INTERNATIONAL COAL NEWS

The importance of the Oz government's India report

TOUGH times and ongoing cost cutting seem to be the immediate outlook for coal, but anyone in nee...

Staff Reporter

Well hidden on the Department of Industry’s website the 108-page document is the most optimistic analysis of the outlook for coal anyone has produced in the past 10 years.

Released without the normal fanfare associated with major government reports, perhaps to avoid upsetting the environmental lobby, the report paints a picture of a country which is keen to encourage coal consumption as part of an overall boost to its economy.

What the analysis of coal in India found is that while the fast-growing Asian country will continue to meet much of its own demand for coal it will be looking for higher-quality Australia coal as it modernises its power plants by installing super-critical technology which uses less coal and generates fewer emissions.

Before considering the Coal in India report in more detail there are a few important points to consider, including the lack of a formal launch of the document which can be found here.

Why the Australian government would investment time and money in a detailed analysis of the Indian coal industry and that country’s future demand for coal and then allow the report to almost disappear without trace is an interesting comment on the politics surrounding coal.

As far as The Hog has been able to determine there have been only a handful of reactions to the document, one from the Minerals Council of Australia welcoming the report and one from the environmental lobby criticising it.

The MCA said the analysis: “Flatly contradict claims by anti-mining activists that India is turning away from coal.”

The best the activists can do is say that the Coal in India report uses data which is 12 months old, a rather weak comment given that any economic study has to start somewhere and getting Indian government statistics which are only 12 months old probably falls into the category of minor miracle given the way that country’s bureaucracy works.

Enough of the tit-for-tat point scoring between the pro and anti-coal camps, it’s best to let the report speak for itself and that means considering a few of the salient points, including the opening statement attributed to the International Energy Agency that over the next 25 years India will stake a claim as one of the world’s biggest energy consumers.

According to the Coal in India study, the IEA reckons that by 2040 India’s total energy consumption, from all sources, will be more than western Europe and approaching that of the US.

But, to get to that position India has a heavy lift ahead of it, not least because it is such a densely populated country, but also because it has multiple layers of government which are described as: “complex institutional structures” – a polite way of saying that at times India can appear to be over-governed.

Cutting through the red tape which has held India back is one of the aims of new Prime Minister Narendra Modi, a champion of the push to modernise India’s power sector, and a champion of coal as a key part in that process which includes extensive investment in renewable energy sources.

“To meet its growing energy requirements India is developing all available technology options,” the Coal in India report said.

“The government has set ambitious targets to increase the installed capacity of renewable technologies to 175 gigawatts in 2022 (from around 65GW today).

“India is also rapidly expanding its coal-fired electricity generating capacity with around 113GW of new capacity already under construction or approved in addition to the 205GW of existing capacity.

“In 2012, coal-fired electricity accounted for 60% of India’s installed capacity and 71% of its electricity generation. Given the investment underway in the sector, coal will remain a key input into India’s electricity generation.”

Why the energy revolution underway in India is important to the Australia coal mining industry lies in the fact that Indian coal, and coal from Indonesia, which is currently the major source of imported material, is not generally suitable as a fuel in modern power stations.

The bulk of India’s power stations use sub-critical technology because it is cheaper and generates more carbon dioxide emissions. But, from 2017 all new coal power stations will be required to use super-critical technology, or better.

In other words, not only is India going to grow its coal-fired power sector it is going to be looking for more high energy, low ash coal to replace the low energy, high ash, domestic material, and what it imports from Indonesia.

Australia’s high quality coal is the best-placed to meet India’s changing (and growing) energy market – which is some of the best news in years for coal miners.

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