In the discussion of how to avoid climate deterioration, the removal of coal from the world's energy system has always been the top priority.
In the United States, coal-fired power generation has fallen by 40% in the past decade, and cheap natural gas is more competitive in the power system than coal. However, coal remains the dominant energy source in other parts of the world.
India's ambition to achieve its renewable energy goals has attracted widespread international attention.
But coal remains India's main fuel for electricity generation, accounting for half of commercial primary energy.
In the article "Coal in India: Adjustment and Transition", Rahul Tongia said that coal would remain the main fuel in India's power industry by 2030 and beyond.
Although coal dominates India's energy market, it still faces enormous challenges from industrial structure and finance.
In addition, from coal mining to final power sales to consumers, the power system process is complex and inefficient.
Coal is the core of India's politics and economy.
India Coal Limited (CIL), the world's largest coal mining company, provides about 85% of India's domestic coal production.
The central government owns about three-quarters of the company and provides revenue to the financial sector by paying dividends and coal production taxes.
Coal producers run through India's poorest states, providing them with huge financial revenues and employment opportunities.
The Indian Railway Company transports most of its domestic coal and overcharges coal transportation to subsidize passenger transport.
For power plants far away from mines, coal transportation is often the largest component of their coal costs.
Although Indian Coal Company Limited plays an important role in the economy, it also faces the challenge of short supply and demand.
The Indian government wants more private enterprises to mine coal, but getting land and expanding production permits are the main difficulties it faces.
Similarly, these problems are not unique to India Coal Ltd.
In the past few years, coal-fired power generation has also faced tremendous financial pressures as capacity growth has gradually exceeded electricity demand.
Renewable energy is gradually replacing coal-fired power generation, reducing the use of coal-fired power plants and reducing their profit margins.
Private power plants in their infancy are facing greater pressure. Compared with old factories, these factories are usually more efficient and flexible in operation, but they are at a disadvantage in obtaining coal supply and signing power purchase agreements (PPAs) to sell electricity compared with public factories. The problem may get worse before it can be improved, as the country is building a 50-gigawatt coal-fired power project.
In the retail industry, the efficiency of the electricity industry is still low.
State-level distribution companies buy electricity from power plants, mostly through power purchase agreements (PPAs), and sell it to consumers at specified prices.
However, they lose money every kilowatt they sell. In addition, commercial and industrial customers pay relatively high rates to subsidize residential consumers.
At present, the per capita electricity consumption in India is only one third of the world average, and millions of households lack power connections.
Its energy policy is aimed at providing affordable electricity prices for all households.
The environment is very important, but compared with climate change, local air pollution is the primary concern.
Although coal consumption is increasing, India is still expected to fulfil its national responsibilities in accordance with the Paris Accord.
To reduce air pollution and greenhouse gas emissions, it may be more realistic to improve coal-fired power efficiency than to ban coal use.
However, the inefficiency and rigidity of India's power system make this optimization more difficult.
Electricity purchase protocols deal with all electricity in the same way, whether stable or intermittent (usually from coal or renewable sources, respectively).
This rigidity slows down the market dynamics of flexible power generation or power storage to supplement renewable energy; at the same time, new and efficient coal-fired power plants are usually not given priority because they lack power supply agreements or because they are far from coal mines, which means that higher transport costs make their electricity more expensive than inefficient power plants close to mines.
In addition, the loss of distribution companies prevents investment in more efficient distribution and smarter grids.
Overall renovation of India's power system can improve efficiency and reduce greenhouse gas emissions in the long run. However, the motivation for such a change will be a political challenge.
