Thu January 31, 2013
This Week in Asian Coal News: China Burns More, India Needs More
Two related stories about coal in Asia broke earlier this week: that India just doesn’t have enough coal to meet the country’s demands, and that China burns nearly as much coal as the whole rest of the world.
The news about China was released by the Energy Information Administration on Tuesday, and Brian Walsh of TIME summed it up with his headline: “The Scariest Environmental Fact in the World.”
We’ve seen the effects of China’s coal-burning on air pollution in the past few weeks, as the air over Beijing has been what the U.S. Embassy first described in 2010 as “crazy bad” and then “beyond index.” And as China continues to grow and burn coal, it makes the task of dealing with climate change even more daunting.
The EIA’s chart also shows how limited President Obama’s ability to deal with climate change really is. The reality is that the vast majority of the carbon emissions to come will be emitted by developing nations like China — and much of that will be due to coal. As we’ve reported, the U.S. has reduced coal use and cut carbon emissions in recent years, even in the absence of comprehensive climate legislation, thanks to tougher air-pollution regulations and cheap natural gas from fracking. Yet even as coal has waned in the U.S., it’s still being burned by the gigaton in other countries. We won’t beat climate change until we’ve beaten coal, but I’m not sure there’s much the U.S. can do to persuade China or India to quit cheap energy — no matter the cost.
The International Energy Agency estimates by 2017, India could be importing as much coal as China (and a recent New York Times blog post noted that the air in New Delhi has been worse than Beijing's lately). And a Wall Street Journal article noted this week that those imports are going to be necessary because the country’s coal mines just aren’t producing enough coal for the growing demand.
India’s coal minister says the country needs to speed up environmental clearance for new coal mines, or risk more blackouts like the one this summer. As it is, some cities have daily six hour blackouts.
Most of the coal mines in India are owned by Coal India, which is controlled by the state. But Coal India’s supplies can’t meet the country’s growing demand, so the government has given private companies permission to mine in a few areas. But apparently environmental clearance for new mines takes a long time, so the minister is calling for a “balance…between environmental concerns and mining.”
The Wall Street Journal article notes that imported coal—like the coal that’s supposed to be coming from Kentucky—is problematic because it’s expensive and it's hard to pass on the costs to consumers in such a poor country. But the country might have no choice but to increase imports.
Unless private companies are given the green light to start operations in their captive mines, coal imports will likely continue to rise, [federal coal minister Sriprakash] Jaiswal said.
The country will likely have an estimated coal shortage of 192 million metric tons for this financial year ending March 31, and traders expect imports of around 140 million tons to help narrow the gap.
However, power producers are loath to rely on imported coal, which cost 40%-50% more than domestically produced coal. India's power producers face difficulties in passing on the higher costs to consumers, because state governments have a large say in tariff hikes by state-run utilities as higher prices can stoke inflation.
"In the next several years, power tariffs are bound to rise, just as prices of other commodities are rising. Higher power tariffs will allow private producers to import more coal," Mr. Jaiswal said.
What’s especially interesting is that despite coal shortages, India is still building more coal-fired power plants. Renewable energy and nuclear power aren’t popular there, and the country doesn’t have the same magnitude of natural gas reserves as the U.S.
So, what's the answer? I also wonder if India's continued shortages will jumpstart the first shipment of coal from Kentucky, which was several months delayed last time I checked.