Can world’s largest coal consumers make a smooth transition to green energy?
World’s two largest coal consumers, India and China account for almost 60% of global coal use. Although they have outlined ambitious plans for boosting renewable energy, consumption of the polluting fossil fuel has again started increasing as industrial activity rebounds after three years of Covid.
The nations have set goals of reducing their emission levels by 2030 to arrive at net-zero targets by 2060-2070. But meeting these ambitious targets depends on how soon they can free themselves from fossil fuels.
Analysts say China’s extensive renewable energy capabilities have overpowered those of several other nations. But considering Beijing’s prominent focus on energy security, the country will continue to use the polluting coal in tandem with its renewable energy transitions.
According to Fitch Ratings, China’s earlier-than-expected reopening is expected to cause its power demand to rise to around 6% in 2023 from 3.6% last year. Power shortages and the eventual crippling blackouts compelled the country to approve three times as much coal-fired power in 2022 from the previous year.
Even though China’s coal consumption is expected to plateau through 2025 and green energy consumption to rise, the recent approvals for coal mining and power capacity have made it much more difficult for analysts to predict what comes next.
In its annual budget unveiled on February 1, India set $4 billion aside for the nation’s energy transition. But “there is some emphasis on increasing coal production and use to meet the increasing demand on account of high economic growth,” Vibhuti Garg, director of South Asia at IEFA, said.
Although India’s energy mix is changing in favour of renewables, the country will need to import more coal to satisfy the incremental power needs.
Because of the costs – compared to developed countries, it is relatively more difficult for developing nations to immediately switch from their coal dependency. However, dropping costs of renewable energy as well as the slowing appetite in fossil fuel investments is expected to quicken the transition.