Skip to main content

India's fossil fuel, especially coal subsidy equaling 2.7% of GDP, main hurdle in climate change target: Report

 
A new report, “Thermal Coal in Asia – Stopping the Juggernaut”, by top international energy consultants, Energy Transition Advisors Pty Ltd, has raised the alarm that India’s fossil fuel subsidies, especially those related with coal, remain a major hurdle in the country’s contribution to achieving climate change target of limiting global warming to 2 degrees centigrade.
Pointing out that the fossil fuel subsidies are a huge drain on India’s finances, too, the report says, “The accumulated losses of India’s power distribution utilities equates to about 2.7 per cent of GDP, largely owing to the provision of free or underpriced power.”
Suggesting that this is a populist subsidy, the report says, “India has long suffered from an overall shortage of generation capacity” with 300 to 400 million people not having access to electricity. Yet, it adds, ironically, “the official peak demand (approximately 145GW) and installed capacity (around 290GW) create an opposite impression—i.e. that of a surplus.”
Pointing out that this is because “coal-based thermal generation capacity operates at remarkably low capacity utilization factors of approximately 60 percent”, the report believes, this is happening at time when the Government of India provides subsidies to coal-fired power plants.
Thus, according to the report, “The estimated value of subsidies to coal production was $99 million on average in 2014 and 2013”, calling this an underestimation, because, “many fossil fuel production subsidies have not been quantified due to a lack of publicly available data.”
“In addition to direct spending by government agencies, the government owns the majority of India’s banks, resulting in a large number of institutions in India providing public finance as defined in this report”, the report points out.
It underlines, “We identified coal financing at 8 of India’s largest public finance institutions and state-owned banks – for coal projects including mining, transportation and/or combustion. On average per year in 2013 and 2014 support provided through Indian public finance institutions and state-owned banks was $2.3 billion.”
“Investment by state owned enterprises (SOEs) in coal mining and coal-fired power was $4.4 billion on average per year in 2013 and 2014”, the report says, adding, this is happening when “fossil fuel consumption subsidies in India are significant, and in many cases provide additional support to fossil fuel production.”
While noting that the government has begun to reform gas pricing and to deregulate downstream activities, the report regrets, “Although fossil fuel producers take on the burden of some of these costs, much of the cost of price fixing is covered by payments from government budgets.”
“In spite of the deregulation of petrol prices (in 2010) and diesel prices (in 2014) and the global fall in oil prices, costs to the government of price fixing still remained substantial at $11 billion in 2014–15”, the report says.
“Similar consumer subsidies of approximately $12 billion in 2012–13 existed in the primarily fossil fuel based electricity sector. These subsidies may drive demand for further production of fossil fuels and electricity (the majority of which is fossil fuel-based)”, the report says.
“If the ‘true cost’ of coal in terms of health and environmental impacts is included in the definition of a subsidy, the scale of subsidies in India has a greater order of magnitude”, the report says, adding, “The International Monetary Fund’s analysis showed that global energy subsidies in 2015 amounted to $5.3 trillion, of which India accounted for $277 billion mostly costs associated with the air pollution and GHG emissions.”

Comments

TRENDING

World Hijab Day? Ex-Muslim women observe Feb 1 as No Hijab Day, insist: 'Put it on a Man'

I didn't know that there could ever be a thing as World Hijab Day until I received an email alert from Maryam Namazie of the Council of Ex-Muslims of Britain (CEMB), stating that several ex-Muslim women's groups had observed the same day—February 1—as No Hijab Day! According to Namazie, the day "was created on February 1 as a direct response to World Hijab Day" to "illuminate the coercive and oppressive realities of the hijab as a pillar of sex apartheid and a war on women."

Google powered AI refuses to correct grammar of a 'balanced' piece on Trump sending chained immigrants to India!

This is a continuation of my blog on how, while the start-up-developed AI app DeepSeek is being criticized for consistently rejecting content related to China or Maoism, there appears to be no mention in Western media about why another app, developed by the powerful Google, Gemini, remains silent on Indian political issues.  

5% poor in India? Union govt claim debunked, '26.4% of population below poverty line'

A recent paper, referring to the Household Consumption Expenditure Survey (HCES) 2022-23 of the Government of India (GoI), has debunked the official claim that poverty has substantially declined. Titled "Poverty in India: The Rangarajan Method and the 2022–23 Household Consumption Expenditure Survey", the paper —authored by scholars CA Sethu, LT Abhinav Surya, and CA Ruthu—states that "more than a quarter of India’s population falls below the poverty line."

Gujarat a police state? How top High Court advocate stunned a senior-most journalist

Rajdeep Sardesai, Anand Yagnik This is a continuation of my earlier blog on well-known journalist Rajdeep Sardesai's lecture in memory of the late Achyut Yagnik at the Ahmedabad Management Association (AMA). I was a little surprised when I received the intimation about the venue for the lecture.

How the middle classes are returning to the BJP fold, be it Delhi or Gujarat: Mahakumbh, Sitharaman's budget

Whatever reasons may be offered for the Aam Aadmi Party's defeat in Delhi—whether it was the BJP's promises of more freebies than AAP, the shedding of ultra-nationalist slogans, or the successful demolition of Arvind Kejriwal's "Mr. Clean" image—my recent interaction with a group of middle-class individuals highlighted a notable trend. Those who had just begun to sit on the fence were now once again returning to the BJP fold.

Why burn Manusmriti? Why not preserve it to demonstrate, display historicity of casteism?

In a significant Facebook post, Rana Singh, former associate professor of English at Patna University, has revealed something that few seem to know. Titled "The Shudras in Manusmriti", Singh says,  because Manusmriti is discussed so often, he thought of reading it himself. “This book likely dates back to the 2nd or 3rd century BCE, and the presence of contradictory statements suggests that it is not the work of a single author,” he says in his Facebook post in Hindi, written in 2022 and recently reshared.

Talking of increased corporate control over news, Rajdeep Sardesai 'evades' alternative media

When I received an intimation that well-known journalist Rajdeep Sardesai was to speak at the Ahmedabad Management Association (AMA) on February 2, my instant reaction was: I know what he is going to say—his views are quite well known; he wouldn’t be saying anything new. Yet, I decided to go and listen to him to catch his mood at a time when the media, as he (and I) knew it, is changing fast due to the availability of new technological tools that were not accessible even a decade ago.

Trump’s research cuts 'may mean' advantage China: But will India leverage global brain drain to its advantage?

When I heard from a couple of NRI professionals—currently on work visas and engaged in research projects at American universities—that one of President Donald Trump's major policy thrusts was to cut federal funding to the country's top educational institutions, I was instantly reminded of what Prof. Kaushik Basu had said while delivering a lecture in Ahmedabad.

I'm flattered: A New York media house claims I was a KGB agent! Wow, I didn't know that

I was astonished, let me say pleasantly surprised, on receiving a comment by Rich TVX News  on my blog   "Why predictions of an imminent collapse of the Russian economy may be wrong" (January 28).  I don't know who wrote the strange comment from this "media house", which is based in New York, and claims to "hold sway not only among the masses but also within global corridors of power, influencing esteemed politicians and shaping international diplomacy, especially evident during pivotal events like the ongoing crisis in Ukraine."