What’s the Role of Coal in India?, with Sandeep Pai

Notable Quotes

• India has to balance urbanization with the need to establish clean energy resources: “India has a lot of aspirations to urbanize, grow, and industrialize—probably not at the level of the United States or Canada, but definitely to reach a level like China, or to at least reach the world average of per capita electricity consumption, which is 3,000–3,500 kilowatt-hours. That means India’s electricity system has to triple as India tries to decarbonize.” (7:04)
• India’s unique energy trajectory means it is working on a unique timeline to meet global clean energy goals and commitments: “[In the Paris Climate Accords,] many countries in the Organization for Economic Cooperation and Development and rich countries have pledged to reach net zero by 2050, but India has pledged to reach net zero by 2070. That is because India says that it needs more carbon space, meaning it needs to grow and carbonize before it can decarbonize. Nonetheless, that 2070 pledge is quite crucial. We don’t know how India is going to get there and what the coal trajectory will look like … However, like many countries … [India does] have short-term targets.” (11:46)
• India is in the early stages of thinking about how it will ensure justice in the energy transition: “India’s just transition story is only five years old. It’s well-documented. No one used to know what it meant. But India has come a long way in the last five years, from a stage where a lot of us were doing research, writing papers on who will be impacted, where the impacts will be, and so on—to institutionalization. So, it’s moving toward that planning stage. It’s not there yet.” (19:33)

Top of the Stack

• The Climate Question podcast from the BBC

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi. Today, we talk with Dr. Sandeep Pai, director of climate and energy policy at Swaniti Global and a nonresident senior associate in the energy security and climate change program at the Center for Strategic and International Studies.

Sandeep is, among many other things, an expert on coal. In today's episode, I'll ask him about the large and growing role that coal is playing in India, the world's most populous country, and how that role might change in the years and decades to come. It's a complex story, one that involves the government, workers and labor unions, communities, private companies, and international climate finance. We'll also talk briefly about how other countries, particularly South Africa and Indonesia, are navigating the future of coal in their countries. Stay with us.

Sandeep Pai from Swaniti Global, welcome to Resources Radio.

Sandeep Pai: Thank you so much, Daniel. I've been a long-time listener of the podcast, so I'm really honored to be on one of your shows.

Daniel Raimi: We're thrilled to have you. To be honest, I'm a little surprised it's taken us this long to get you on the show, but I'm happy we're doing it today.

As I mentioned in the intro, we're going to talk all about the coal sector in India and a variety of issues related to that. But first, as you know, we always ask our guests how they got interested in working on energy or environmental issues—whether you had some childhood inspiration or came to these topics later in life. So, what drew you into the field, Sandeep?

Sandeep Pai: I grew up in India. I specifically grew up in the coal belt in India. At that time, I had no idea what coal meant for energy systems or for the climate, but I was growing up with people who were in the coal industry. I was growing up in a state in eastern India called Jharkhand, which was pretty much coal-dominant. It's almost like India’s equivalent of West Virginia. So, everybody around me was, in one way or another, connected to coal. But, again, as a child, I had no idea what all of this meant.

As it happens, when you grow up in a small town in India, many people want to work in the coal industry—but many people also want their children to go into engineering, to become doctors, and so on. It's a thing in India—in a small town in the early 1980s and 1990s, that's what you wanted. So, everybody in my family wanted me to do engineering. So, I did engineering.

As soon as I finished doing engineering, I realized that I couldn’t code all day and was more interested in public policy issues. I made a rapid career switch from being a computer engineer to being a journalist.

I've actually made a lot of transitions in my career. I was a journalist and, as it happens, I got the opportunity to cover coal, climate, and energy in India, as well as in South Asia more broadly. That's where it really became a full circle for me—growing up as a child around coal people and coal communities, then later covering these issues extensively as a journalist, from grassroots issues all the way to policy, coal markets, and so on. Later on, I moved on and did a PhD in just transitions. I’ve been in this field since then, and this work has been a life passion.

Daniel Raimi: That is so interesting. I would love to ask you more questions about your path, it sounds so fascinating. But I'd like to dive, now, into our main subject matter, which is India, its energy sector, and particularly its coal sector.

India is the world's most populous country. Its demand for energy is growing rapidly. Can you give us a thumbnail sketch of where India is in terms of its energy mix, and particularly what the trajectory of coal has been and what role it has played in India's energy mix?

Sandeep Pai: That's a really good question. India is a very, very unique country because of its huge population. India is projected to have the highest energy-demand growth in the future.

Let me just start with some statistics of where India stands and what its future looks like in a climate-constrained world.

In India, in around the year 2000, half of the population didn't have access to electricity. The other half that had access to electricity had very intermittent power. Now, almost everybody has access to electricity. The problem of quality power and having it regularly still exists, though.

As India has electrified over the last 25 years or so, India has relied mainly on coal. People have started to talk about decarbonization, but India’s carbonization started through coal around 2000. So, if you look at the power sector in India, the average age of power plants is around 12 years old.

Even though India has electrified its households and many people have access to electricity, per capita electricity consumption … And I'm just using electricity as an indicator for energy more broadly. Energy and electricity are different, but this is just to simplify this. Even though everybody has access to electricity, per capita electricity consumption is about 1,300 kilowatt-hours per person.

Now, compare that to the United States, where per capita electricity consumption is 10 times more, at 13,000 kilowatt-hours per person. Compare it to Ireland, where it is 40 times the average Indian’s use of electricity. What does 1,000 kilowatt-hours or 1,200 kilowatt-hours per person mean? What it means is that, on average, people have basic things like appliances and electricity. If you take the rich in India out of the equation, then what people have is even more basic.

So, India has a long journey ahead. India has a lot of aspirations to urbanize, to grow, to industrialize—probably not at the level of the United States or Canada, but definitely to reach a level like China, or to at least reach the world average of per capita electricity consumption, which is 3,000–3,500 kilowatt-hours. That means India's electricity system has to triple as India tries to decarbonize.

So as I said, there are two factors. The first is that India has just carbonized; it has just built its power plants. It's all young; it's all brand new. It's 12 years old, on average. At the same time, India has to triple the size of its electricity system. So, while it's embracing renewable energy and renewable energy is growing—and we can talk about it later in the show—at the same time, India is not ready to say goodbye to coal or phase out its use. It is hard to triple your electricity or energy system while also decarbonizing and ensuring people have quality power.

Daniel Raimi: There’s definitely been very rapid growth in the coal sector over the last 25 years.

One thing that's really important for India, which is pretty different from the United States, is the role that the government plays in the energy and coal sectors. Can you give us a sense of what role that the government plays in coal? What are some of the implications of that substantial state involvement in energy?

Sandeep Pai: That’s a really good question. It's mind-boggling for people who come from systems which are completely private, so let's look at the coal value chain in India.

It starts with coal mining. India is producing about 1 billion tons of coal per year. 95 percent of that is produced by state-owned companies. What is a state-owned company? It’s a company where the majority of shareholders are either the government of India or different state governments. So, state-owned companies are producing 95 percent of that.

When it comes to the power sector, it's a little bit more half and half. So, half of the power sector is state-owned and half is private-owned, with private investors and so on. When it comes to the transmission networks, 80 percent to 90 percent of transmission infrastructure is owned by state-owned power companies, like the Power Grid Corporation of India.

When it comes to distribution of that power, again, a large majority of it is state-owned. So, it's basically a state-owned power company. That has huge implications in terms of how these companies operate, what their mandates are, and what their mission is.

If you look at any state-owned company, or most of the state-owned companies, they will always talk about their coal business, which, in the case of some companies, could be about mining. In the case of others, it could be about coal power stations. But they also talk about job creation, welfare, and unions. So, they're very different beasts. They operate in a different way. They have different incentives. They do not operate in a perfect market. Markets are distorted, often.

That's the basic structure of the power or the energy sector in India.

Daniel Raimi: That’s really interesting. And it’s really important for policy, because if the government is a large owner of the energy system, presumably, that gives the government more direct power on how the energy system changes, which is what I wanted to ask you about next—climate goals.

India, as you mentioned, is heavily reliant on coal. Coal is, of course, the most carbon-intensive fuel when it's burned for electricity. What are some of the goals that the federal government has for reducing emissions in the future, and what does that mean for coal?

Sandeep Pai: Right. It's a really good question. I don't think anybody has a perfect answer, but let me try to give some interesting statistics and numbers, and then infer from there.

One of the larger foundations that India has been part of is the Paris Climate Accords. Within the Paris Climate Accords—not during the signing of Paris Climate Accords, but later on—India signed on to a net-zero pledge. Many countries in the Organization for Economic Cooperation and Development and rich countries have pledged to reach net zero by 2050, but India has pledged to reach net zero by 2070. That is because India says that it needs more carbon space, meaning it needs to grow and carbonize before it can decarbonize.

Nonetheless, that 2070 pledge is quite crucial. We don't know how India is going to get there and what the coal trajectory will look like. I don't think there is a comprehensive assessment around how we go from 2025 to 2070 and what the trajectory of coal will be. However, like many countries—and India is not unique; what I just said is true for probably every country in the world—we do have short-term targets.

India has many short-term targets. The short-term target for renewables is to reach 500 gigawatts of renewable energy capacity by 2030. That is going to fulfill most of the growth in energy demand. But it is not enough. While renewables and all other clean technologies will grow, India will also grow its coal fleet, as well as its coal production.

In terms of coal production in the short term, right now, India is producing about 1 billion tons of coal. India plans to produce 1.5 billion tons. These are large numbers. That is primarily because India is importing a lot of coal—almost 250 million tons. That is more coal than the entire country of South Africa, plus a little bit more. So, that gives you context. In terms of renewables in the short term, India has that 500 gigawatts of capacity target.

In terms of coal, India will build a few more power plants. I think India is at the last stage of building power plants. The numbers vary. When it's a year with more power demand, India says, "We'll build 60 or 70 gigawatts." During COVID, when there was less demand, India was saying, "Okay, we'll build only 30." I think the real number will be somewhere in between. But this is the last phase. I can say with confidence that this decade will be the last phase of any newly built coal-fired power plants.

What will happen after 2030, or even 2032, is very, very unclear. When will coal peak? When will it start to decline? How will India reach its 2070 goal? It depends on who you ask, because in India, electricity energy policy work is done in silos. You have different ministries with different mandates. Again, this is not very different compared to many countries.

You have the Ministry of New and Renewable Energy, whose mandate is to be ambitious on renewables. You have the Ministry of Coal. Yes, India does have a Ministry of Coal, whose mandate is to produce more coal. You have the Ministry of Power, whose mandate is to make sure that there are renewables, but also to produce more coal.

So, no one has a comprehensive target, and I don't think we even have two-year or five-year time-stamped targets for different energy technologies in the future.

Daniel Raimi: That’s really interesting. We did an episode—gosh, it must've been three or four years ago—with Varun Sivaram, and we talked all about solar in India. India is obviously a place that has a lot of land available. It's sunny in a lot of places. Do you see solar as one of the key technologies of the future for India? Or is it just one part of the broader mix?

Sandeep Pai: Oh, yes. I think solar is the technology, to the extent that it is actually crowding out some of the others. I think India's solar story has been remarkable. It used to have a target of 20 megawatts of capacity, in 2010. Now, we're close to 200 gigawatts. So, the solar story is great. Like you said, it's a sunny country.

The big question that I have is, will it be enough? According to some modeling analysis, India needs about 5,000 gigawatts of solar. That requires a lot of land, and India is a very dense country. It's one-fourth the size of Canada, there are so many more people, and the land is already contested. So, it would be a big challenge, having enough land for transmission, infrastructure, integration—all the same issues that many other countries will have.

But to answer your question, yes, solar will play a really, really big role, and it is already playing a big role. It's the cheapest source of energy in India, according to many analyses. Although, I must say, that many others say that it's still not cheap, so it's divided.

Daniel Raimi: Interesting, very interesting.

I'd love to ask you now, Sandeep, about a lot of the work that you do, which is connected to some of the research that I do, which is about the energy transition. In a world where India is transitioning away from coal, what are some of the strategies that either the government, unions, or other stakeholders are taking to try to make sure that the communities where coal plays a central role in the local economy, like the place where you grew up, aren't disproportionately burdened by a shift away from coal in the decades ahead? How are strategies evolving to support those communities?

Sandeep Pai: Yeah, great question. I want to start with a global big picture and then come to India, just to give the context in which India and Indian stakeholders are operating.

I think you're getting at the topic of a just energy transition, or equity in the transition. I like to think, especially in the coal sector, you can actually divide the world into three buckets. One bucket is a set of countries where coal has declined or is declining—we see the end of the road, and that is where countries have started to implement projects. I call them implementation countries. The United States is an example, where lots of funds were allocated to just-transition and economic-diversification projects under the previous administration. The European Union is another great example of an implementation region.

Then you have countries that are at the planning stage of a just transition. You have South Africa and Indonesia, who have just energy-transition partnerships. I don't think large-scale implementation of any kind of economic diversification or repurposing projects have happened in these countries, but every stakeholder is aware. They're starting to build out large policies. There's a lot of action happening. Everybody has a white paper. Everybody knows what it is. So, these are planning countries.

Then you have a third set of countries, in which I would include India and Vietnam, where this is new, whether you want to call it a just transition, a just energy transition, thinking about people and communities … This is a five-year-old topic in a country like India. If you asked anybody in 2019 about a just energy transition, people would ask, "What are you talking about? What does that even mean? Why are we talking about all this?"

So, India's just transition story is only five years old. It's well-documented. No one used to know what it meant. But India has come a long way in the last five years, from a stage where a lot of us were doing research, writing papers on who will be impacted, where the impacts will be, and so on—to institutionalization. So, it's moving towards that planning stage. It's not there yet.

Not every stakeholder knows about this, but there are some regional governments, like in my state in Jharkhand, that have formed task forces on the just transition. You have some state-owned companies, like Coal India Limited, who have just-transition task forces. There's also some talk about doing some pilot projects. But again, I think it's not comparable, but it's moving in the right direction. The topic, the field, the ideas are moving in the right direction.

Daniel Raimi: That’s really interesting. It's great to break it up into those three groups. I'd never thought to do it that way. That's really useful.

I know that you work with folks from two of the countries that you just mentioned, Indonesia and South Africa. Can you tell us a little bit about the strategies that they are developing in this development phase, as you described it? And maybe say something about the just energy transition partnerships.

Obviously, these countries are very different from India, they're very different from one another in a variety of ways, but there are some commonalities, as well. Can you tell us a little bit about Indonesia and South Africa?

Sandeep Pai: Right. Let me go one by one. I think that would be easier to talk about.

South Africa is a very interesting country. One of the things about South Africa is that it's a middle-income country. It doesn't have the same kind of energy and power demand that a country like India has. It's fairly rich. It is an industrialized country. So, it comes from a different stage.

It has a state-owned enterprise called Eskom, its main power utility, which is responsible for about 95 percent of its power. It's 100 percent owned by the Republic of South Africa. It is a highly indebted company. And it has a 40-plus-years-old fleet of power plants. These conditions make it easy for South Africa to transition; or, I would say, easier, in relative terms. Not easy, easier. The conditions are there for transition, because even if all these plants run for 10 more years, at some point you have to shut down those plants.

Its coal-mining sector is reliant on exports to countries like India, and India is building and expanding its own coal-mining infrastructure. So, that will also be impacted. The conditions are there.

Another thing to consider is that South Africa, because of its history of apartheid, is a very inclusive country in that everybody has a strong opinion, everybody has a strong ask. So, a just transition actually means so many different things to stakeholders within South Africa.

Given all these factors, when South Africa launched the Just Energy Transition Partnership (JETP) in 2021, it really provided a boost, when G7 countries and others committed $8.5 billion for South Africa's coal transition.

Daniel Raimi: You mentioned the term JETP, that's Just Energy Transition Partnership. That's where this $8.5 billion comes into play.

Sandeep Pai: That's right. It was a landmark political agreement. As it always happens, we chase headlines first, and then the analysis comes later. It was a headline agreement, and the analysis is still ongoing, but what it did is it brought all these different issues together. That old power plants need to be shut down. That there needs to be justice in the energy transition. That there is a lot of energy, and there are a lot of stakeholders who are very, very keen and interested, and that this is a great opportunity for South Africa's power and energy sector to transition.

Because of other geopolitical changes, as well as a slow implementation process, that process has become a bit more cumbersome and challenging. That doesn't mean that the trajectory of the just transition and energy transition is not happening. It's just that it's become more complicated, especially after the United States backed out of that JETP just this year, along with all the other changes that have happened.

Nonetheless, I think it's the most justice-aware country that I know of in the world. Everybody has a white paper, from unions to environmental groups to academics, of what just transition means. It's complicated, but there's some action happening on the ground.

Daniel Raimi: That's really interesting. One of the other facts about South Africa that I always remember is that it's also the most unequal country in the world. It has a Gini coefficient, which is a metric that measures income inequality, and South Africa is perpetually at the top of the list of the most unequal countries in the world, which has got to play a role in this, too.

Sandeep Pai: Right. And again, since you brought it up, that is a big challenge. Because the coal sector, as you know, and as your work itself has shown in the United States and in other places, for all its environmental and climate challenges, is a big ecosystem. It creates good, high-paying jobs in a very unequal society with high unemployment, it provides revenues, and so on. So, it is deeply embedded, and it's a big challenge, especially in the province of Mpumalanga in South Africa, which is where 80 percent of all coal power plants and mining exist in South Africa. So, yes, I think it's going to be a big challenge, but the country is planning, and I think that's quite positive.

Now, moving on to Indonesia … I'll keep it brief here. Indonesia is a very different country. Indonesia is more like India, with a low per capita electricity capacity and a very young fleet of power plants. It’s also not very industrialized compared to other countries. It signed a JETP in 2022. It previously had a government that was quite keen to leverage phasing out coal to get climate financing. But given what happened from a geopolitical point of view, with the change in government, they are going back to coal.

As the critical mineral industry, especially the nickel industry, is growing in Indonesia, the demand for power is also growing, especially for captive coal-fired power plants—those that are not connected to the grid, but are supplying power to a specific industry, which, in this case, is nickel. So, overall, Indonesia's coal story is more like India, looking into growing in the short and medium term and then seeing how it goes.

Just one line on the justice aspect—Indonesia is very different from South Africa. I was quite involved with the JETP secretariat in Indonesia and South Africa, as well as with the United States Treasury. Where the United States was coming from in terms of how a just transition is understood … It was about making sure workers and communities in transition are taken care of.

As Indonesia understood it, a just transition partnership is about the deployment of renewables. They have not engaged as deeply with coal communities as, say, South Africa has done because of its history. So, the “just” aspect of Just Energy Transition Partnership in Indonesia needs a lot of work, to say the least.

Daniel Raimi: That’s really interesting. Well, as our listeners can probably tell, these are all deep, deep topics, they’re super complex, and we're just scratching the surface of them, as we often do on the show. But, Sandeep, those are great descriptions and are really helpful. Of course, people can dig deeper into these resources if they're interested.

Now, I'd love to ask you the last question that we ask all of our guests, which is to recommend something that you think is really great. It could be related to coal or not at all related to coal. It's totally up to you.

Sandeep, what's at the top of your literal or your metaphorical reading stack?

Sandeep Pai: I was thinking about this, because I've listened to your past episodes and was asking myself, "What should I say?"

One podcast that I really, really like, that I listen to almost religiously, is a podcast called The Climate Question. It's by BBC World Service. What I like about it is it breaks down highly complex climate energy topics into very understandable, simple terms and language.

They do episodes ranging from climate impacts on motherhood to critical minerals to the use of sand for batteries, and so on. It’s broad, it's wide-ranging, but I think it's one of the best climate communications products that I've come across. If I don't know about a topic and if they have covered it, I think I understand the basics after they're done with that episode. So, it's pretty good. I would encourage your listeners to listen to The Climate Question by BBC World Service.

Daniel Raimi: That’s great. Yeah, I just looked it up. It looks fantastic. I definitely have to add that to the rotation.

One more time, Sandeep Pai from Swaniti Global, thanks so much for coming on the show and helping us understand the situation with coal in India, and even helping us understand what's going on in a couple other countries too. We really appreciate it.

Sandeep Pai: Thank you so much, Daniel. And thank you for having me.

Daniel Raimi: You've been listening to Resources Radio, a podcast from Resources for the Future, or RFF. If you have a minute, we'd really appreciate you leaving us a rating or a comment on your podcast platform of choice. Also, feel free to send us your suggestions for future episodes.

This podcast is made possible with the generous financial support of our listeners. You can help us continue producing these kinds of discussions on the topics that you care about by making a donation to Resources for the Future online at rff.org/donate.

RFF is an independent, nonprofit research institution in Washington, DC. Our mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. The views expressed on this podcast are solely those of the podcast guests and may differ from those of RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.

Resources Radio is produced by Elizabeth Wason with music by me, Daniel Raimi. Join us next week for another episode.