 2017 (around 12.5 per cent of
both economic and population growth. Efforts to the population).7 India’s per person electricity
increase access to electricity have also supported use remains low compared with both advanced
growing electricity use. Around half a billion economies and other emerging economies
people have gained access to electricity in India (Figure 1.3).
since the year 2000.4
4 | C O A L I N I N D I A 2019
Figure 1.3: Electricity use and economic development, 2017
Source: IEA (2018) World Energy Outlook, World Bank (2019)
India has also made significant progress in primarily driven by coal-fired power generation
reducing power shortages, thanks to a significant capacity, and more recently, renewable generation
expansion in generation capacity and lower than (Figure 1.4). Over the past decade, coal
expected demand growth in recent years.8 While generation capacity has increased by 123 GW,
reliability of electricity supply has improved, it while renewable capacity (excluding large-scale
remains an ongoing challenge. India’s largest hydro) has increased by 64 GW. In June 2019,
survey of household energy access indicated that coal accounted for around 56 per cent of total
daily electricity supply was 16 hours in 2018, up installed capacity in India, followed by renewables
from a median of 12 hours in 2015.9 The political (excluding large-scale hydro) at 22 per cent,
imperative to provide affordable and reliable large-scale hydro at 13 per cent, gas at 7 per cent
power to Indian households is expected to shape and nuclear at 2 per cent (Table 1.2).11 Coal’s
reforms in the energy and electricity sectors share of India’s electricity generation is larger
moving forward.10 than its share of installed electricity capacity,
given it tends to run at a higher utilisation rate
To meet growing demand, India’s electricity than renewable generation.
generation capacity has more than doubled
over the past decade. The expansion has been

Figure 1.4: India’s installed electricity generation capacity
Notes: Installed capacity as at March each year. Hydro refers to large-scale hydro. Renewables include wind, solar, biomass,
and mini-hydro. In 2019, thermal coal includes a small amount of lignite.
Source: Central Electricity Authority (2019)
Table 1.2: India’s installed electricity generation capacity, June 2019
Generation type Capacity (GW) Share (%)
Thermal coal 194 54
Lignite 6 2
Total coal 201 56
Gas 25 7
Diesel 1 0
Total thermal 226 63
Small-scale hydro 5 1
Wind 36 10
Bio-power 9 3
Solar 29 8
Total renewables (ex large hydro) 79 22
Large-scale hydro 45 13
Nuclear 7 2
Total installed capacity 358 100
Source: Central Electricity Authority (2019)
6 | C O A L I N I N D I A 2019
1.2 Structure of India’s
energy and electricity
sectors
India’s energy sector
India’s energy sector is governed by a complex Energy (Figure 1.5). These ministries have
set of institutional arrangements. The Indian stakes in state-owned enterprises — known as
government is the principal agent in the energy Public Sector Undertakings (PSUs) — as well as
market, with responsibility for both setting energy statutory bodies and research institutions. The
policy and administering the public companies National Institution for Transforming India (NITI),
that produce energy. There are five major also known as NITI Aayog, is the premier policy
government ministries that are directly involved think tank of the Indian Government.12 NITI Aayog
in policy making, and which have responsibility designs strategy and long-term policies and
for energy provision: the Ministry of Power; programs for the Indian government, and
the Ministry of Coal; the Ministry of New and provides technical advice to both central and
Renewable Energy; the Ministry of Petroleum state governments.
and Natural Gas; and the Department of Atomic
Figure 1.5: Institutional structure of energy administration in India
Source: adapted from IEA (2012) Understanding energy challenges in India

India’s electricity sector
Government
tariffs charged by generating companies that
India’s electricity sector can be divided into are controlled by the central government
regulators, generation, transmission and and by independent power producers which
distribution (Figure 1.6). Both central and state deliver electricity to more than one state.15 The
governments play an important role in the power CERC also advises the central government
sector, which is a shared responsibility under on electricity tariff policy. State Electricity
the Indian Constitution. The central government Regulatory Commissions (SERCs) set
has a key role in the electricity sector through tariffs charged by state-owned utilities.
the Ministry of Power, which has responsibility
for planning and policy formulation in the sector, Generation
as well as for project approvals, monitoring
While government-owned utilities have historically
and implementation.13 The Central Electricity
dominated India’s generation sector, the role of
Authority (CEA) — a statutory body overseen by
private utilities has been growing. In June 2019,
the Ministry of Power — undertakes short and
government-owned utilities accounted for
long-term policy planning and coordination in the
54 per cent of India’s installed electricity
power sector, acting as an advisory body to the
generation capacity (29 per cent state
central government.
governments, 24 per cent central government).16
State governments also play an important role Private utilities accounted for 46 per cent of
in the Indian electricity sector, with installed capacity. While government-owned
state-owned utilities controlling a large share of utilities dominate thermal generation
the transmission and distribution network. State (coal and gas), private investors account for the
governments are responsible for the day-to-day vast majority of renewable energy generation.
operation and maintenance of their grids.14 Captive power plants (CPPs) are another feature
of India’s electricity market; these are power
Regulators plants owned by industry that generate electricity
for self-consumption.17 Table 1.3 shows the four
The Central Electricity Regulatory Commission
largest power companies in India.
(CERC) — a statutory body that plays a key
role in power sector regulation in India — sets
Table 1.3: Key power providers in India
Capacity (Megawatts) Ownership
National Thermal Power Corporation 55,000 Government
Tata Power 10,957 Private
Adani Power 10,440 Private
National Hydroelectric Power Corporation 7,071 Government
Source: Department of Industry, Innovation and Science (2015) Coal in India; NTPC(2019); NHPC (2019);Tata Power (2019); Adani
Power (2019).
8 | C O A L I N I N D I A 2019
Transmission
Transmission and distribution are dominated long-lived (frequently 25 years). In financial year
by state-owned companies, although they are 2017 (April 2016 to March 2017), 90 per cent
open to the private sector. State transmission of electricity was sold on PPAs, 6 per cent on
utilities (STUs) are responsible for inter-state bilateral contracts and only 4 per cent through
transmission. State distribution companies competitive wholesale markets and power
(also referred to as ‘DisComs’) generally buy exchanges.18 Distribution companies have faced
power from both public and private generators, mounting losses in recent years (discussed
for sale to final consumers. These purchases below), partly explaining why the sector has
are generally made through power purchase struggled to attract funding from private investors.
agreements (PPAs), which are generally
Figure 1.6: India’s electricity sector
Source: Adapted from IEA (2012) Understanding energy challenges in India

India’s transmission network consists of five Overcapacity in generation
regional grids: northern, eastern, southern, Despite the lack of competition in India’s electricity
western, and north eastern. In December 2013, sector, many coal-fired generators have come
these grids were synchronously connected to under financial pressure.22 Generation capacity
operate at one frequency, although the process has grown faster than electricity demand in
of fully integrating India’s electricity grids is recent years, driven primarily by an expansion in
ongoing.19 The Power Grid Corporation of India coal-fired power generation (as discussed in the
(POWERGRID) is mandated to establish the previous section). This expansion has led to over-
national electricity transmission network, or capacity in thermal (coal, gas etc.) generation.23
‘National Grid’, to operate the regional power Growing renewable energy generation has
grids and improve reliability, stability and security further added to pressure on coal generators,
of the transmission sector.20 lowering their utilisation rates and reducing their
profitability. Renewable energy in India has a de-
India’s electricity challenges facto ‘must run’ status in India — which requires
India faces a range of challenges across its any renewable power that is generated to be
electricity sector. These include inefficient state- accepted by the grid — and therefore displaces
owned generators, overcapacity in generation, thermal generation when available.24
bottlenecks in transmission, financial pressure
on distribution companies (due to transmission Transmission bottlenecks
and distribution losses and the underpricing of There are also substantial bottlenecks in the
electricity), and distortionary subsidies. These transmission system. While transmission
challenges have flow-on effects for the speed, constraints have been easing, a considerable
scale and nature of energy investment in India, amount of electricity is lost each year due to
and are fundamental to understanding the congestion in the electricity network. According
broader context in which the producers and to the World Bank, almost 4 per cent more
consumers of electricity and coal operate. electricity could have been transmitted in financial
year 2017 if it had not been for transmission
Inefficient state-owned generation congestion.25
companies
A key challenge in India’s electricity sector Financial pressure on distribution
is the inefficiency of state-owned generation companies
companies, which account for a large share Power distribution companies in India — the
of India’s generation mix21 (see the previous main buyers of power from the generation
section). A key driver of this inefficiency is a lack companies — are also under significant financial
of competition in India’s electricity market, which pressure. Transmission and distribution losses
reduces the incentives of power plants to control are a key factor. A combination of power theft,
costs. As discussed, the vast majority of electricity poor infrastructure, outdated equipment and
in India is sold under long-term PPAs, with very faulty metering led to the loss of over one fifth
little electricity sold through wholesale markets of electricity in transmission and distribution in
and power exchanges. In addition, there are high India in financial year 2016 — a much higher
barriers to entry for private generators seeking loss rate than elsewhere in the world. The Indian
to enter the market. State governments, for Government has launched several reforms aimed
instance, levy additional charges on consumers at reducing electricity losses during transmission
that purchase electricity from a party other than a and distribution, including the Restructured
state-distribution utility. Accelerated Power Development and Reforms
Program (R-ADRP) and the Integrated Power
Scheme (IPDS).
10 | C O A L I N I N D I A 2019
The underpricing of electricity by central and state At the retail level, the Indian government finances
electricity commissions has also contributed to the the underpricing of electricity for households
poor financial position of distribution companies. and farmers (who are the main beneficiaries of
As outlined in the previous section, electricity electricity price regulation) by making commercial
tariffs for end users are regulated in India and and industrial customers pay higher rates. The
are, on average, below the cost of supply in many use of subsidies creates distortions in the market,
states. As a result, many distribution companies and artificially low electricity prices do not send
are losing money on the electricity they supply.26 the appropriate signals for consumers to improve
Both central and state governments provide energy efficiency or alter their electricity use.
financial support for distribution companies to However, pricing reforms are difficult, due to
cover the losses of supplying power at low rates. the substantial social, economic and political
However, government subsidies are not always challenges of raising electricity prices. In short,
paid on time, and sometimes fall short of the distortions exist across multiple segments of
amount booked by distribution companies, adding India’s power generation sector. These distortions
to their financial problems. have flow-on implications to the coal sector in
India (see Chapter 2).
1.3 Government policies

and reforms
Economic policy
The Modi Government has instituted a number While the introduction of some of the Modi
of major economic reforms since taking office Government’s reforms (such as demonetisation)
in 2014. Major reforms in its first term included weighed on economic activity in the short-term,
a demonetisation policy (designed to reduce they will likely help bolster economic growth and
informal economy activity, increase tax revenue, support the Government’s financial position over
and prevent the financing of illegal activities), the longer-term. The Modi Government is aiming
the introduction of a goods and services tax, to make India into a US$5 trillion economy.27
and the delivery of public goods programs — in
While the global economy is battling strong
areas such as affordable housing, sanitation and
headwinds — including the escalation of trade
electricity. The Modi Government returned to
tensions between the US and China — the
power for a second five-year term in May
International Monetary Fund (IMF) expects India
2019, with a strong mandate to continue its
to be the fastest growing major economy in the
growth agenda.
world until 2023. India’s GDP grew by 7.1 per cent
The Modi Government has also continued to push in 2018, and growth is expected to remain strong
forward with the Make in India program over the next five years, averaging an annual
— an initiative designed to transform India into a growth rate of around 7.6 per cent.28
global manufacturing hub. The growth in India’s
manufacturing and industrial sectors will be a key
contributor to rising energy demand in the country.

National energy policy affordable prices would come into conflict with the
goal of sustainability and possibly energy security
India’s draft national energy policy was published
as well’. Box 2.1 outlines the costs of different
by the National Institution for Transforming India
types of generation in India in more detail.
(Niti Aayog) in July 2017. At the time of writing,
the final version of the national energy policy The details of India’s national energy plan related
had not been released.29 The draft national to coal are discussed in Chapter 2 of this report.
energy policy focuses on a short-term horizon (to
2022), and a medium-term horizon (through to National electricity plan and
2040), when the aim is to have India’s economy
electricity market reform
‘energy ready’. It identifies four key energy policy
objectives. The Central Electricity Authority (CEA) published
India’s most recent national electricity plan in
1. Access at affordable prices. This objective is January 2018.31 It envisages a massive expansion
described as being of the ‘utmost importance’ in electricity generation capacity over the next
given ‘poverty and deprivation’ in India. It aims decade (Table 1.4), led by renewable generation
to ensure universal access to ‘24x7 electricity (excluding large-scale hydro), which increases
by 2022’ and clean cooking fuel within a by 196 GW on present levels. Coal is the next
‘reasonable time’. In July 2019, the Indian largest contributor (37 GW), followed by
Government brought forward its target for large-scale hydro (18 GW) and nuclear
clean cooking fuel to 2022.30 (10 GW). Gas generation capacity remains largely
2. Improved security and self-sufficiency. unchanged from present levels.
The national energy policy notes that there
The expansion in coal-fired generation capacity
is ‘a strong case for reduced dependence on
is expected to be driven by a combination of
imports’, given the availability of domestic
capacity already under construction and additions
oil, coal and gas, but that the diversification
through new projects, which will offset retirements
of import sources can also enhance energy
of coal power stations. The national electricity
security.
plan notes that, other than capacity already under
3. Greater sustainability. This objective seeks construction, no additional coal-fired capacity will
to address the ‘catastrophic effects of climate be required before 2021–22, with new capacity
change and detrimental effects of fossil fuel expected to come online between 2022–23 and
usage of local air quality’ through increasing 2026–27.
energy efficiency and renewable energy.
4. Economic growth. The national energy policy

notes that energy policy must support rapid
economic growth by underpinning economic
activity across the economy, as well as support
economic activity in the energy sector.
The draft national energy plan states that there

are complementarities and tensions between
these four objectives. For example, on the one
hand, reducing fossil fuel consumption would
‘promote the twin goals of sustainability and
security’. However, as long as fossil fuels remain
the cheapest source of energy, ‘the goal of
12 | C O A L I N I N D I A 2019
Table 1.4: India’s projected installed capacity
Fuel type June 2019 2021–22 2026–27 2018–19 2021–22 2026–27

(actual) (projection) (projection) (share) (share) (share)
Unit GW GW GW % % %
Coal 201 217 238 56 45 38
Renewable 79 175 275 22 37 44
Hydro 45 51 63 13 11 10
Gas 25 26 26 7 5 4
Nuclear 7 10 17 2 2 3
Total 358 479 619 100 100 100
Notes: Hydro refers to large-scale hydro. Coal includes thermal and lignite. Diesel is not included. Installed capacity figures are
year ended March. According to the NEP, coal-fired capacity in 2017–18 was 192 GW and is expected to increase to 238 GW in
2026–27, driven by 48 GW of capacity already under construction and new capacity additions of 46 GW between 2022–23 and
2026–27, less retirements of 48 GW of capacity.
Source: Central Electricity Authority (2018) National Electricity Plan; Central Electricity Authority (2019) Monthly Reports
Executive Summaries
In the July 2019 Union Budget speech, the Indian Recently announced targets and policies
finance minister reaffirmed the government’s In mid-2018, the Indian Government announced
commitment to the ‘One Nation, One Grid’ model plans to increase renewable energy capacity to
for the electricity sector.32 One Nation, One Grid 227 GW by March 2022, a significantly more
involves the integration of India’s five regional ambitious target than the 175 GW set out in its NDC
grids, a plan that was first conceptualised in the and in the January 2018 National Electricity Plan.37
early 1990s, and one that remains ongoing.33
In January 2019, the Secretary of the Ministry of
Climate change, renewables and New and Renewable Energy announced plans to lift
air pollution installed renewable energy capacity (excluding
large-scale hydro) to 500 GW in 2028, up from
Nationally Determined Contribution 79 GW in June 2019.38 Solar is expected to drive
India’s Nationally Determined Contribution (NDC) the bulk of the expansion in renewable capacity. The
under the Paris Agreement includes a target to target is divided into 350 GW of solar, 140 GW of
reduce the emissions intensity of its GDP by wind and 10 GW of other technologies, and excludes
33-35 per cent from 2005 levels by 2030.34 India large-scale hydro.39
could meet this target by reducing the amount of
The target aligns most closely with the IEA’s
energy used per unit of GDP, or by reducing the
Sustainable Development Scenario (discussed
carbon content of the energy it uses. However,
below), which envisages almost 530 GW of installed
the nature of the target means that, even if it is
renewable capacity in 2030 (excluding hydro).
met, carbon emissions may continue to rise.
Achieving the target would likely see renewable
Under its NDC, India will aim to increase the installed capacity climb to around 60 per cent of
share of non-fossil fuel based capacity in the India’s total generation capacity, well in excess of the
electricity mix to over 40 per cent by 2030.35 In the 2040 target specified in India’s NDC. A target of
shorter term, India has set itself a target of 175 500 GW would represent a significant increase on the
GW of installed renewable energy capacity by projection from the January 2018 national electricity
2022 (excluding large-scale hydro): its 2022 target plan for 275 GW of installed renewable capacity in
is for 100 GW for solar, 60 GW of wind, 10 GW of 2026–27 (discussed in the previous section).
biomass and 5 GW of small-scale hydro.36
In July 2019, the Indian government committed Air pollution
$5 billion to develop small-scale solar in the In January 2019, India launched its National
agriculture sector, including 10 GW of Clean Air Program (NCAP), which aims to reduce
grid-connected solar plants on farmland and the fine particulate matter (PM2.5) and particulate
roll-out of 2.75 million solar water pumps.40 (PM10) air pollution by 20–30 per cent by 2030. In
India, exposure to PM2.5 contributed to 673,000
Challenges to the uptake of renewable deaths and the loss of 21.3 million years of
generation healthy life in 2017.44 The burning of coal is one
India will need to overcome significant challenges contributor to PM2.5 levels. According to the World
to achieve its capacity targets for renewable Bank, around 7.6 per cent of PM2.5 emissions
energy generation.41 Some of these challenges were attributable to power generation and
relate to cost. As discussed in Chapter 2 7.7 percent to industry coal combustion.45
(Box 2.1), renewable generation may, in some
circumstances, be cheaper than new coal Coal production tax
generation, but will struggle to outcompete In the 2010 financial year, India introduced the
existing coal power generation. Other challenges Clean Environment Cess46 – an environmental tax
are more technical. India, for example, does not on coal consumption. The tax was levied at 50
currently have sufficient transmission capacity rupees per tonne of coal, and was subsequently
or a sufficiently dynamic transmission system to increased to 100 rupees per tonne in the 2014
easily integrate large amounts of renewables into financial year, 200 rupees per tonne in 2015
the grid. and 400 rupees per tonne in 2016.47 With the
There are also a wide variety of political factors introduction of the GST in 2017, the tax on coal
to consider. The central government in India consumption was abolished, and a new cess on
cannot require the states to align their renewable coal production (GST compensation cess) was
purchase obligations with national targets, and put in its place at the same rate of 400 rupees per
how states respond to national targets varies tonne. India’s NDC specifies that ‘the coal cess
substantially.42 Recently, the renewable energy translates into a carbon tax equivalent’.48
industry has found itself under pressure from the
state government in Andhra Pradesh, which has
sought to cancel PPAs with wind-power projects,
and has asked renewable energy firms to reduce
prices on previously agreed contracts and cut
their grid contributions.43 Any efforts to reduce
coal consumption could also be resisted by coal-
producing regions, and would have significant
implications for railways, which are the largest
civilian employers in India.
India’s renewable energy targets are ambitious,

and it remains to be seen whether they can be
achieved. However, they do signal considerable
ambition in expanding renewable energy
generation on the part of the central government.
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1.4 India’s coal sector
India’s coal sector plays an important role in the The distribution of India’s coal reserves creates
country. From an energy security perspective, it a supply challenge for India. The bulk of its
is the country’s most abundant non-renewable coal reserves are geographically separated
fuel, and coal-fired power dominates electricity from its principal areas of consumption, and
generation. It also makes an important economic require substantial infrastructure networks for
contribution. Coal mining and power generation transportation from mine sites to generators
are two major industries in India, and together (Figure 2.10).
account for around a tenth of the country’s
industrial production, and directly employ around Quality
half a million people.49 The coal sector also
Coal quality varies substantially across India.
generates substantial additional employment
Compared to other internationally traded coals,
through the transport sector. Rail is the largest
Indian coals typically have lower energy content.
civilian employer in India, and the coal and rail
Indian coals also have high ash content and low
sectors are heavily interdependent through
sulphur content. The moisture content of Indian
cross-subsidies (see Chapter 2).
coal is variable, and is typically higher in coal
produced during the monsoon season. Over
India’s coal supply the last two decades, data suggests that there
has been a continuous decline in the quality
Reserves
of indigenously produced coals, with average
Coal is a key commodity for India from an calorific values falling and mineral-ash content
energy security perspective, because it is the increasing.51
country’s most abundant non-renewable energy
source. India has the world’s fifth largest proved To improve the combustion efficiency of India’s
recoverable reserves of coal, at an estimated coal-fired fleet, the quality of India’s coal can be
101 billion tonnes (Figure 1.7).50 Most of India’s improved either by blending domestic coal with
coal reserves are located in the east, with the higher quality imported coal, or washing domestic
states of Jharkhand, Odisha, Chhattisgarh and coal to reduce the impurities.
West Bengal accounting for most of total
proved reserves.
Figure 1.7: Proved reserves of coal at end 2018
Source: BP (2019) Statistical Review of World Energy

Production Production growth has recently rebounded,
India’s total coal production in the 2018–19 Indian with annual average growth accelerating to
financial year (April to March) was an estimated 5.5 per cent between 2014–15 and 2018–19.
730 million tonnes.52 Thermal coal accounted for In 2016, India overtook the US to become the
94 per cent of India’s domestic coal production, at world’s second largest producer of thermal coal
683 million tonnes in the same period. after China. Coal India has boosted production
by improving mechanisation and restructuring its
India’s thermal coal production increased more coal operations to improve efficiency, progressing
than six-fold between 1978–79 and 2009–10, in more projects through the complex approvals
response to rapid growth in coal consumption in process, and expanding existing operations.
the electricity generation sector (Figure 1.8).
Nevertheless, production still remains
Production growth slowed considerably after substantially lower than consumption, with the
2009–10, dropping from an annual average development of new greenfield coal mines in
growth rate of 6.0 per cent between 1978–79 India constrained by ongoing challenges with
and 2008–09, to 1.1 per cent between 2009–10 land acquisition, approvals processes, and
and 2013–14. Coal India — the state-owned inadequate transport infrastructure. The Indian
coal producer which accounts for over 80 per government will need to continue to pursue
cent of coal production (see Box 1.2) — was not reforms so that production can keep up with
able to meet its annual production targets, and growing power and industrial demand. However,
its inability to meet domestic requirements from the complex regulatory and institutional settings
the mid-2000s was one of the key challenges for India’s electricity and coal industries remain a
underpinning India’s energy policies. barrier to implementing these reforms
(discussed further in Chapter 2).
Figure 1.8: India’s thermal coal production and consumption
Note: Data is for the Indian financial (April to March)
Source: IEA (2018) Coal Information 2018, IHS (2019) India coal data tables, June 2019
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Box 1.2: India’s coal market structure
India’s coal sector is primarily government owned and coordinated. Coal production in India
has been controlled by the central government since the nationalisation of India’s coal mines
in the early 1970s. State governments approve mining licences and leases. The complex
institutional interactions make streamlining and reforming the approvals process challenging.
Figure 1.9: Structure of India’s coal sector
Source: IEA (2012), Ministry of Coal (2014)
Key government agencies include:
The Ministry of Coal: Responsible for the formulation of policies and strategies for coal
exploration, project approvals and other issues relating to the production, supply, distribution and
pricing of coal in India.53 The Ministry of Coal also sets production targets and other performance
indicators for Coal India through a Memorandum of Understanding (MoU).
The Coal Controller: A subordinate office of the Ministry of Coal which sets standards and
procedures for assessing coal quality, inspects coal quality, performs an arbitrator role in the event of
quality disputes, issues project approvals, collects excise duties and manages coal-related statistics.54
State governments: Approve mining licences and leases — which are required before the
Ministry of Coal grants final project approval — and sets royalty rates.
Coal production in India is dominated by Coal India Limited, with smaller producers making up the
balance. Key producers are:
• Coal India Limited (‘Coal India’): Formed as a holding company in 1975, incorporating
the state-owned companies that were created following the nationalisation of India’s
coal assets. The government owns a 75 per cent stake in Coal India, which continues
to dominate coal production in India, accounting for over 80 per cent of India’s total coal
production (Figure 1.10).

Coal India is targeting coal production of 660 million tonnes in the 2019–20 financial
year (April 2019 to March 2020), as laid out in the 2019 MoU with the Ministry of Coal.
The target represents an increase in production of 8.7 per cent on the previous year’s
production of 607 million tonnes, which came in just below the 2018–19 target of 610
million tonnes.
Of the coal that Coal India supplies to power plants, around 80 per cent is through long-
term fuel supply agreements (FSAs), and the rest is through e-auctions. FSA prices are
generally much lower than those obtained through e-auctions.56
• Singareni Collieries Company Limited (SCCL): Accounts for around 10 per cent
of India’s coal production, which is primarily supplied to southern India. The central
government has a 49 per cent interest in SSCL, with the state government of Andhra
Pradesh owning the other 51 per cent interest.
• Captive producers: Account for around 8 per cent of Indian production. The government
allows privately-owned end-users (such as electricity generators and industrial sectors
like cement production) to produce their own coal, through the auction of coal blocks. The
producers are referred to as ‘captive’, as the coal can only be used in approved activities,
and cannot be traded or exported, although any surplus production can be sold to Coal
India. Recent reforms have sought to relax these restrictions (see Chapter 2).
Figure 1.10: India’s thermal coal production by source
Notes: Production is for the Indian Financial Year, beginning in April
Source: IHS (2019) India coal data tables, July 2019.
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Coal imports Despite the ongoing government target of
self-sufficiency, the power and industrial sectors
Trends and policies have had to source thermal coal from the
Prior to 2003, India was either at, or close to, seaborne market, with domestic production
total self-sufficiency in thermal coal. A combination and infrastructure capacity failing to keep pace
of rapidly increasing consumption and stalling with consumption. Coal India has missed its
production underpinned a surge in India’s coal production target every year since 2011, although
imports from the mid-2000s onwards it came close in 2018–19. It is likely that achieving
(Figure 1.11). In 2013, India overtook Japan to self-sufficiency in thermal coal will remain on the
become the world’s second largest thermal coal Indian government’s agenda.57
importer, and has increasingly become a driving
force in international thermal coal markets. Import sources
Indonesia has been the primary source of
Imports declined for a couple of years beginning
thermal coal imports for India, driven by two key
2013–14, due to government efforts to boost
factors. The similar properties of Indonesian and
production combined with slowing industrial
Indian coal makes it easy to substitute Indonesian
production growth (which weighed on power
coal into India’s coal-fired power generation
demand). However imports bounced back in the
fleet, which has largely been designed for
subsequent years, as power demand rebounded.
low-energy, high-ash coal. The relatively low cost
India now relies on imports for around a fifth of its
of Indonesian coal is also appealing to Indian
thermal coal consumption.
buyers, who are relatively price sensitive.
Figure 1.11: India’s coal imports and thermal coal self-sufficiency
Notes: Import requirements are thermal coal imports as a share of total thermal coal consumption.
Source: IEA (2018) Coal Information 2018, IHS (2019) India coal data tables, June 2019, Indian Department of Commerce
(2019) Export Import Data Bank

Figure 1.12: India’s thermal coal imports by source
Notes: 2019 data is for January to May
Source: IHS (2019) India coal data tables, June 2019
India also imports smaller volumes of thermal coal Coal consumption has grown rapidly in India
from the US, Australia, South Africa, Colombia, over the last two decades, primarily driven by
and Russia (Figure 1.12). Imports from the US substantial growth in thermal coal use,
have increased in recent years, driven by a ban which increased at an annual average rate
on petroleum coke (or ‘petcoke’) use in the three of 6.3 per cent between 1978 and 2017
states surrounding New Delhi, to improve air (Figure 1.13). The power sector accounts for
quality. Petcoke is a refinery by-product used as almost 70 per cent of India’s coal consumption60
a cheaper substitute for coal, and is more carbon and thus remains central to the outlook for coal
and sulphur-intensive. As a result of the ban, consumption in India.
buyers replaced local petcoke with coal from the
US Northern Appalachia region — which has In more recent years, metallurgical coal
comparable costs on a per kilocalorie basis, but consumption has increased considerably, driven
lower sulphur content.58 by India’s rapidly expanding steel sector. The
2017 National Steel Policy61 contains an ambitious
plan for India’s steel capacity to reach 300 million
Coal consumption
tonnes by 2030. Other industrial sectors also use
India is the world’s second largest coal consumer, coal, including the cement industry and
behind China, with coal consumption reaching brick manufacturing.
942 million tonnes in 2017:
• thermal coal accounts for 86 per cent

(or 806 million tonnes) of India’s coal
consumption
• lignite (or brown coal) accounts for 5 per cent

(or 47 million tonnes)
• metallurgical coal accounts for 9 per cent

(or 89 million tonnes).59
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Figure 1.13: India’s coal consumption
Source: IEA (2018) Coal Information
Coal-fired power generation

India has invested heavily in new coal-fired estimated 5.7 GW of coal-fired power capacity
power generation over the past few decades, was added, the lowest rate of addition in more
in response to rapid growth in electricity than a decade. The sharp decline has been driven
consumption and shortfalls in energy supply. In by slowing investment and growing cancellations
mid-2019, installed coal-fired power capacity of coal-fired power projects, with the total stock
totalled over 200 GW.62 The rate of growth in of cancelled capacity reaching almost 300 GW.63
India’s coal-fired power generation accelerated in The surge in project cancellations is a result of
the mid-2000s, with installed capacity more than a glut in power supply and underutilisation of
doubling in just six years (Figure 1.14). existing coal-fired power capacity. Utilisation
rates for coal-fired power stations have steadily
The pace of growth in power-generation capacity declined over the last decade and remain low at
has declined sharply since 2012. In 2018, an around 60 per cent (Figure 1.15).
Figure 1.14: India’s installed coal-fired power capacity
Source Platts (2019) World Electric Power Plants database, March 2019.

Figure 1.15: Plant load factor at India’s coal-fired power stations
Notes: 2019 data point is for the year average to May. A plant load factor (PLF) is a measure of average capacity utilisation.
Source: IHS Markit (2019) India coal data tables, June 2019, based on Central Electricity Authority data.
Coal-fired power plants have remained Nevertheless, with a large share of India’s
underutilised because power producers have installed capacity relatively new, the existing fleet
struggled to sell all the electricity they produce has another two decades or so of operational
from existing plants, due to weaker than expected life remaining. Even with a subdued outlook for
electricity demand. India’s energy demand has new additions to capacity, coal consumption is
grown at a slower pace than original government expected to continue to grow in the short-term.
forecasts, with industrial activity growing more The outlook for India’s coal-fired power capacity
slowly than anticipated. Further, state-owned and coal consumption is discussed in Chapter 2.
distribution companies — which are the key
buyers of electricity — have struggled to increase
purchases amid large debts and financial losses,
due to pricing, theft and other issues (discussed
earlier in this chapter). An increase in renewable
capacity — which has more than doubled in
the past five years (see Figure 1.4) — and
improvements in energy efficiency have weighed
further on demand.64
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Outlook
for coal in
India
India is one of the world’s most rapidly expanding economies, and its
population is expected to surpass China’s in the late 2020s. As such,
India’s future energy requirements are expected to increase rapidly,
and the country looks set to drive much of the growth in world
energy demand.
The composition of India’s future energy mix — and thus the outlook
for coal in India — will depend on how India addresses the challenges
faced in its energy, electricity and coal sectors, including balancing
economic growth and improving access to energy while limiting air
pollution and carbon emissions.
This chapter examines the IEA’s 2018 World Energy Outlook (WEO)
and other projections for India’s future coal demand, and explores
prospects for further growth in India’s thermal coal imports.
O U T L O O K F O R C O A L I N I N D I A | 25
2.1 India’s energy mix
The IEA’s WEO provides three scenarios for demand, with oil and renewables the next largest
long-term energy use and the mix of sources that contributor. Under the Sustainable Development
will supply this energy. The scenarios are not a Scenario, where the goals of the Paris Agreement
forecast, but rather present pathways along which are met, renewables and gas would grow more
the world could travel if certain conditions are met. rapidly, with coal consumption largely unchanged
Box 2.1 describes the assumptions underpinning (Figure 2.1).
the IEA’s three WEO scenarios.
Under all three scenarios, coal (both thermal and
Under the IEA’s New Policies Scenario, India metallurgical) is expected to remain an important
would be the single largest source of new energy part of India’s energy mix (Figure 2.2). Under the
demand to 2040, with energy demand almost Current Policies Scenario, coal would increase
doubling. Even under the IEA’s Sustainable its share of India’s energy mix to 50 per cent over
Development Scenario — where energy demand the next two decades. Coal’s share would drift
growth is more subdued — India’s energy lower in the New Policies Scenario but would fall
requirements increase by over 50 per cent. more sharply under the Sustainable Development
India is expected to remain the world’s third Scenario. However, even under the Sustainable
largest energy consumer, but will rapidly close the Development Scenario — where growth in
gap on China and the US. renewable energy is strongest — coal would still
account for 28 per cent of India’s total energy
Under both the Current Policies Scenario and demand in 2040.
the New Policies Scenario, coal (both thermal
and metallurgical) account for the vast majority
of the incremental increase in Indian energy
Figure 2.1: Change in India’s energy use by source under different IEA scenarios
Notes: Renewables includes hydro, bioenergy and other renewables (wind, solar etc.)
Source: IEA (2018) World Energy Outlook 2018, International Energy Agency
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Figure 2.2: India’s energy mix under three different IEA scenarios
Notes: Renewables includes hydro, bioenergy and other renewables (wind, solar etc).
Box 2.1: IEA World Energy Outlook scenarios and assumptions
IEA WEO scenarios

The IEA WEO scenarios are primarily underpinned by different assumptions about the evolution of
government policies on energy and climate.
The central New Policies Scenario incorporates policies and measures that governments
have already put in place, and takes into account the effects of announced policies in official
targets and plans. This includes the Nationally Determined Contributions of the Paris Agreement,
although these may also be supplemented or superseded by more recent announcements.
The Current Policies Scenario considers the impact of only those policies and measures that
are firmly enshrined in legislation as of mid-2018, and shows the lower bound estimate of any
targeted range of outcomes. The Current Policies Scenario provides a conservative assessment
of where existing policies might lead the energy sector in the absence of additional impetus from
governments, and a reference case against which the impact of new policies can be measured.
The Sustainable Development Scenario starts from the objectives of the Sustainable
Development Goals of the United Nations, and then works backwards to assess what combination
of actions would deliver them. The objectives include:
• universal access to affordable, reliable and modern energy services by 2030
• a substantial reduction in air pollution
• effective action to combat climate change (aligned with the goal of the Paris Agreement to hold
the increase in the global average temperature to well below 2 degrees Celsius above
pre-industrial levels).
IEA WEO assumptions for India

The IEA makes a number of key assumptions for India in its scenarios. GDP growth is assumed
to average over 6.5 per cent a year to 2040, almost double the rate of average global growth, but
slightly lower than India’s 7.1 per cent growth in 2018.65 India’s population is assumed to grow by
250 million people, overtaking China to become the world’s most populous country. The
urbanisation rate is assumed to be almost half the population by 2040, up from around a
third today.
Key policies in India included in the Current Policies Scenario are:
• the National Mission on Enhanced Energy Efficiency
• the National Clean Energy Fund to promote clean energy technologies based on a levy
of 400 rupees (US$6) per tonne of coal
• the Make in India campaign to increase the share of manufacturing in the national economy.
Key policies in India included in the New Policies Scenario are:
• a Nationally Determined Contribution greenhouse gas target: reduce emissions intensity

of GDP to between 33 to 35 per cent below 2005 levels by 2030
• a Nationally Determined Contribution energy target: achieve about 40 per cent cumulative
installed capacity from non-fossil fuel sources by 2030, with the help of technology transfer
and low-cost international finance
• efforts to expedite environmental clearances and land acquisition for energy projects, and
• the opening of the coal, gas and oil sectors to private and foreign investors.
Table 2.1 sets out the IEA’s macroeconomic and technology cost assumptions for India.
Table 2.1: Key IEA WEO assumptions for India
Unit 2017 2040
Population Million 1,339 1,605
— Compound annual growth rate Per cent 1.0 (2017 to 2025) 0.8 (2017 to 2040)
— Urbanisation Per cent 34 46
Economic growth
— CAGR Per cent 7.8 (2017 to 2025) 6.5 (2017 to 2040)
Selected technology costs (VALCOE)
— Nuclear $/MWh 70 70
— Coal $/MWh 60 50
— Gas CCGT $/MWh 90 80
— Solar PV $/MWh 80 65
— Wind onshore $/MWh 65 55
— Wind offshore $/MWh 160 100
Source: IEA (2018) World Energy Outlook 2018, pp. 598, 605, International Energy Agency
28 | C O A L I N I N D I A 2019
2.2 India’s coal consumption
Government policies National electricity plan
Indian government policies and plans all The 2018 national electricity plan (see Chapter 1)
point to growing coal consumption — until models thermal coal requirements based on
at least the mid to late 2020s, and possibly projections of coal-fired power capacity. Thermal
beyond — to meet India’s growing energy coal demand for use in power generation is
needs. A common theme emerges in these projected to increase from 630 million tonnes in
plans, with the emergence of renewables and 2017–18 to 735 million tonnes in 2021–22, and to
storage flagged as a key uncertainty in the 877 million tonnes in 2026–27 (Table 2.2).
long-term outlook for coal consumption.
Coal Vision 2030
National energy policy In 2018, Coal India commissioned a study —
India’s 2017 draft national energy policy Coal Vision 2030 — to assess future demand
(see Chapter 1) expects coal-fired capacity to scenarios for the coal sector in India.67 The report
grow to between 330 and 441 GW by 2040, finds that coal demand will continue to grow,
translating into thermal coal demand of between until at least 2030, and perhaps beyond. The
1.1 and 1.4 billion tonnes.66 However, the draft projections for India’s thermal coal demand have
national energy policy also notes the challenges a wide range, with projected demand ranging
in projecting coal demand, with the role of coal in between 1.15 billion tonnes and
India’s energy future dependent on the evolution 1.75 million tonnes in 2030, reflecting the
of renewables and storage technologies, uncertainties underpinning the outlook for
especially in the longer term. thermal coal.
Table 2.2: Projected coal requirements in India’s National Electricity Plan
Unit 2017–18 2021–22 2026–27
Renewable capacity GW 69 175 275
Coal-fired power capacity GW 197 217 238
Coal-fired power generation TWh 958 1,119 1,336
Coal requirement Mt 584 685 827
Coastal power plant imports Mt 46 50 50
Total coal requirement Mt 630 735 877
Source: CEA (2018) National Electricity Plan, January 2018, Central Electricity Authority.
Figure 2.3: India’s coal demand under different IEA scenarios
IEA World Energy Outlook • in the New Policies Scenario, India’s coal
demand more than doubles between 2017 and
The role of policy and technology in determining
2040, increasing at an annual average rate of
India’s future coal consumption is reflected in the
3.4 per cent, to reach 868 mtoe.
IEA’s WEO projections. The IEA’s three scenarios
produce widely divergent outcomes for India’s • in the Current Policies Scenario, coal
coal consumption, highlighting both the dominant consumption rises at a more rapid pace of
role of coal in India’s power sector, 4.1 per cent to reach 1,009 mtoe in 2040.
and the fact that coal is one of the most • in the Sustainable Development Scenario,
emission-intensive fuels. Coal demand increases coal consumption continues to grow to
in all scenarios to 2025, but the pathways 2025 — although at a slower pace — before
quickly diverge (Figure 2.3): declining to 376 mtoe in 2040.
2.3 Coal-fired power

capacity and generation
Understanding the Indian power sector — which divergence in the outlook for coal-fired power
accounts for almost 70 per cent of India’s coal capacity and coal-fired power generation,
consumption68 — is fundamental to understanding although both will influence thermal coal
India’s future thermal coal demand. There is a consumption.
30 | C O A L I N I N D I A 2019
Coal-fired power capacity In its January 2018 national electricity plan
(see Chapter 1), the Central Electricity Authority
Project pipeline and government plans noted that beyond projects already under
Growth in Indian coal-fired power capacity has construction, no new coal-based capacity will
slowed substantially in recent years (see Chapter be required before 2021–22 to meet energy
1) and will likely remain subdued, especially in demand.69 Existing plants are currently running
the short term. There is almost 40 GW of capacity well below capacity, and there is considerable
currently under construction (Table 2.3). scope to ramp up capacity utilisation to meet
growing demand. 26 GW of new coal-fired power
Despite another 45 GW of capacity in the capacity is expected to come online between
planning phase, it is unlikely that much of this 2022–23 and 2026–27 to meet growing electricity
capacity will eventuate in the short term. demand (Table 2.2).
Table 2.3: Coal-fired power station status in India
Capacity (GW) Number of units
Operating 230.6 1,333
Construction 39.0 75
Planned 45.1 89
Cancelled/deferred 310.6 580
Closed 8.9 195
Notes: The estimate for installed capacity differs from the Central Electricity Authority (CEA) estimates of 201 GW as at June
2019, due to time-dependent variations in unit capacity and operating status, and the inclusion of captive (non-utility) power
capacity in the Platts World Electric Power Plants database. The most recent CEA estimates are provided in Chapter 1.
Source: Platts (2019) World Electric Power Plants database, March 2019
IEA World Energy Outlook indicates that this is unlikely. A large share of
The outlook for coal-fired power capacity diverges India’s installed capacity is relatively new — more
substantially in the IEA’s three scenarios. In than half of India’s current coal capacity was
the IEA’s New Policies Scenario, coal-fired installed in the last decade70 — and have many
power capacity increases at an annual average years of operational life remaining. Relatively
rate of 2.8 per cent to reach 421 GW in 2040, new coal-fired power capacity may need to close
up from 224 GW in 2017. In the Sustainable prematurely, which would further exacerbate
Development Scenario, coal-fired power capacity economic costs. The Indian government’s
declines sharply to 166 GW in 2040. Achieving 2018–19 annual economic survey warned against
the Sustainable Development Scenario would abruptly halting coal-fired power stations before
be challenging for India, and would require a the end of their useful lives, due to the risks it
significant shift in government policy and the presents to both the Indian banking sector and the
energy mix. stability of the electricity grid.71 The report notes
that, ‘considering the intermittency of renewable
If India’s future energy mix is to reflect the power supply, unless sufficient technological
Sustainable Development Scenario, coal breakthrough in energy storage happens in the
consumption would need to peak before 2030. near future, it is unlikely that thermal power can
However, the current fleet of coal-fired power be easily replaced as the main source of energy
plants in operation and under construction already for a growing economy such as India.’
Gas capacity would need to grow by a factor of Scenario projection. Renewables have surpassed
almost seven from its current capacity of expectations in India, with a faster than expected
29 GW to reach 197 GW in 2040 — more than uptake and a sharper than expected decline in
double than in the New Policies Scenario. India costs in recent years. The potential implications
has considerable reserves of gas, but faces of a growing share of renewables is discussed in
regulatory, social licence and cost challenges in further detail in the next section.
developing them; gas exploration has remained
low due to a lack of development incentives. BNEF’s New Energy Outlook
Using imported LNG in electricity generation may
In contrast to the IEA’s World Energy Outlook,
be difficult for India’s price-sensitive utilities.
which is largely driven by policy scenarios,
Nuclear capacity would also need to grow by a Bloomberg New Energy Finance’s (BNEF) New
factor of almost seven to reach 47 GW — beyond Energy Outlook projections emerge from
the already ambitious target of 39 GW — and least-cost optimisation modelling. This exercise
hydro capacity would need to more than double is driven by the cost of building different power
to reach 130 GW by 2040. The availability of generation technologies to meet projected peak
water and the distance of India’s hydro schemes and total demand.
from key demand centres — in addition to the
BNEF projections suggest that India’s coal-fired
socioeconomic impacts — are likely to remain
power capacity is expected to grow for at least
substantial barriers to growth in hydro capacity.
the next few decades, although at a slower pace
There would also need to be substantial and than renewables. Projected coal capacity falls to
sustained investment in renewable technologies somewhere between the IEA’s New Policies and
under the Sustainable Development Scenario. Sustainable Development scenarios (Figure 2.4).
Solar PV capacity would need to grow by a factor According to BNEF projections, coal capacity is
of 34 to reach 651 GW by 2040, and produce not expected to peak until 2043 at 289 GW.
1,125 TWh in 2040 — 50 per cent higher than the
The BNEF projections also indicate that solar and
New Policies Scenario projection. Wind would
wind will likely fall short of the levels needed in
need to grow by a factor of over nine to reach
the Sustainable Development Scenario; solar PV
512 GW, and produce 749 TWh of power in
capacity is projected to reach 586 GW, and wind
2040 — 50 per cent higher than the New Policies
capacity is projected to reach 226 GW in 2040.
Figure 2.4: India’s projected coal-fired power capacity
Notes: The IEA projections represent the range between the Sustainable Development and Current Policies Scenarios.
Source: IEA (2018) World Energy Outlook 2018, International Energy Agency; BNEF (2019) New Energy Outlook, Bloomberg
New Energy Finance.
32 | C O A L I N I N D I A 2019
Coal-fired power generation the main fuel in power generation (Figure 2.5).
Power demand is growing rapidly in India, and
There is a divergence in the outlook for capacity
coal is expected to continue to play a key role in
and generation in the short term. While coal-
the energy mix. Coal consumption for power is
fired power capacity growth will likely remain
likely to grow more slowly than generation — at
subdued in the near term — due to the factors
an annual average rate of 2.5 per cent — as a
outlined above — there is scope to substantially
result of higher efficiency in newer coal-fired
increase coal-fired power generation. Currently
power plants.
low utilisation rates and ongoing growth in energy
demand could increase coal-fired generation and
BNEF New Energy Outlook
thus coal consumption.
The expected growth in India’s coal-fired power
IEA World Energy Outlook generation is echoed in BNEF New Energy
Outlook projections (Figure 2.6). BNEF’s
In the IEA’s New Policies Scenario, electricity
projections show that coal-fired power generation
generation increases at an annual average rate of
could lie somewhere between the IEA’s New
4.6 per cent to 4,554 TWh in 2040. While coal’s
Policies Scenario and Sustainable Development
share of power generation declines from
Scenario projections, but will likely lie closer to
74 per cent in 2017 to 48 per cent in 2040,
the former. Sustained electricity demand growth
coal-fired electricity generation increases in
in India is expected to drive ongoing growth in
absolute terms — at an annual average rate of
coal-fired power generation up to the late 2030s,
2.7 per cent, to reach 2,195 TWh — and remains
before declining (Figure 2.7).
Figure 2.5: India’s electricity generation by source, and coal’s share of electricity generation in the New
Policy Scenario
Figure 2.6: India’s projected coal-fired power generation
Notes: The IEA projections represent the range between the Sustainable Development and Current Policies Scenarios.
Source: IEA (2018) World Energy Outlook 2018, International Energy Agency; BNEF (2019) New Energy Outlook, Bloomberg
New Energy Finance.
Figure 2.7: India’s power generation by technology
Source: BNEF (2019) New Energy Outlook
Key factors influencing coal-fired through India’s National Company Law Tribunal
power capacity and generation (NCLT).72 More recent estimates suggest that
the amount of financially-stressed capacity has
A number of persistent challenges and other climbed even higher, to 75 GW.73 As at March
factors are expected to influence future coal-fired 2019, around 311 GW of planned projects
power generation and new investment in had been cancelled or deferred (Table 2.3).
coal-fired power capacity in India.
There are several key factors that have
Financial stress contributed to the financial stress of coal-fired
power plants. Coal supply constraints are the
Coal-fired power plants are one of the largest
primary driver. Domestic coal shortages and a
categories of stressed assets in India. In 2018,
lack of guaranteed coal supplies have resulted
the Ministry of Power’s Standing Committee
in some plants buying more expensive coal on
on Energy reported that 34 coal-fired power
the open market, or have left plants unable to
stations, with a combined capacity of 40 GW
procure enough coal to produce power and thus
(around 21 per cent of capacity at the time),
generate income to service their debts.74 The
were financially stressed. The 34 projects have
financial challenges facing distribution companies
been caught up in insolvency proceedings
34 | C O A L I N I N D I A 2019
(see Chapter 1) have also impacted the coal-fired 2018 to fund CCS research with partner countries79
power sector, due to reduced purchases and — there have been no new government-funded
delayed payments to power producers. projects since 2015. CCS deployment in India has
faced substantial barriers to date. Key challenges
Overcapacity in thermal generation in India, include the capital and operational costs, the
coupled with the rapid expansion in renewables, inability to pass on the costs to distribution
has further added to financial pressure on companies, and a lack of reliable geological
coal power assets. However, issues around storage data. Despite the slow progress in CCS
overcapacity of coal-fired power will likely be deployment, India noted its interest in obtaining
resolved over the next decade as power demand technological and financial support in implementing
continues to grow. CCS in its latest submission to the United National
Framework Convention on Climate Change
The Indian Government implemented a series
(UNFCC).80
of policy measures in 2019 to alleviate the
financial stress of the coal-fired power sector, There are relatively stronger prospects for turning
which has revived an estimated 11 GW of India’s coal-fired fleet into a more flexible asset.
capacity in the year to date.75 These measures Coal-fired power plants will remain important
include debt-restructuring schemes, providing in India’s power sector as the share of variable
power procurement guarantees to projects, renewables grows, with neither gas nor hydro
and improve coal linkages (under which private expected to play a major role in providing
power producers will be provided with coal supply flexibility to the electricity system. India’s national
agreements through competitive e-auction bidding energy plan (see Chapter 1) notes that the
instead of by ministerial recommendations). flexible operation of coal-fired power plants has
the potential to create a synergy between coal
Nevertheless, India’s coal power assets are facing
and renewables, rather than a dichotomy. The
growing difficulties attracting capital and insurance
IEA’s 2018 WEO notes that there is a currently a
coverage due to the financial challenges facing
significant reserve margin in the system to allow
the sector.76 International financing for coal power
for flexibility, provided that the right regulations,
projects has largely stalled, and the public sector
mechanisms and incentives are in place. However
banks and lenders which fuelled India’s rapid
there are challenges to resolve. For example,
growth in coal capacity a decade ago are facing
some states in India have resisted the imposition of
financial stress due to the high levels of
central government regulations on coal-fired power
non-performing assets in the sector.77
plants, due to costs and technical difficulties.81
Technology
Renewables
The IEA’s 2018 WEO notes that technology
Over the last few years, renewables have
choices are vital to the outlook for coal in
surpassed expectations in India, with capacity
power generation. Two potential technological
rapidly expanding and costs falling dramatically
game changers are carbon capture and
(Box 2.2). The longer-term outlook for coal-fired
sequestration (CCS), and increasing the
power capacity depends heavily on the pace of
flexibility of coal-fired plants to complement
expansion in renewable generation capacity.
the variable nature of renewables.
The Indian government has set a goal of 500 GW
While India showed strong interest in CCS
of renewable capacity (excluding large-scale hydro)
through domestic research and development
by 2028. However, the target is largely considered
projects and international collaboration,
to be aspirational82, and India will need to overcome
momentum has recently slowed.78 Beyond small
significant challenges to achieve its capacity targets
scale government grants — released by the
for renewable energy generation (see Chapter 1).
Indian Ministry of Science and Technology in
Analysis by Brookings India83 highlights the scale would require a considerable increase in the
of the challenge. Reaching the target would cost of solar. India’s 500 GW target is well above
require 42 GW of capacity additions yearly. This the projected 333 GW of renewables capacity
is in stark contrast to the 12 GW of renewables in BNEF’s New Energy Outlook projections.
capacity that India added in 2017–18, and 9 BNEF’s analysis concludes that coal-fired power
GW added in 2018–19. If the 500 GW target is generation is unlikely to peak by 2030 due to
achieved, substantial deployment of grid-storage these challenges.
would be required to balance the system, which
Box 2.2: Electricity technology costs in India

The cost of renewable energy generation has fallen rapidly in recent years, and its price
relative to coal-fired power generation has been the subject of much discussion. The cost of
renewable generation compared to coal depends on the measure used, whether renewable
generation is accompanied by storage, and whether the focus is on new or existing coal-fired
power generation.
A key measure of the cost of different generation technologies is the levelised cost of electricity
(LCOE). According to a 2018 Brookings study, the LCOE of new renewable generation without
storage is lower than that of new coal-fired power generation in India.84 The low LCOE of
renewables without storage helps to explain their rapid uptake in India in recent times. However,
when the cost of new renewable generation is compared to existing coal-fired power generation,
the economics currently favour coal. The current economics suggests that renewable generation
may have difficulty displacing existing coal assets, particularly those located near coal mines.
However, as the penetration of renewables increases, the electricity system will increasingly
require storage solutions. Brookings’ study suggests that renewable generation with battery
storage may be competitive with new coal plants, but not with existing coal generation. When,
and how much, storage will be required to support increasing renewable penetration is a difficult
question, but it may be around 220 GW of capacity according to Brookings — slightly above
India’s 2022 target, but well below recent India’s recently announced 2028 target of 500 GW.
Overall, these findings suggest that renewable generation (with or without storage) could struggle
to displace existing coal power, and that growing storage requirements for renewables could
undermine any cost advantages they have to coal.
A key issue with the LCOE, however, is that the measure does not consider the system-level
costs of renewable generation.85 These system-level costs include the wear and tear on thermal
generators due to the need to vary output to accommodate renewable generation, and the
reduced efficiency of thermal generation operating at partial capacity as a result of increased
renewable penetration. LCOE also does not capture the value that flexible generation brings to
the electricity system. Peak demand in India is usually in the evening, which does not correspond
with peak solar output and may not match wind’s peak generation. The system-level costs of
renewable power generation are likely to become more pronounced as renewable generation
capacity in India rises.
The IEA has recently published a value-adjusted LCOE (VALCOE), which adjusts the LCOE
by incorporating information on the value of different technologies to the system (specifically,
energy, capacity and flexibility value). VALCOE provides a perspective that system planners and
36 | C O A L I N I N D I A 2019
policymakers (rather than investors) might take if they are seeking to minimise costs. Figure 2.8
shows the LCOE’s and value-adjusted LCOE’s in India for different generation technologies. In
2017, coal’s VALCOE was lowest of any technology in India, followed by onshore wind, nuclear,
solar PV and gas. Solar PV costs decline sharply on an LCOE basis between 2017 and 2040,
but only approach the cost of coal on a value-adjusted LCOE basis. Existing coal power plants, in
other words, make an important contribution to system flexibility and reliability.
Figure 2.8: LCOEs and value-adjusted LCOEs in India, 2017 and 2040
2.4 India’s coal production

Outlook for India’s coal changes to India’s carbon emission targets, slow
production industrial growth and energy demand growth, a
changing energy mix, environmental challenges
Government policies and plans and land acquisition difficulties.87
In order to meet the expected increase in India’s Despite an easing of the ambitious timeframe,
coal consumption and reduce reliance on imports, production will still need to grow at an annual
the Indian Government set a target in late 2014 average rate of 8.5 per cent to achieve the
to roughly double Coal India’s coal production 1 billion tonne target by 2025–26 — more than
to 1 billion tonnes by 2020, and to triple total double the average pace of growth in the last
domestic coal production to 1.5 billion tonnes over decade. While India’s production growth has
the same period. In 2018, Coal India’s timeframe accelerated in recent years (see Chapter 1),
for the 1 billion tonne target was pushed back to its coal sector continues to face substantial
2025–26, and the Indian government stated that it challenges. At the start of 2019, a third of Coal
was reviewing the 1.5 billion target in light of more India projects were behind schedule, primarily due
recent developments.86 Coal India cited a range to delays in the approvals process.88
of issues that contributed to the delay, including
IEA World Energy Outlook
In the IEA’s New Policy Scenario, India’s domestic targets. In the longer term, India’s coal production
coal production grows at an average annual rate is projected to increase at an annual average
of 5.0 per cent between 2017 and 2025, slower rate of 3.9 per cent to reach 955 mtce in
than required to achieve Indian government 2040 (Figure 2.9).
Figure 2.9: World coal production, and share of world coal production, IEA New Policies Scenario
Note: The IEA does not provide projections for coal production for the Sustainable Development or Current Policies Scenarios.
India’s coal production: challenges and recent reforms

While the Indian government has implemented increasing production.89 To develop a coal mine
and proposed a range of reforms in an attempt to in India, project proponents need to acquire
increase coal production, substantial challenges land, resettle or compensate local communities
remain. Approvals and land acquisition remain the in some cases, obtain multiple clearances and
primary factors weighing on production growth, environmental approvals, and develop supporting
with other issues — productivity, competition, infrastructure. The process requires input from
investment, transport and domestic pricing multiple agencies across various levels of
schemes — further compounding the challenges. government, reflecting the complex institutional
The Indian government will need to continue to structure (see Chapter 1). While the government
pursue reforms and policy changes to address the has undertaken structural reforms in the last
remaining barriers to production growth. five years to support the faster development of
coal mines90, challenges remain. A recent report
Approvals, coordination and planning commissioned by Coal India highlighted that
a simplification and streamlining of regulation,
Greenfield coal projects in India take an extensive
and reducing development risks were crucial to
amount of time and planning, and are subject to
achieving its targets.91
complex processes and bureaucracy. Coal India
has identified approvals as a key bottleneck in
38 | C O A L I N I N D I A 2019
Land acquisition
Land acquisition has been a substantial barrier The last attempt — in 2015 when the Modi
to improving coal supply in India. With coal Government attempted to pass a bill to reform
reserves, rail projects and prospective coal aspects of land acquisition law — failed to pass
plants in, or near, areas that are privately or the upper house. Land reforms will need to be
state owned, it can be challenging acquiring progressed for projects to advance at a faster pace.
land for new projects. With India’s economy
still largely agricultural-based, and 44 per cent Transport and infrastructure
of India’s workforce engaged in agriculture92, Logistics are another key constraint. The majority
new coal projects can affect homes and of India’s coal-fired generation capacity is located
livelihoods.93 India’s land laws are numerous, in the northern and western regions of the
complex, and sometimes conflicting, with laws country, while coal production is concentrated in
administered by various government ministries the eastern region (Figure 2.10). As such, most
and departments at the central and state level.94 of India’s domestically-produced coal needs to be
Land reforms have been challenging to date. transported long distances, adding to costs.
Figure 2.10: India’s coal reserves and coal-fired power capacity
Coal reserves Coal-fired power capacity
N/A or negligible
<5 Bt <5 GW
5–13 Bt 5–13 GW
13–20 Bt 13–20 GW
>20 Bt >20 GW
Note: Map shows India's territorial claims.

Source: Central Electricity Authority (2019), Ministry of Coal (2019), Department of Science and Technology (2019)
Survey of India
In the Indian 2018–19 financial year, almost 60 congestion, particularly on the east coast, and
per cent of coal was transported by rail95, and by inadequate rail infrastructure to transport coal
transport costs made up more than a third of the from ports to utilities.
total fuel costs of an average non-pithead power
plant in India.96 Inadequate rail infrastructure Productivity
and the cost of transportation have been key
Labour productivity in India’s coal mining
barriers to domestic supply growth. Key issues
sector has been steadily improving over the
include bottlenecks — with coal stranded at mines
last decade, with the average output per
because of inadequate rail lines and a shortage
employee doubling between 2010 and 2019
of railcars — and line congestion, with dedicated
(Figure 2.11).100 To improve productivity and
coal freight corridors not yet fully developed, and
remain competitive against imports, Coal
passenger services given priority over freight.
India increased mechanisation and the use
Coal freight rates are also very high, due to a of equipment, used natural attrition to cut its
cross-subsidy between passenger and freight workforce, and opened mines at an accelerated
users. Freight tariffs in India are among the pace. Nevertheless, labour productivity in
highest in the world on a purchasing power parity India’s coal sector remains low relative to other
basis, while its passenger tariffs are among coal producing countries, with around double
the lowest.97 The subsidy — which can distort the employees needed to produce the same
locational choices for coal-fired power plants, volume of coal as the world average.101 The
and favours plants close to mines and those on lower productivity is largely the result of the use
the coast which use imported coal — will be very of older technologies and production methods.
difficult to address given the political challenges of
Technology adoption in underground mining
raising passenger fares.
is particularly limited. In the 2018–19 financial
However, some progress has been made year, 95 per cent of Coal India’s production was
since the 2015 Coal in India report. The Indian from open cut mines (Figure 2.11).102 A push to
government has prioritised railway development, increase profitability at Coal India’s operations
with two major railway infrastructure projects resulted in the closure of underground operations,
completed in the 2018–19 Indian financial year, which are high cost due to the limited use of
and a further three projects underway.98 The advanced technology.103 With a large proportion
government has also made progress in allocating of India’s coal reserves located at depths
coal linkages (buying coal from mines close to greater than 300 metres104, increased adoption
power plants to save transport costs).99 of underground mining and the use of more
advanced technology could enhance access to its
While inadequate rail infrastructure has large coal reserves.
contributed to the increased reliance on imports,
imports also face transportation challenges.
Coal imports have also been affected by port
40 | C O A L I N I N D I A 2019
Figure 2.11: Coal India labour productivity and production methods
Source: Coal India (2019) Annual Report 2018–19
Coal pricing
Around 80 to 90 per cent of domestically The pricing mechanism for coal has undergone
produced coal in India is allocated through several reforms over the last two decades. Most
long-term agreements (called fuel supply recently, Coal India adopted a new pricing system
agreements, or FSAs) to end-users at notified in April 2018 to address some of these issues,
prices. The prices are set in consultation with but ongoing challenges remain.105 A recent World
the government, with the remaining coal sold via Bank report notes that, despite various pricing
e-auctions. The pricing system had been subject reforms, the price of coal for power generation
to frequent disagreements between suppliers has been kept low as a way to subsidise
and end-users on a number of issues. These electricity in India.106 Pricing reforms will be
include coal ‘grade-slippage’ — where there needed to both boost the quality and quantity of
is a difference between the stated dispatched coal produced. World Bank analysis showed that
and actual quality received of the coal — and a raising the coal price to the market-clearing price
disconnect between domestic and international could increase domestic coal production by an
prices (Figure 2.12). estimated 191 million tonnes a year.107
Figure 2.12: Domestic and international coal prices
Notes: India’s domestic prices are the average notified prices for the corresponding grade band. SSCL Singareni Collieries
Company Limited, CIL Coal India Limited, WCL Western Coalfields Limited (a subsidiary of Coal India)
Source: IHS (2019) Indian coal data tables, June 2019
Competition and private investment reforms to allow commercial mining stopped in

At present, coal production in India is effectively the lead up to the Indian general elections after
a monopoly, with production dominated by Coal a trade union threatened to strike at Coal India’s
India. In 1993, captive coal mining was allowed, operations to protest the government’s decision,
but this did not provide the production growth and has not gained momentum since.110
that was envisaged. In more recent years, the The effectiveness of the reforms in boosting
government has approved two major policy output will also depend on the response from
changes, representing the biggest reforms to private and foreign companies. An ongoing
India’s coal sector since its nationalisation in the perception of excessive bureaucracy, lengthy
1970s. The policy changes aim to boost output, approval processes and poor quality coal may
and improve productivity and coal quality in the continue to stifle interest. Commercial mining
sector, through facilitating greater competition will not solve the fundamental challenges — of
and private investment. The two policy changes coordination and planning, land acquisition and
approved by the Indian Cabinet were: obtaining approvals — that face India’s coal
• February 2018: Allow commercial coal mining, sector.111 Given the long lead times required for
by changing coal mining auction rules to allow the approvals process, commercial production
private companies to develop new mines and within the next five years is still highly uncertain.112
sell coal in the free market without price or
end-use restrictions.
• February 2019: Allow captive producers

to sell 25 per cent of their output in the
open market.108
Reforms to the coal sector have generally been

politically difficult and faced resistance from trade
unions in India, which have organised strikes and
sought the Supreme Court’s help to block policy
changes.109 Progress on implementing the latest
42 | C O A L I N I N D I A 2019
2.5 India’s coal imports
IEA World Energy Outlook rapidly growing steel sector and coal-fired power
generation requirements. In the New Policies
Under the IEA’s New Policies Scenario, India
Scenario, India’s share of world trade in coal is
overtakes China as the world’s largest coal
projected to increase from 4 per cent in 2000 to
importer by 2025, as total coal consumption
over a quarter in 2040 (Figure 2.13).
continues to outpace production growth.
Consumption will be driven by the country’s
Figure 2.13: IEA WEO New Policies Scenario world coal imports and share of world trade
Note: The IEA does not provide projections for coal production for the Sustainable Development or Current Policies Scenarios
IEA Coal Market Report

In contrast to the World Energy Outlook — which While the IEA’s 2018 forecast for India’s thermal
is largely policy and scenario focused — the coal demand was similar to the previous year, the
IEA’s 2018 Coal Market Report aims to forecast forecast for imports was revised from declining
the outlook for coal based on trade, demand imports in the 2017 forecast, to increasing
and supply models, and makes projections of imports in the 2018 forecast. The main factor
metallurgical and thermal coal imports. driving the revision was that, despite favourable
developments in India’s domestic coal sector,
The 2018 IEA Coal Market Report113 forecasts it continued to face substantial challenges and
India’s thermal coal imports to expand at an noticeably undershoot initial expectations. The
annual average rate of 2.2 per cent, from revision highlights the substantial uncertainties
119 mtce in 2017 to 135 mtce in 2023, with underpinning the outlook for India’s thermal
domestic production unable to keep pace with coal imports.
demand (Figure 2.14). Metallurgical coal
imports grow at a faster annual average rate of
7.2 per cent, to meet growing demand from the
rapidly expanding steel sector.
Figure 2.14: India’s forecast thermal coal imports, consumption and production
Source: IEA (2018) Coal 2018: Analysis and forecasts to 2023, International Energy Agency
Key factors influencing India’s thermal coal imports

Domestic production and consumption likely at a slower pace than ambitious government
balance targets. Substantial headwinds remain, and
India’s future thermal coal import demand will although reforms have moved in a positive
be primarily driven by the gap between demand direction, the pace of change remains slow, with
and domestic production. Some judgements can India’s complex bureaucracy, socioeconomic
be made about the trajectories of each but, as issues, and a financially-strained power sector
highlighted, there are substantial uncertainties all impacting.
underpinning the outlook for both consumption The key question is if, and to what extent,
and domestic production. These uncertainties production will continue to lag consumption
grow further out into the future. Even small growth, and thus drive import levels. As
changes to either could swing the pendulum highlighted in the IEA’s 2018 Coal Market Report,
on whether India’s thermal coal imports grow it is likely that production will not be able to keep
or shrink. pace with consumption growth in the next five
As discussed earlier in this chapter, India’s years, resulting in growth in India’s imports of
thermal coal consumption is likely to increase, at thermal coal in the short term. However, in the
least over the next decade — and potentially well longer term, the outlook for the scale — and
beyond — as energy demand continues to rise. even direction — of India’s thermal coal imports
Despite the impressive ramp up of renewables is more uncertain.
and ambitious targets for new renewable capacity, Beyond the balance between production and
increasing coal-fired power generation will likely consumption, there are a number of other factors
be required over the next decade. India’s thermal that will influence the level of India’s thermal coal
coal production is also expected to grow, but imports, and these are outlined below.
44 | C O A L I N I N D I A 2019
Import-dependent power plants The quality of coal can be improved either by:
A number of power plants have been designed • blending domestic coal with higher quality
and built to operate solely on the specifications of imported coal, or
imported coal, which typically has higher calorific
values and lower ash content than most domestic • washing domestic coal to reduce the ash
coals. Most of these plants employ supercritical content and other impurities.
technologies (see Box 3.1) and are located Despite supportive government policies, coal
in coastal locations in the western states of washing has not been adopted on a large scale
Maharashtra and Gujarat.114 These power plants by coal producers and end users. Coal India’s
have signed long-term contracts with overseas thermal coal washing capacity was 16 million
suppliers, or rely on captive mines acquired tonnes in 2018–19.117 Coal washing capacity did
overseas, largely in Indonesia. India’s national not grow as planned, due to delays in awarding
electricity plan notes that import-dependent power contracts to establish washeries by Coal India.118
plants will need to continue import around 50 There are also ongoing challenges implementing
million tonnes of coal out to 2026–27. coal washing due to the additional costs involved
and incorporating the process into the existing
However, it is possible that these plants could turn
coal supply and distribution system.119 In its latest
to domestic coal in the long term, if higher quality
annual report, Coal India stated plans for another
coal (in terms of higher calorific content and low
nine washeries with a total capacity of 63 million
ash content) is produced in sufficient quantities,
tonnes by the end of 2020, which could support
and if transportation bottlenecks are removed.115
the supply of higher quality domestic coal.120 In
the meantime, beneficiation (washing) capacity in
Quality and efficiency regulations India remains limited and capacity utilisation is low.
In recent years, Indian government policies have
favoured the use of higher quality coal to improve Due to a lack of domestic supply of high quality
plant efficiency and air quality116 (see Chapter 1). coal, there has been an increase in imports
The use of higher quality (high calorific value and to blend with domestic coal to meet quality
low ash) coals improves efficiency by reducing requirements. Early in 2019, India’s Power
the quantity of coal needed to generate the same Ministry — in collaboration with Coal India —
amount of electricity compared to lower quality sought to make power plants reduce import
coals, and consequently reduces air pollution volumes of high grade coal, with Coal India
and carbon emissions. There have been several increasing high grade volumes offered to power
policies that could support the use of higher plants and via e-auctions.
quality imported coal.
Coal-fired power plant efficiency standards
Coal quality requirements
India’s government released new power plant
A policy was introduced in 2016 which required emissions standards in 2015, which aimed
power plants with a capacity greater than to reduce air pollution. Existing plants were
100 MW and located more than 500 kilometres assigned mandatory efficiency targets, which
from mines — changed from a previous require retrofitting plants and the use of higher
benchmark of 700 kilometres — to be supplied quality coal. With almost all plants missing the
with coal with ash content no greater than original deadline, the compliance period for these
34 per cent. The obligation of meeting the target changes has been extended from 2017 to 2022.121
rests with the supplier of the coal. All new plants have also been mandated to use
supercritical technology, which will also support
the use of higher quality coal.
International and domestic coal prices Regulatory changes
To date, the relative cost of domestic and A number of recent regulatory changes could
imported coal has not been a major factor in result in higher imports. In 2019, India’s Central
influencing the volume of imports, because Electricity Regulatory Authority (CERC) passed
domestic coal prices are substantially lower two regulatory judgements affecting purchasing
than international prices, even after adjusting for power agreements (PPAs) between power
quality.122 As a result, imports have largely been producers and state distribution companies.125
used in India to fill the gap between consumption
and production, with domestic coal favoured In April 2019, the CERC allowed incremental fuel
where available. However, this situation depends costs associated with importing coal at several
on the evolution of domestic and international import-based power plants to be passed-through
prices, and as the draft Coal Vision 2030 report to end consumers. In May 2019, the CERC
highlights, the competitiveness of domestic coal approved a compensatory tariff for a domestic
may not hold forever.123 Two trends could see the coal-based project — to compensate for high cost
gap between the two narrow. imports and high cost e-auction coal — where
there were shortfalls in domestic coal availability.
• International prices could decline. While coal
prices, like other commodities, move in cycles, Both verdicts are considered to be landmark
the average long-term price could drift lower judgements that could see an increase in thermal
as demand weakens relative to supply. The coal imports by up to 10 million tonnes a year,
draft Coal Vision 2030 report notes that low by allowing greater flexibility in sourcing and
international prices could drive as much as recovering the costs of imported coal.126
200 million tonnes of coal demand towards
imported coal.124
• Domestic prices could increase. This could be

driven by higher mining costs, higher taxes
(with a review of the royalty rate currently
underway), and ongoing high freight costs.
Power plants closer to the coast are more
likely to favour imports due to high domestic
freight costs.
46 | C O A L I N I N D I A 2019
48 | C O A L I N I N D I A 2019
Implications
for Australia
Coal has been one of the key commodities that has underpinned Australia’s
latest mining boom. While the growth in Australia’s coal exports has
coincided with the substantial rise in India’s coal imports, only exports of
metallurgical coal to India have risen substantially — despite rapid growth
in India’s imports of thermal coal.
This chapter looks first at Australia’s metallurgical coal exports to India,

and then explores the trends and key barriers that have limited Australian
exports of thermal coal to India to date, and future opportunities for the
Australian mining and coal industry as some of these barriers fall away.
I M P L I C AT I O N S F O R A U S T R A L I A | 49
3.1 Australia’s coal
exports to India
Metallurgical coal
Australia’s metallurgical coal exports to India have grow (Figure 3.2). Even if India’s steel demand
grown substantially over the last few decades, follows a different, lower intensity trajectory than
driven by India’s rapidly expanding steel sector other major steel producing countries, India’s
(Figure 3.1). India is Australia’s largest export metallurgical coal demand could still increase by
market for metallurgical coal, accounting for a third between 2015 and 2035.128 Steel demand
a quarter of total metallurgical coal exports in in India will be driven by rapid urbanisation, rising
2018 (Table 3.1). In recent years, India has household incomes and growing industrial activity.
sought to diversify the sources of its metallurgical
coal imports, following supply disruptions in India’s 2017 National Steel Policy sets an
Queensland in the aftermath of Cyclone Debbie ambitious steel capacity target of 300 million
in 2016 (Table 3.2). Nevertheless, Australia is tonnes, and a consumption and production target
still the dominant supplier of metallurgical coal of 255 million tonnes by 2030.129 In 2018, India’s
to India, accounting for over 70 per cent of its crude steel production increased by 4.9 per cent
metallurgical coal imports. to reach 106 million tonnes, more than double
production levels a decade earlier. With limited
India’s low level of steel intensity — currently domestic reserves of metallurgical coal, India is
a third of the world average127 — reflects the expected to continue to import the vast majority of
potential for ongoing strong growth in steel its metallurgical coal needs to meet demand from
consumption and consequently metallurgical its growing steel sector. Australia remains
coal demand as India’s economy continues to well-positioned to meet India’s growing demand.
Figure 3.1: Australia’s coal exports to India
Source: ABS (2019) International Trade in Goods and Services, Australia, cat. no. 5368.0
50 | C O A L I N I N D I A 2019
Table 3.1: Australia’s metallurgical coal exports by destination (million tonnes)
2010 2011 2012 2013 2014 2015 2016 2017 2018
India 32.4 29.0 30.0 33.2 40.1 42.9 43.5 41.2 45.3
China 21.9 13.7 28.2 45.3 46.3 36.4 38.9 41.5 39.6
Japan 48.0 40.7 38.5 41.7 42.0 41.0 42.3 35.8 35.8
South Korea 17.4 16.2 15.8 17.0 20.4 21.5 19.5 17.8 17.8
Taiwan 8.2 7.8 8.0 9.1 9.4 9.3 9.7 8.5 10.0
Rest of world 31.1 25.2 24.2 23.6 28.2 35.1 35.4 27.9 30.3
Total metallurgical coal 159.0 132.7 144.6 170.0 186.4 186.1 189.2 172.7 178.9
India’s share (per cent) 20.4 21.8 20.8 19.5 21.5 23.1 23.0 23.9 25.3
Table 3.2: India’s metallurgical coal imports by destination (million tonnes)
2010 2011 2012 2013 2014 2015 2016 2017 2018
Australia 15.9 25.7 27.5 29.8 37.5 39.0 36.5 35.8 36.9
United States 1.5 2.8 3.3 2.7 1.6 1.2 1.1 3.3 4.1
Canada 0.0 0.2 0.9 1.2 1.9 1.4 2.3 3.3 4.3
Mozambique 0.0 0.0 0.9 1.0 1.4 1.9 0.9 2.4 2.2
Rest of world 2.1 3.0 3.0 2.2 1.3 1.2 0.8 2.3 4.2
Total metallurgical
19.5 31.8 35.6 36.9 43.7 44.6 41.6 47.0 51.8
coal imports
Australia’s share
81.9 80.8 77.3 80.8 85.8 87.5 87.7 76.1 71.2
(per cent)
Notes: Data is for the Indian financial year beginning in April of each specified year. Data for Australia’s coal exports to India does
not align with India’s imports from Australia due to differences in the time periods, delays in shipping, and differences in customs
classifications.
Source: Indian Department of Commerce (2019) Export Import Data Bank
Figure 3.2: Steel consumption intensity, 1980 to 2017
Notes: PPP is Purchasing Power Parity
Source: World Steel Association (2019) Steel Statistical Yearbook; Bloomberg (2019) IMF
Thermal coal
In contrast to metallurgical coal, Australia is not exports in 2018 (Table 3.3). Indonesia has met
a significant supplier of thermal coal to India, most of India’s import growth, with Australia
despite India’s rapid growth in thermal coal accounting for just 4.8 per cent of Indian’s thermal
imports over the last decade. India accounted coal imports in 2018–19 (Table 3.4).
for just 2.3 per cent of Australia’s thermal coal
Table 3.3: Australia’s thermal coal exports by destination (million tonnes)
2010 2011 2012 2013 2014 2015 2016 2017 2018
Japan 69.8 65.4 75.2 82.3 77.7 84.7 79.6 81.7 81.0
China 15.3 20.3 34.7 42.7 47.1 35.0 36.4 42.0 49.8
South Korea 26.2 29.6 30.1 32.8 34.6 38.1 31.6 31.0 30.1
Taiwan 20.5 19.1 16.4 18.0 20.5 20.7 26.4 23.2 22.5
India 0.4 1.2 2.1 1.7 6.7 5.3 4.8 3.1 4.8
Rest of world 9.8 12.5 12.9 11.0 14.5 18.4 23.1 19.4 19.5
Total thermal coal 142.1 148.1 171.5 188.4 201.0 202.2 201.9 200.3 207.7
India’s share (per cent) 0.3 0.8 1.2 0.9 3.3 2.6 2.4 1.6 2.3
52 | C O A L I N I N D I A 2019
Table 3.4: India’s thermal coal imports by destination (million tonnes)
2010 2011 2012 2013 2014 2015 2016 2017 2018
Indonesia 49.0 77.2 103.0 120.5 140.5 115.8 90.8 94.6 112.0
South Africa 20.2 18.9 22.0 20.4 33.3 37.3 34.6 38.7 31.6
United States 0.2 0.8 1.5 1.2 1.2 2.1 2.9 8.8 10.3
Australia 0.2 1.2 2.3 1.7 7.1 5.8 4.5 3.6 8.3
Rest of world 4.8 0.1 0.5 2.0 2.4 3.9 5.3 5.6 11.0
Total thermal coal imports 74.4 98.3 129.4 145.9 184.6 165.0 138.1 151.3 173.2
Australia’s share 0.2 1.2 1.8 1.2 3.9 3.5 3.3 2.4 4.8
Notes: Data is for the Indian financial year beginning in April of each specified year. Data for Australia’s coal exports to India does
not align with India’s imports from Australia due to differences in the time periods, delays in shipping, and differences in customs
classifications.
Source: IHS (2019) Indian coal data tables, June 2019
3.2 Australian thermal

coal exports to India:
opportunities and barriers
The 2015 Coal in India report identified three key equipment, technology and services (METS)
factors that have limited Australian thermal coal sector has, and will continue to benefit from
exports to India: price, compatibility, and Indian growing coal production in India.
investment in Australian mines. These factors
have remained barriers to growth in Australian Australia’s METS sector
thermal coal exports to India to date.
Regardless of the trajectory that India’s thermal
However, there is potential for India to become coal imports take, the Australian METS sector
a growing market for Australia’s thermal coal as will benefit from growing coal production in India.
some of these barriers are reduced, and if India The India Economic Strategy highlights that India
continues to import large volumes of thermal coal. is one of the most important future markets for
The potential commissioning of Indian owned Australian METS companies.130 Both state and
coal projects in Australia, growing compatibility privately-owned coal mines in India are seeking
between India’s new coal-fired power plants and to lift productivity and production through effective
Australian thermal coal, and the potential for mine planning, more efficient equipment, and
Indonesia and South Africa to divert supply from meet global safety and work standards. India’s
export markets to domestic use, could all open desire to improve the productivity of domestic
up opportunities for growth in Australian exports coal mines through advanced technology
of thermal coal to India. Outside of thermal presents a considerable opportunity for Australia’s
coal trade opportunities, the Australian mining METS sector.
As a recognised global leader in METS, Australian Price
companies have a competitive edge as India
Australian thermal coal prices and freight costs
grows and seeks to modernise and upgrade the
have typically been higher than other major
technology employed in its coal sector, particularly
exporting countries, particularly Indonesia and
in the coal value chain and the creation of
South Africa, due to the shorter distances they
beneficiation (washing) capacity.
need to travel (Figure 3.3).
India is currently host to more than 40 Australian
As a result, the cost of Australia’s higher quality,
METS companies, many with a longstanding
more expensive thermal coal has generally
presence in the country.131 For example,
exceeded the level that India’s power
SIMTARS works with leading India’s state-
utilities — which are subject to regulated prices
owned coal producers, CIL and SCCL, and has
(see Chapter 1) — could profitably pay. India’s
collaborated in numerous executive training
coal importers have primarily sourced supplies
programs. It has recently secured orders to
from low-cost producers in Indonesia, which
supply, among other equipment, India’s first
supply lower energy content coal. In 2018,
virtual reality mine theatre to the Indian Institute
74 per cent of India’s thermal coal imports had a
of Technology-Indian School of Mines. Other
calorific value of 5,000kcal/kg NAR or lower. In
examples include Mine Excellence (drilling and
contrast, all of Australia’s thermal coal exports in
blasting software technology), Ground Probe
2018 had a calorific value of 5,000kcal/kg NAR or
(advanced hardware and software solutions)
higher (Figure 3.4).
and Valley Longwall International (supplies
and maintains specialist mining equipment and Despite recent policy and regulation changes,
services). Orica-owned Indian Explosives Pvt India’s power utilities are expected to remain
Ltd operates a production facility in Jharkhand financially constrained and consequently relatively
and Nagpur, and is one of the largest providers price sensitive in the years to come, restricting
of commercial explosives and blasting systems their ability to purchase more expensive and
in the country. Cooee has recently sold-in its better quality Australian coal. Thus, Australian
dust suppression products and Immersive coal will likely continue to be less attractive for
Technologies is setting up simulators for trucks Indian buyers.
and excavators.
Figure 3.3: Average freight rates to India in 2018
Notes: Freight rates for Australia to India is for metallurgical coal, due to an absence of data for Australian thermal
coal freight to India.
Source: Platts (2019) Steel Analyzer; IHS Markit (2019) India coal data, June 2019
54 | C O A L I N I N D I A 2019
Figure 3.4: Imports and exports by coal quality, India, Indonesia and Australia
Notes: Calorific values are in terms of kcal/kg Net as Received (NAR)
Source: IHS Markit (2019) Global coal imports and exports outlook by quality, July 2019
Outlook for thermal coal exports from Indonesia and South Africa
Thermal coal exports from Indonesia and South thermal coal import needs, this could improve the
Africa may be more constrained in the future, with prospects for exports of Australian thermal coal
the possibility of either country diverting more exports to India, particularly for low to mid-energy
coal to domestic markets. If Indonesia and South coal (Figure 3.5).
Africa are unable to meet all of India’s future
Figure 3.5: Estimated delivered costs of thermal coal to India, 2018
Notes: 170 million tonnes of supply from countries with no available estimates for coal freight costs to India has been excluded
from the cost curve. Average import price is based on the import unit value for thermal coal in 2018.
Source: Department of Industry, Innovation and Science (2019) estimates, based on data from Indian Government trade data,
AME Group, Platts Steel Analyzer, and IHS Markit
In particular, Indonesia’s coal exports are in the domestic market at capped prices, will likely
expected to decline in the longer term. The IEA’s remain a feature of Indonesia’s coal market for
Coal Market report forecasts Indonesia’s thermal years to come. The DMO could be even more
coal exports to decline at an annual average rate restrictive by 2030 if domestic coal-fired power
of 3.6 per cent between 2019 and 2023.132 Under stations are facing shortages.
the IEA’s 2018 WEO New Policies Scenario,
Indonesia’s coal exports could decline at an Under the IEA WEO New Policies Scenario,
annual average rate of 2.2 per cent between South Africa’s thermal coal exports grow at an
2025 and 2040 (Figure 3.6).133 annual average rate of 1.1 per cent between 2017
and 2040. However, this outlook is underpinned
The key driver of the projected decline in by considerable risks. South Africa’s coal sector
Indonesia’s thermal coal exports is an expected has faced infrastructure bottlenecks and subdued
increase in domestic consumption of thermal mining investment. The South African government
coal, driven by a strong increase in coal-fired has also occasionally mandated that thermal coal
power generation. Restrictive government policies be redirected to the domestic market. Eskom,
may also affect future exports, although they the national electricity utility, has recently been
have had little effect to date. The Indonesian experiencing severe coal shortages. While
government currently applies quotas to national the South African government is expected to
coal production at capped levels, to both reserve improve the investment environment by changing
coal for future use and to stabilise seaborne regulations, addressing the ongoing problems at
prices for Indonesian coal. The domestic market Eskom, and boosting rail capacity, it remains to
obligation (DMO), under which Indonesian be seen whether these measures will translate to
producers are obliged to sell a share of production higher production.134
Figure 3.6: IEA World Energy Outlook New Policies Scenario coal exports
56 | C O A L I N I N D I A 2019
Compatibility
Much of India’s coal-fired power generation However, India’s investment in new generating
fleet employs subcritical technology capacity has a greater share of generators
(see Box 3.1), for which Australian coal that employ supercritical technologies
— with high energy content — will remain (Figure 3.7). Of the coal-fired power capacity
unsuitable for use. The specifications of the currently under construction, 34 GW or
lower cost coal from Indonesia are closer to 88 per cent of it employs supercritical technology
that of Indian coal, and are more compatible or higher. The new power plants will provide
with the engineering requirements of power better thermal efficiencies and lower carbon
generators in India. The higher energy content emissions per gigawatt hour of electricity
and proportion of volatile matter in Australian produced, and their implementation has been
produced coal makes it unsuitable for many supported by efficiency requirements for future
older subcritical generators in India which are coal-fired power plants. Electricity output from
not designed to operate at higher temperatures. these generators could be optimised by using
higher energy content and lower ash coal than
most India’s domestic mines currently produce.
Figure 3.7: India’s coal-fired electricity capacity by technology
Source: Platts (2019) World Electric Power Plant database, March 2019.
Box 3.1: Coal-fired electricity generation technologies
Coal-fired power accounted for around a third of world electricity generation in 2017.135 The
technology is attractive because it is reliable, provides secure supply, and has relatively low fuel
costs and competitive capital and operating costs.136 However, coal-fired generation also presents
challenges in terms of air pollution and CO2 emissions.137 The different technologies used for
coal-fired power generation have markedly different efficiencies, costs, and pollution outcomes
(Figure 3.8).
Pulverised Coal Combustion (PCC) is the most common coal-fired technology deployed worldwide.
There are a number of PCC technologies being used that have markedly different efficiencies,
costs and pollution outcomes. The efficiency of a plant refers to the electricity produced for a given
heat input. In coal-fired power plants, this depends on the temperature and pressure of the steam
generated in the boiler during combustion. The efficiency of a plant increases as both temperature
and pressure are increased.
Subcritical technologies are the most common type of coal-fired plant. They have the lowest
efficiency (around 30 per cent) of the available technologies. However, subcritical plants generally
have low capital costs, which supports their large-scale uptake.
Supercritical technologies use less coal and generate less CO2 than subcritical plants, and
achieve efficiencies of around 40 per cent. The capital costs of supercritical plants are higher than for
subcritical plants because they use materials with a greater heat tolerance in the boiler.
Ultra-supercritical and advanced ultra-supercritical plants operate at efficiencies between

45–50 per cent. The capital cost of these plants is high because they use advanced materials
(with high nickel content) in the boiler. They use less coal and emit less CO2 than supercritical plants.
Plants that utilise supercritical technologies and above require higher energy coal with low ash
content to operate optimally.
Figure 3.8: Effect of different technologies on coal use and carbon emissions
Notes: Based on an 800 MW power plant operating at a capacity factor of 80 per cent and generating 6 TWh a year. Emissions
are relative to a subcritical plant. i.e. A supercritical plant generates 13 per cent less CO2, an ultra-supercritical plant generates
19 per cent less CO2 etc.
Source: IEA Clean Coal Centre (2014)
58 | C O A L I N I N D I A 2019
Table 3.5: Investment in Australian thermal coal projects by Indian companies
Project Company Capacity Status Investment Approvals
10–27 mtpa Mining Lease granted, EIS approved with

Carmichael Adani Committed $2 billion
(Stage 1) conditions. Royalty agreement still to be finalised.
GVK $10.8 billion Mining lease application still under

Alpha Coal 30 mtpa Feasibility
Hancock (mine rail) assessment. EIS approved with conditions.
Kevin’s GVK Mining Lease application still under

30 mtpa Feasibility $6 billion
Corner Hancock assessment. EIS approved with conditions.
Notes: All three projects have received the Commonwealth Minister for the Environment’s approval, subject to conditions; mtpa million
tonnes per annum; EIS Environmental Impact Statement.
Source: AME Group (2019), Queensland Department of State Development, Manufacturing, Infrastructure and Planning (2019
Indian investment in Australia Adani’s Carmichael project is the most advanced

in the project pipeline, and could triple Australia’s
The limited investment by Indian companies in
thermal coal imports to India — although from
Australian thermal coal mines to date — beyond
a low base of 5 million tonnes currently. The
Adani’s Carmichael project — has been another
Carmichael project was scaled down from original
factor that has limited Australian thermal coal
plans for a 60 million tonne mine and a near-
exports to India. In contrast, India has long
400 kilometre rail project after it was unable to
invested in coal mines in Indonesia, which have
source financing. The project now has a smaller
provided power generators with a reliable source
proposed capacity of 10 to 27 million tonnes, and
of coal. Ownership of assets reduces exposure to
a 200 kilometre rail line to Aurizon’s Newlands rail
price and supply risks compared with buying on
infrastructure, for which it still needs to negotiate
the open market. These are crucial considerations
access. The project is intended to be vertically
for electricity companies, which require reliable
integrated with Adani’s power operations in India.
sources of fuel.
The other two projects are owned by GVK
A key supporting factor that could drive up
Hancock, a partnership between an Indian
Australian exports of thermal coal to India is the
conglomerate, GVK Power and Infrastructure,
development of Indian owned mines. Coal India
and an Australian mining company, Hancock
has plans to invest in overseas metallurgical coal
Prospecting. GVK Hancock was the first company
and high-grade, low-ash thermal coal projects
to propose a Galilee Basin mine in 2008. The
for import into India, either through equity
Alpha Coal project is a proposed 30 million
participation in working mines — on a production-
tonne a year open-cut thermal coal mine with
sharing basis — or through the opening of new
the potential to expand underground operations
mines. In particular, Coal India has recently
in the future. The project also includes proposed
identified coal assets in Australia, for which it is
rail infrastructure to the Abbot Point port, owned
interested in acquiring equity.138
by Adani. The rail would also be used by GVK
There has been substantial interest from Indian Hancock’s other adjacent project, Kevin’s Corner,
companies in developing thermal coal projects in a proposed 30 million tonne a year open-cut and
the Galilee Basin in Queensland. There are three underground thermal coal mine.
Indian-owned coal projects in the investment
As with all mining projects, there remain a range
pipeline: Adani’s Carmichael mine, and GVK
of regulatory, financial, technical, public relations
Hancock’s Alpha Coal and Kevin’s Corner mines
and commodity price risks that, if realised,
(Table 3.5). If these projects eventuate, most of
could result in delays, scope changes and cost
the coal produced is expected to be destined
overruns, and affect the commercial viability of
for export markets, and could drive substantial
the projects.
growth in Australian thermal coal exports to India.
Endnotes
Foreword
1. Department of Industry and Science (2015) Coal in India 2015, K Penney and I Cronshaw,
Department of Industry and Science, https://www.industry.gov.au/sites/g/files/net3906/f/June%20
2018/document/pdf/coal-in-india.pdf
Chapter 1
2. While India was the world’s seventh largest economy in 2018, it is expected to become the
world’s fifth largest economy in 2019, according to the IMF (2019) World Economic Outlook
Database, https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/index.aspx
3. IEA (2018) World Economic Outlook 2018, International Energy Agency, Paris
4. Murphy B and Daly H, Commentary: Electricity in energy village in India, IEA Newsroom, 1 June
2018, https://www.iea.org/newsroom/news/2018/june/commentary-electricity-in-every-village-in-
india.html
5. Ibid.
6. The National Institution for Transforming India (NITI) Aayog and the Institute of Energy
Economics (IEE), Japan (2017) Energizing India: A Joint Project Report of NITI Aayog and IEEJ,
https://www.niti.gov.in/writereaddata/files/Energising-India.pdf
7. IEA (2018) World Economic Outlook 2018, International Energy Agency, Paris.
8. Zhang F (2019) In the Dark. How much do power sector distortions cost South Asia?, The
World Bank, South Asia Development Forum, https://openknowledge.worldbank.org/bitstream/
handle/10986/30923/9781464811548.pdf
9. Jain A, Tripathi S, Mani S, Patnaik S, Shahidi T, and Ganesan K (2018) Access to Clean Cooking
Energy and Electricity: Survey of States 2018, Council on Energy, Environment and Water,
https://www.ceew.in/publications/access-clean-cooking-energy-and-electricity
10. Varghese P (2018) An Indian Economic Strategy to 2035. Navigating from potential to delivery,
report commissioned by Australian Government, https://dfat.gov.au/geo/india/ies/pdf/dfat-an-
india-economic-strategy-to-2035.pdf
11. Historically, India has not classified large-scale hydro (those over 25 MW) as renewable energy,
but in March 2019 reclassified large-scale hydro projects as a renewable energy source. In this
report, we mostly split out large-scale hydro from other renewables because Indian government
document and targets typically preserve this split, and because large-scale hydro by itself
accounts for a large share of installed capacity.
12. National Institution for Transforming India (NITI) Aayog (2019) Overview,
http://164.100.94.191/content/overview
13. Government India Ministry of Power (2019), About Us, https://powermin.nic.in/
14. Varghese P (2018) An Indian economic strategy to 2035. Navigating from potential to delivery,
report commissioned by Department of Foreign Affairs and Trade, Canberra,
https://dfat.gov.au/geo/india/ies/pdf/dfat-an-india-economic-strategy-to-2035.pdf
60 | C O A L I N I N D I A 2019
15. IEA (2012) Understanding energy challenges in India: Policy, players and issues, International
Energy Agency, Paris.
16. Central Electricity Authority (2019) All India Installed Capacity (In MW) Of Power Stations, CEA
Reports, http://cea.nic.in/reports/monthly/installedcapacity/2019/installed_capacity-06.pdf
18. Zhang F (2019) In the Dark. How much do power sector distortions cost South Asia?, The World
Bank, South Asia Development Forum,
https://openknowledge.worldbank.org/bitstream/handle/10986/30923/9781464811548.pdf
19. Ibid.
21. Zhang F (2019) In the Dark. How much do power sector distortions cost South Asia?,
The World Bank, South Asia Development Forum,
22. Tongia R and Gross S (2019) Coal in India: Adjusting to transition, The Cross-Brookings Initiative
on Energy and Climate Paper Series, Brookings India.
23. KPMG (2017) Transition of the energy sector in India, https://assets.kpmg/content/dam/kpmg/in/

pdf/2017/11/Transition-of-the-energy-sector-in-India.pdf
24. Tongia R (2018) RE ‘versus’ coal in India, Policy Brief, Brookings India,
https://www.brookings.edu/wp-content/uploads/2018/10/Renewable-Energy-
%E2%80%9Cversus%E2%80%9D-coal-in-India.pdf
25. Zhang F (2019) In the Dark. How much do power sector distortions cost South Asia?, The World
26. Tongia R and Gross S (2019) Coal in India: Adjusting to transition, The Cross-Brookings Initiative
on Energy and Climate Paper Series, Brookings India.
27. Union Budget (2019) https://www.indiabudget.gov.in/
28. International Monetary Fund (2019) World Economic Outlook, Still Sluggish Global Growth,
World Economic Outlook Report, July 2019 Update,
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29. Niti Aayog (2017) Draft National Energy Policy, Government of India,
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30. BBC (2019) India budget 2019, BBC News, 5 July 2019,
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31. CEA (2018) National Electricity Plan, Central Electricity Authority,

http://www.cea.nic.in/reports/committee/nep/nep_jan_2018.pdf
32. Union Budget (2018) https://www.indiabudget.gov.in/budgetspeech.php
33. Power grid corporation of India (2019) One Nation-One Grid,

https://www.powergridindia.com/one-nation-one-grid
61
34. Government of India (2015) India’s Intended Nationally Determined Contribution. Working
towards climate justice, submission to United Nations Climate Change, https://www4.unfccc.int/
sites/submissions/INDC/Published%20Documents/India/1/INDIA%20INDC%20TO%20UNFCCC.pdf
35. Ibid.
36. CEA (2018) National Electricity Plan, Central Electricity Authority, p. 6, http://www.cea.nic.
in/reports/committee/nep/nep_jan_2018.pdf ; Government of India (2015) India’s Intended
Nationally Determined Contribution. Working towards climate justice, submission to United
Nations Climate Change, https://www4.unfccc.int/sites/submissions/INDC/Published%20
Documents/India/1/INDIA%20INDC%20TO%20UNFCCC.pdf ; The 15 GW target for other
generation (biomass and small-scale hydro) is higher than the target of 10 GW announced in the
2028 target of 500 GW.
37. Saluja N and Singh S (2018) Renewable energy target now 227 GW, will need $50 billion more
in investments, Economic Times, 5 June 2018, https://economictimes.indiatimes.com/industry/
energy/power/india-will-add-225-gw-renewable-energy-project-capacity-by-2022-r-k-singh/
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38. Saurab H (2019) India Plans 40 Gigawatts of Solar & Wind Auctions Every Year Till 2028, Clean
Technica, 14 January 2019, https://cleantechnica.com/2019/01/14/india-plans-40-gigawatts-of-
solar-wind-auctions-every-year-till-2028/ ; Kumar A (2019) India to bid out 500 GW renewable
energy capacity by 2028, Energyworld.com, 7 January 2019, https://energy.economictimes.
indiatimes.com/news/renewable/india-to-bid-out-500-gw-renewable-energy-capacity-
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39. Saurab H (2019) India Plans 40 Gigawatts of Solar & Wind Auctions Every Year Till 2028, Clean
Technica, 14 January 2019, https://cleantechnica.com/2019/01/14/india-plans-40-gigawatts-of-
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42. Ibid.
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serious repercussions, The Hindu, 2 August 2019, https://www.thehindubusinessline.com/
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46. In the Indian taxation system, a cess is a fee levied to raise funds for a specific purpose.
47. Zhang F (2019) In the dark: How much do power sector distortions cost South Asia?,
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62 | C O A L I N I N D I A 2019
48. International Institute for Sustainable Development (2019) The evolution of the Clean Energy
Cess on coal production in India,
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Stakeholders_Consultation_27012018.pdf
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business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-
2019-full-report.pdf. According to the Government of India’s Ministry of Coal, India’s proved coal
reserves are estimated at 148.8 billion tonnes.
51. IEA (2018) World Energy Outlook 2018, p. 236, International Energy Agency, Paris.
52. Government of India, Ministry of Coal (2019) Coal statistics: Production and supplies, June
2019, https://www.coal.nic.in/content/production-and-supplies
53. Government of India, Ministry of Coal (2014) Functions and responsibilities,

https://www.coal.nic.in/content/functions-and-responsibilities
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http://www.coalcontroller.gov.in/pages/display/5-functionsresponsibilities
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58. IHS Markit, US NAPP selling fast overseas, amid India petcoke ban fears, 29 November 2017.
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60. IEA (2018) World Energy Outlook 2018, International Energy Agency, Paris.
61. Ministry of Steel (2017) National Steel Policy 2017,

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63. Platts (2019) World Electric Power Plants database, March 2019.
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powers-pace-slows-in-india-as-glut-leaves-plants-unused/articleshow/62332558.cms
63
Chapter 2
65. IMF (2019) World Economic Outlook April 2019. Growth Slowdown, Precarious Recovery, IMF,
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66. NITI Aayog (2017) Draft National Energy Policy, Government of India,
https://www.niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.pdf
67. Coal India Limited (2018) Coal Vision 2030 Stakeholders’ consultation, https://www.coalindia.
in/DesktopModules/DocumentList/documents/Coal_Vision_2030_document_for_Coal_Sector_
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69. Central Electricity Authority (2018) National Electricity Plan, Central Electricity Authority,
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70. Platts (2019) World Electric Power Plants database, March 2019.
71. Government of India (2019) Economic Survey 2018-19, Volume 1, p. 175,

https://www.indiabudget.gov.in/economicsurvey/doc/vol1chapter/echap09_vol1.pdf
72. Jai S (2018) A parking lot for stressed power assets that have no takers, 12 September 2018,
Business Standard, https://www.business-standard.com/article/economy-policy/pariwartan-a-
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73. Worrall L et al (2019) India’s energy transition: Stranded coal power assets, workers and energy
subsidies, April 2019, International Institute for Sustainable Development, https://www.iisd.org/
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74. Ibid.
75. IHS Markit (2019) Coal Insight: Recent regulatory measures to de-stress coal power plants, 23
July 2019.
76. Russel C (2019) Coal going from winner to loser in India’s energy future, Reuters, 20 February
2019, https://www.reuters.com/article/us-column-russell-coal-india/coal-going-from-winner-to-
loser-in-indias-energy-future-russell-idUSKCN1Q90OP.
77. Tongia R and Gross S (2019) Coal in India: Adjusting to transition, Brookings India..
78. Nakano J and Ladislaw S (2019) A tale of three coal markets, Centre for Strategic and
International Studies, https://www.csis.org/analysis/tale-three-coal-markets
79. Ministry of Science and Technology (2019) Funding opportunity announcement in carbon capture
innovation challenge, http://www.dst.gov.in/sites/default/files/1.%20IC%233%20advertisement_0.pdf.
80. Government of India (2019) Second biennial update report to the United National Framework
Convention on Climate Change, December 2018.
81. IEA (2018) World Energy Outlook 2018, p. 230, International Energy Agency, Paris.
82. Varadhan S (2019) India plans to add 500 GW renewable energy by 2030: government, Reuters,
25 June 2019, https://www.reuters.com/article/us-india-renewables-idUSKCN1TQ1R9
83. Ali S and Tongia R (2019) The future of Indian electricity supply: Scenarios of coal use by 2030,
Brookings India, https://www.brookings.edu/research/the-future-of-indian-electricity-supply-
scenarios-of-coal-use-by-2030/
64 | C O A L I N I N D I A 2019
84. Tongia R and Gross S (2018) Working to turn ambition into reality. The politics and economics of
India’s turn to renewable power, Brookings,
https://www.brookings.edu/research/working-to-turn-ambition-into-reality/
85. Tongia R and Gross S (2018) Working to turn ambition into reality. The politics and economics of
India’s turn to renewable power, Brookings, https://www.brookings.edu/research/working-to-turn-
ambition-into-reality/; Tongia R (2018) RE “versus” coal in India – A false framing as both have
a role to play, Policy Brief, Brookings, https://www.brookings.edu/wp-content/uploads/2018/10/
Renewable-Energy-%E2%80%9Cversus%E2%80%9D-coal-in-India.pdf
86. Arora B (2019) Government may revise 1 billion tonne coal production target set for 2020,
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87. Ministry of Coal (2019) Minutes of Quarterly Project Review, January 2019,
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88. Ibid.
89. Ministry of Coal (2018) Coal Vision 2030 Stakeholders’ Consultation, https://www.coalindia.in/
90. Dutta S (2019) 52 coal mines opened in 5 years to fuel power drive, 23 January 2019, Times of
India, https://timesofindia.indiatimes.com/india/government-opened-52-coal-mines-to-fuel-pm-
narendra-modis-electrification-drive/articleshow/67646776.cms
91. Ministry of Coal (2018) Coal Vision 203 Stakeholders’ Consultation, https://www.coalindia.in/
92. International Labour Organisation (2018) ILO database, accessed through World Bank
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93. EIA (2016) International Energy Outlook 2016, US Energy Information Administration,
https://www.eia.gov/outlooks/ieo/pdf/0484(2016).pdf
94. Centre for Policy Research (2019) Understanding Land Conflict in India and Suggestions for
Reform, Centre for Policy Research News, 26 June 2019, https://www.cprindia.org/news/7922
95. IHS Markit (2019) India Coal Market Briefing Q2 2019.
96. BNEF (2019) New Energy Outlook, Bloomberg New Energy Finance.
97. Zhang F (2019) In the dark: How much do power sector distortions cost South Asia, The World
98. Coal India Limited (2019) Annual report and accounts 2018–19, Coal India Limited.
101. Spencer T et al (2018) Coal Transition in India, November 2018, The Energy and Resources
Institute, https://www.teriin.org/sites/default/files/2018-12/Coal-Transition-in-India.pdf
65
103. Roychowdhury I (2019 CIL shuts underground mining with Centre push to convert all mines
profitable, Financial Express, 26 April 2019, https://www.financialexpress.com/market/cil-shuts-
underground-mining-with-centre-push-to-convert-all-mines-profitable/1559373/
104. IEA (2012) Understanding Energy Challenges in India: Policy, player and issues, International
105. Sengupta D (2018) Coal India to adopt more transparent pricing system, The Economic Times,
25 March 2018, https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/
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106. Zhang F (2019) In the dark: How much do power sector distortions cost South Asia, The World
107. Ibid.
108. Ministry of Coal (2018) Government of India Press Information Bureau, 20 February 2018,
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commercial-coal-mining
111. Sehgal A and Tongia R (2018) Commercial coal mining in India: A possible but not
irrefutable game changer, 1 March 2018, Brookings,
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114. Cornot-Gandolphe S (2016) Indian steam coal imports: The great equation, The Oxford Institute
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Steam-Coal-Imports-The-Great-Equation-CL-3.pdf?v=6cc98ba2045f
115. Ibid.
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https://www.coal.nic.in/sites/upload_files/coal/files/coalupload/AnnualReport1819.pdf
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66 | C O A L I N I N D I A 2019
122. Zhang F (2019) In the dark: How much do power sector distortions cost South Asia,
World Bank, South Asia Development Forum,
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for Energy Studies, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/03/Indian-
Steam-Coal-Imports-The-Great-Equation-CL-3.pdf?v=6cc98ba2045f
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https://www.coalindia.in/DesktopModules/DocumentList/documents/Coal_Vision_2030_
document_for_Coal_Sector_Stakeholders_Consultation_27012018.pdf
125. IHS Markit (2019) Coal Insight: Recent regulatory measures to de-stress coal power plants,
23 July 2019.
126. Ibid.
Chapter 3
127. World Steel Association (2018) Steel Statistical Yearbook,
https://www.worldsteel.org/en/dam/jcr:e5a8eda5-4b46-4892-856b-00908b5ab492/SSY_2018.pdf
128. Department of Industry, Innovation and Science (2017) Resources and Energy Quarterly,
September 2017.
129. World Steel Association (2019) Monthly crude steel production, World Steel Association.
130. Varghese P (2018) An Indian economic strategy to 2035. Navigating from potential to delivery,
report commissioned by Department of Foreign Affairs and Trade, Canberra.
131. AusTrade (2019) Personal communication, 2 August 2019.
135. IEA World Energy Outlook 2018, International Energy Agency, Paris.
136. Cziesla, Bewerunge & Senzel (2009) State of the Art ultra-supercritical steam power plant under
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We examine the latest developments David Turvey

Chapter 1: India’s energy sector 1

1.1 India’s energy and electricity use 2

1.2 Structure of India’s energy and electricity sectors 7

1.3 Government policies and reforms 11

1.4 India’s coal sector 15

Chapter 2: Outlook for coal in India 25

2.1 India’s energy mix 26

2.2 India’s coal consumption 29

2.3 Coal-fired power capacity and generation 30

2.4 India coal’s production 37

Chapter 3: Implications for Australia 49

3.1 Australia’s coal exports to India 50

3.2 Australian thermal coal exports to India: opportunities and barriers 53

Table 1.2: India’s installed electricity generation capacity, June 2019 6

Table 1.3: Key power providers in India 8

Table 1.4: India’s projected installed capacity 13

Table 2.1: Key IEA WEO assumptions for India 28

Table 2.2: Projected coal requirements in India’s National Electricity Plan 29

Table 2.3: Coal-fired power station status in India 31

Table 3.1: Australia’s metallurgical coal exports by destination (million tonnes) 51

Table 3.2: India’s metallurgical coal imports by destination (million tonnes) 51

Table 3.3: Australia’s thermal coal exports by destination (million tonnes) 52

Table 3.4: India’s thermal coal imports by destination (million tonnes) 53

Table 3.5: Investment in Australian thermal coal projects by Indian companies 59

Box 1.2: India’s coal market structure 17

Box 2.1: IEA World Energy Outlook scenarios and assumptions 27

Box 2.2: Electricity technology costs in India 36

Box 3.1: Coal-fired electricity generation technologies 58

India’s energy sector is governed by a complex set of institutional

INDIA’S ENERGY SECTOR | 1

Figure 1.1: Total primary energy demand

Source: IEA (2018) World Energy Outlook, International Energy Agency

Box 1.1: Energy measurement

To: TJ Gcal Mtoe Mtce MBtu GWh

From Multiply by:

Terajoule (TJ) 1 238.8 2.388 x 10-5 3.412 x 10-5 947.8 0.2778

Gigacalorie 4.1868 x 10-3 1 10-7 14-7 3.968 1.163 x 10-3

Mtoe 4.1868 x 104 107 1 1.428 3.968 x 107 11630

Mtce 2.9307 x 104 76 0.7 1 2.777 x 107 8141

Gigawatt hour 3.6 860 8.6 x 10-5 1.228 x 10-4 3412 1

Source: IEA (2019) Unit converter

India’s energy mix

INDIA’S ENERGY SECTOR | 3

Source: IEA (2018) World Energy Balances

Electricity consumption in India

Source: IEA (2018) World Energy Outlook, World Bank (2019)