India Insight

Will necessity help coal trump environment concerns?

September 27, 2011

Coal accounts for 60 percent of India’s energy use, runs most power stations and factories and enabled state-run company Coal India to have a blockbuster IPO last year raising a record $3.5 billion.

But despite having the world’s fourth largest coal reserves, India remains a major importer and the coal industry is pointing fingers at the environment ministry for part of the failure to properly develop coal fields.

“The main reason for slow progress (in developing coal fields) is the time taken for getting clearance (from the environment ministry),” Coal Secretary Alok Perti said during a coal conference on Tuesday.

Prior to 2009, getting forest clearance took 3-5 years instead of the stipulated 240 days, Perti said, highlighting the conflict between environment concerns and the need to build industrial capacity to power Asia’s third-largest economy.

The environment ministry shot to the spotlight under the stewardship of Jairam Ramesh, who set new standards in compliance and halted more than 60 big ticket projects and held up more than 450 of them.

Apart from stricter enforcement of existing environment laws, he brought in new ones like the so-called ‘go, no-go’ policy under which a mining application could be rejected without being considered because of the forest density of the area.

But with Ramesh moving to another portfolio and demand for coal and other minerals increasing, the trade-off between growth and environment looks to be moving in favour of the industry.

Officials predict new environment minister Jayanthi Natarajan will show more “flexibility” in giving clearance because of the country’s “imperative to grow”.

And the coal secretary said there was now a “thinking” that it would be better to do away with the ‘go, no-go’ policy.

With alternative energies like nuclear, wind and thermal still underdeveloped, the importance of coal for India cannot be overstated in a country where electricity blackouts are still common and with a peak-hour power deficit of nearly 14 percent.

And although green initiatives like a solar plan seeks to boost green power generation from near zero to 20 gigawatts (GW) by 2022, the majority of power will continue to come from coal, which is much cheaper compared to other forms of energy.

Coal Minister Sriprakash Jaiswal also warned that unless the country “facilitates” new coal production through “proactive measures”, the gap in demand and supply from domestic sources would exceed 200 million tonnes by 2017 from around 142 million tonnes presently — a sure signal for increased production push.

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