India election 2024: Coal demand to surge if Modi wins

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Another five years with Narendra Modi at the helm will see India’s coal demand surge, but how much of that will translate to imports is unclear as the prime minister pushes for greater self-reliance.

After more than a month of voting, Indians eagerly await the outcome of the world’s biggest election, expected to be announced on 4 June. Modi, the leader of the ruling Bharatiya Janata Party (BJP), is widely expected to secure a third term.

If Modi does win, India’s economic growth strategy will remain on track with plans to add as much as 80 GW of new coal-fired plants in less than a decade.

That translates to as much as 480 Mtpa of additional domestic coal, or around 280 Mtpa of imported coal of around 5,000kcal/kg GAR.

India’s government has repeatedly pushed coal users to burn more domestic supplies to end their dependence on more expensive imports.

“Prime Minister Modi’s vision is very clear. His first and foremost instruction is to reduce imports. To reduce imports, we have to produce more and that is why Coal India has been given a target to raise output to 1,400 Mtpa by 2030,” Coal Secretary M L Meena told McCloskey last November.

Coal and Mines Minister Pralhad Joshi earlier this year pledged coal imports would stop as early as this financial year, according to local reports.

However, few believe this is possible with Coal India (CIL) unable to completely replace imports anytime soon.

“While India will continue to seek to reduce its dependence on imported coals, the domestic coal industry is not expected to be able to grow supply fast enough to meet all the demand growth,” according to McCloskey’s Thermal Coal Seaborne Trade Outlook.

India’s coal production capacity is expected to rise to 1.8-2.0 bnt/y by 2030, with nearly 1.4 bnt coming from CIL alone. Last year, India’s coal output was 969 Mt, of which 756 Mt was produced by CIL.

Despite the rise in domestic production, India’s thermal coal imports still grew last year by 8% to 178.95 Mt.

McCloskey analysts forecast seaborne thermal coal imports to rise above 200 Mtpa in 2029 and continue to climb for the foreseeable future, reaching 231 Mtpa by 2050.

This is despite Modi’s major push towards greener energy, committing to a “net-zero” India by 2070.

“We need to add capacity which can provide round-the-clock power as energy security of the country cannot be achieved by renewable sources alone, because solar power is not available round the clock and wind energy is intermittent in nature,” Power and New & Renewable Energy Ministry R K Singh said recently in a written reply in parliament.

For those running against Modi, there are no major parties calling for the end of coal over the next few years.

In the manifesto for BJP’s biggest rival, Indian National Congress (INC), the party led by Rahul Gandhi does not specify anything on the future of the country’s coal-fired power plants nor coal production.

INC does say that if it wins the election, it will implement renewable energy schemes aiming to make villages self-sufficient in electricity.

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