IMPORTS GAINING In the short term India's imports of seaborne thermal coal are likely to accelerate, especially since the government invoked emergency measures last week requiring power plants that use imported fuel to operate at full capacity in order to avert potential electricity shortfalls as the summer demand peak approaches. India's coal arrivals are already heading higher, with data from commodity analysts Kpler pointing to a rise in thermal coal imports to 10.19 million tonnes in February, up from 9.71 million tonnes in January and the most since November. Over the longer term, the trajectory for imports will depend on how successful India is at boosting domestic coal production, and shifting volumes around the country. It's likely that thermal coal imports may decline over the coming years, but predictions that this trade will end by 2030 are ambitious. Where India will see increasing coal imports is in higher-grade metallurgical coal, used primarily to make steel. India produces only small amounts of this grade of coal, also known as coking coal, and given the expected increase in steel production, it's expected that coking coal imports will rise from around 63 million tonnes a year currently to around 100 million by 2030. There was one question that participants at the Coaltrans India event were likely to skip around, and that was whether this additional coal the industry expects to produce will actually be needed. India is rapidly rolling out renewable energies such as solar and wind, as well as boosting hydro generation. In the 2021-22 fiscal year some 15.5 gigawatts (GW) of renewable capacity was installed, but only 1.4 GW of new coal-fired generation.
While thermal generation still accounts for 59% of India's total capacity, the share of renewables is rising and was at 27% in March 2022, according to data from the Institute for Energy Economics and Financial Analysis. The share of renewables is expected to rise to at least 40% by 2030, and may even climb to half of India's generation capacity. India is building new coal-fired power plants, with data from the Global Energy Monitor showing 32 GW currently being built. Given that each GW of generation requires around 3 million tonnes of coal annually, this implies the coming capacity additions will only need another 100 million tonnes, well below the 500 million tonnes extra the industry believes it will deliver by 2030. There are other coal users, such as cement producers, but it's unlikely they will need massive new volumes. Overall, it appears the positive mood of India's coal sector is justified, especially in the short term. But their vision of massive increases in output and demand for decades to come may yet prove overly optimistic.
The opinions expressed here are those of the author, a columnist
for Reuters.
(Editing by Stephen Coates)
