& testbook.com Coal crisis in India: Reasons, Importance, solution - Testbook Analysis 2021/10/14 Context: India is facing an acute coal shortage, major thermal plants across the country are at the critically low-level supply of coal. Most of the power stations had only 3-5 days of coal, this is lower than the prescribed guidelines of supplies of 2 weeks minimum. As the economy recovered from the pandemic crisis, there was a sharp rise in the demand for coal as the power demand increased. Reasons for coal shortage: Poor planning and unforeseen events were responsible for the acute shortage in coal. Asudden inerease in the international prices of coal, result of coal shortages in China, ‘There was a lower accumulation of stocks by thermal power plants in the April-June period. Heavy rains in September have slowed down the supply of coal to thermal plants. Delayed and scattered monsoon impacted coal production and logistic routes. Rise in the demand for electricity due to the economic revival after the relaxation on the curbs. Last two months have witnessed a jump of 17% power consumption compared to 2019. Saubhagya scheme, global household electrification drive also contributed to electricity load shot up. Electricity generation from other sources was significantly low. Non-payment of coal dues: Power tariffs are set by the respective states in India and are among the lowest in the world. State-run distribution companies are under strain due to indebtedness, strained balance sheets have resulted in the poor flow of the payments affecting investment in the electricity generation sector. Importance of coal:Total Installed capacity Other India is the and largest producer and consumer of coal in the world. Most of the produced coal is consumed for electricity generation. 54 per cent of India’s installed power generation happens via coal fired thermal power plants and account for about 70 per cent of power generated in the country. Electricity shortages will hamper the industries and will affect the economic reopening, businesses may scale down the production. India’s power crisis could be eatastrophic in short and longer terms. With constrained fuel supply to the thermal power plants, high electricity demand has spiked prices in the pen power market Low production on renewable power generation has also made this season has also pushed up power prices. Buying costly electricity from the free market could further aggravate discoms’ financial problems. What needs to be done? Increase Mining Activities — The focus of the government is only monitoring stocks closely, along with State run Coal India and NTPC to raise mining outputs. Boost Imports There is a need to increase the imports of coal from countries which are providing competitive costs with respect to normal players in the market. Coal is the most essential and abundant fossil fuel available in India, proper strategies to meet the energy demand as well as SDG goals, NDC’s are the need of the hour. The government has ended Coal India’s monopoly over the commercial production, this will help in allowing more private players, coal users in coal mining to own the private rake. Aminimum inventory of coal at all times that can last for a month should be made mandatory for power companies Speed up completion of all the infrastructure that can help in production of coal, Improve the health of state discoms. The Centre has allowed 50% sale of coal from captive mines, applicable to both public and private players, This amendment will help release extra coal in the market, Inturn it will ease the pressure on import of coal.Government can devise a plan for alternate forms of energy to the aluminum and cement makers and prioritise the power generation. The current crisis has opened up an opportunity for the use of cleaner alternatives. India needs to devise a plan to switch more aggre: sively to renewable energy. Further steps/reforms in the Coal Sector Government is allowing commercial coal mining with 50 blocks to be offered to the private sector Liberalization of entry norms is already being taken, in order to do away with regulations which require power plants to use “washed” coal. Some private companies would be offered coal blocks on a revenue sharing model, place of the current fixed cost model. Government n through a revenue already looking into the prospect of Coal Gasification/Liquefa: sharing model Coal India’s coal mines would be auctioned for Coal Bed Methane Extraction Conclusion: The current coal crisis can be resolved by devising proper strategy and there is a need for a strategy to avoid such a cri in the future which may hamper the economic growth in short and long term. India needs a curated strategy that can satisfy the energy demand by keeping in mind the SOG, NDC and Climate change scenarios. Question: The current coal crisis will hamper the economic growth of India in the long run. Explain how the coal crisis can be prevented in the future, Lg BA mer CM bc mac) er Le Platform Bru