India Aims to Reduce Thermal Coal Imports by 30% This Year

India Plans Major Reduction in Imported Thermal Coal for Power Generation

India is aiming to decrease its reliance on imported thermal coal for electricity production by 30% this year, shifting its focus toward utilizing more coal mined within the country, according to industry insiders and government officials cited by Reuters.

In 2023, the nation’s power plants consumed close to 50 million tons of imported thermal coal. This year, India intends to cut that figure by approximately 15 million tons, as reported by sources familiar with the government’s strategy.

However, the overall use of coal in India’s power sector is not expected to decline. Instead, the country will substitute imported coal with increased domestic production, which has seen significant growth in recent months, as highlighted by recent reports.

Authorities have assured power producers that the quality of domestic coal will be maintained and will not be of the lowest grade.

Coal’s Role Amidst India’s Renewable Energy Expansion

While renewable energy sources now account for the majority of new power capacity, coal remains essential for providing stable and affordable electricity, ensuring grid reliability as cleaner energy options expand. This perspective was emphasized by NITI Aayog, the Indian government’s policy think tank, in a recent analysis.

The report suggests that, under current policies, India’s demand for coal could more than double by 2050 compared to present levels. Projections indicate that coal consumption may continue to rise through 2070 if existing policies remain unchanged.

Specifically, the think tank estimates that coal demand could reach 2.615 billion tons by 2050, up from 1.256 billion tons in 2025. Even by 2070, coal usage is expected to surpass 2025 figures if the policy landscape does not shift.

Despite the anticipated growth in renewable energy, coal’s share in the power mix is projected to decrease from 73% in 2025 to 47% by 2070.

India continues to depend heavily on coal to satisfy most of its electricity needs, especially as authorities seek to prevent power outages during extreme heat waves.

According to Rajnath Ram, energy adviser at NITI Aayog, coal will remain a central component of India’s energy system for at least the next twenty years.

“We must approach coal use pragmatically. The key issue is ensuring its sustainable utilization,” Ram stated.

By Tsvetana Paraskova for Oilprice.com

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