NITI Aayog's Draft Energy Policy Shows We Still Remain a Country of Coal Men

The NITI Aayog’s draft national energy policy seeks to keep India’s economy heavily reliant on fossil fuels even in 2040.

Adani Power Company's plant at Mundra in Gujarat. Credit: Reuters

Adani Power Company’s plant at Mundra in Gujarat. Credit: Reuters

India’s draft National Electricity Plan released by the Central Electricity Authority (CEA) late last year got worldwide news coverage. The plan estimated that no new coal power plants would be required in India over the next decade till 2027, apart from the ones already under construction. A possible end for coal in India was much heralded and the plan gave further credence to India’s burgeoning climate leadership credentials. Fast forward a few months and India is being talked about as a reliable partner on climate change by Europe as the Trump administration starts the process to withdraw from the Paris Agreement.

However, the latest draft National Energy Policy released a fortnight ago by the government’s think tank, NITI Aayog, for public comment is giving worrying signals about India’s energy future. Unlike the CEA plan, which makes forecasts till 2027, the draft energy policy has calculated energy requirements till 2040 and estimates India would require 330 GW of coal capacity by 2040 in its ‘ambitious action’ pathway. Given that it agrees with the CEA estimates of no new coal capacity being required in the next decade, this would mean a plan to build at least 80 GW of new coal capacity between the years 2027-2040 in a best case (for clean energy) scenario.

In the business as usual scenario, the document plans for nearly 200 GW of new coal capacity between 2027-2040, taking the total to a whopping 441 GW. Just let that sink in. Investing in new coal capacity in 2017 looks questionable enough: the global political economy is moving decisively towards investments in renewable energy, new technologies such as battery storage are being introduced into grids, cheap natural gas is available, and most importantly, the carbon budget left to avoid dangerous levels of climate change is rapidly shrinking.

Planning to invest in coal capacity between 2027-2040 however is like detailing plans to invest in Nokia a decade after the first Android phones started to gain popularity in 2010. That is, if Nokia phones emitted toxic fumes that could kill you. Because climate mitigation is not the only reason to avoid building more coal fired power plants, there’s also the matter of air pollution. Half of the 20 most polluted cities in the world are in India and air pollution is estimated to cost India’s economy 3% of its GDP and cause 1.2 million deaths every year.

The idea to cycle coal power stations in sync with intermittent renewables is also the basis of the recently released ‘Greening the Grid’ report, which looks at how 175 GW of renewable energy by 2022 can be successfully integrated into the electricity for stable functioning. Unfortunately, ramping coal power stations to support variable renewable energy is the model used in Germany with disastrous results both financially and for the environment. While the report plans for low capacity factors and new financial models for coal power plants as renewables eat into their revenue stream, there is no mention of the extra pollution caused by the cycling of old coal power plants not built for flexible operation.

This is not all. Not happy with sabotaging the health of its own people, the plan also details India’s plan to become a net coal exporter in a few years despite little evidence that there would be many countries in the market for coal. This is a bit like planning to open a company to sell black and white TVs in the late 1970s.

India’s ambitious renewable energy targets have rightly been applauded around the world yet the NITI Aayog’s draft National Energy Policy would continue to keep India’s economy heavily reliant on fossil fuels even in 2040. Under the ‘ambitious action’ pathway, it estimates the fossil fuel share in India’s final energy mix will go down from 81% in 2012 to 78% in 2040. It’s pertinent perhaps at this point to remember that the NITI in NITI Aayog is an abbreviation for “National Institution for Transforming India”. The National Energy Policy therefore plays out as some sort of cruel self deprecation.

The good news is that none of this will probably happen. It is almost certain that the global and domestic political economy is not going to be conducive to a fresh round of coal power plant construction in a decade’s time. Also, in 2028, countries have to do a second ‘global stocktake’ under the Paris Agreement and reveal new and improved plans for climate action. Surely the prospect of Indian negotiators having to explain to Bangladesh and Maldives, two neighbours at risk of going under from sea level rise, that India plans to build another 100 odd coal power plants over the next decade would be beyond the pale.

Nevertheless, the fact that this is the policy advice being given to the Indian government for future planning is highly worrying. While meeting India’s rising energy demand and connecting millions who lack energy access to the grid will not be possible only through intermittent renewable sources, phasing out coal power plants in favour of gas fired combined cycle turbines, which have half the emissions and ramp better to integrate renewables, should be a cornerstone of India’s energy strategy. Exploring new technologies such as battery storage should also be on the agenda. This, combined with steady growth in indigenous nuclear power plants, is a winning formula for both the economy and climate action. Instead, NITI Aayog’s draft energy policy will lead to India being ‘locked in’ to 20th century technology at a time when the rest of the world is moving towards new energy systems.  

Aniruddh Mohan is energy and climate policy researcher from India, currently based in Germany through the Humboldt Foundation International Climate Protection Fellowship.