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India To Push Ahead With Coal

April 18, 2015

By Paul Homewood




From Hellenic Shipping News:


India is set to overtake China as the biggest importer of power-station coal, emerging as the leader of a clutch of regional nations that miners including Glencore Plc and BHP Billiton Ltd can tap for new orders.

Indian thermal-coal imports will surpass China’s by 2017 or sooner, Bloomberg Intelligence analysts William Foiles and Andrew Cosgrove said in a report. China, the world’s biggest energy consumer, is cutting down on coal use to fight pollution.

India and its regional peers including Indonesia, Vietnam, Japan and South Korea plan to increase their combined coal-fired generating capacity by more than 204 gigawatts, or 60%, through 2019, as per the report.

Still, that may not be enough to trigger a price rally. A decline in coal supplies from Indonesia, the biggest exporter, and the gap between India’s demand and local output will help shape the outlook for thermal-coal prices, the analysts said.

“India will have the largest impact on seaborne thermal coal markets as lofty domestic production targets battle with likely swelling imports due to a wave of new demand from new generation plants,” Bloomberg Intelligence said.

State-run monopoly Coal India Ltd, which produces more than 80% of the nation’s coal, has said it will double output to about 1 billion tonnes in five years. That means almost doubling the pace of growth in its annual production. India’s thermal-coal demand will probably increase 42% to 1 billion tonnes in the six years to 2020, according to the report.
Source: Bloomberg



To put the numbers into perspective, in 2013 China and India’s coal imports were 327 and 180Mt respectively.




What is particularly significant in all of this is the role of the newly founded Asian Infrastructure Investment Bank, or AIIB. This has been set up by China in direct competition with the US dominated World Bank. The latter has been at the centre of the controversy of whether it should be funding new coal power capacity.

Peter Foster of the Financial Post picks up the story:


The AIIB is rightly seen as a challenge to the World Bank

Narendra Modi is the first Indian Prime Minister to visit Canada since Indira Ghandi. For much of the intervening period, relations were sticky because of that unfortunate business of India using Canadian technology to manufacture nuclear weapons. At the same time, India’s growth was held back by poor economic policies and widespread corruption, much of it soaked in socialist cant.

Those lousy policies also go back to Mrs. Ghandi. Mr. Modi is rightly seen as a breath of fresh air, even if he inevitably has to play the hypocritical game of global realpolitik.

The alleged landmark deal of Mr. Modi’s visit is India’s $350 million purchase of Saskatchewan uranium. This both symbolically buries the bomb issue, and enables Mr. Modi to trumpet his country’s commitment to “sustainable development,” even as SD is increasingly exposed for the unworkable non-concept that it is.

The notion first emerged at the 1972 UN conference on the environment in Stockholm. Conceived by British intellectual Barbara Ward, who thought the Industrial Revolution had been a mistake, SD’s conceit was that poor nations had to grow while avoiding free markets and fossil fuels.

Mrs. Gandhi gave the keynote speech in Stockholm. She blamed the profit motive for wrecking the environment and keeping people poor. Mr. Modi is clearly of a more market-friendly orientation, even as he continues to pay lip service to sustainability. Indeed, he suggested that the uranium deal was part of “saving the world” from the climate change. With respect, India’s role in such salvation comes on a pretty small scale.

India currently derives less than 4% of its electricity from nuclear energy, and although it has announced bold plans to expand this to 25% by 2050, 2050 is a long way off. For the immediate future, India has announced that it will double its coal use by 2020, in the process overtaking the U.S. as the world’s second largest coal consumer after China.

The International Energy Agency predicts that global coal demand, along with that of oil and gas, will still be rising in 2040, when fossil fuels will account for three-quarters of energy use. Asia in particular is destined for an enormous burst of coal investment. A great deal of the funding will likely come from the new Asian Infrastructure Investment Bank, AIIB, an initiative promoted by China in the face of staunch U.S. opposition.


The AIIB is rightly seen as a challenge to the World Bank, an institution traditionally dominated by the U.S., and better known for development failure than success. Anti-fossil fuel bias has permeated funding decisions, to the cost of developing countries. Fifteen years ago, the World Bank’s Extractive Industries Review suggested that the World Bank should get out of funding petroleum and coal investment altogether. It didn’t, but opposition to fossil fuel funding has continued, popping up most recently in new forms such as the Divestment Movement.

There’s a sound case to be made that institutions such as the World Bank and the AIIB shouldn’t exist at all, since all they do is politicize investment decisions. Still, if multinational development institutions are actually concerned with development, they need to invest in coal, which offers the quickest and most effective means of alleviating poverty.

Japan recently came in for massive criticism from the environmental movement for using the Green Climate Fund for high-tech coal plants. However, even Yvo de Boer, the former head of the UN Framework Convention on Climate Change, has supported Japan’s move and the use of coal.

The Post’s Gordon Iseld reported this week that Canada is considering participation in the AIIB, but is concerned that the new bank “will meet the same high standards as similar international institutions.” The problem is that those standards have been biased against fossil fuels.

Given that so many of Canada’s allies, such as Britain and Australia, have signed onto the AIIB, Mr. Harper certainly wouldn’t be going out of a limb in participating. Indeed, it might send a salutary message to Mr. Obama, whose policies have damaged Canada beyond the hold-up of Keystone XL.

Concern about possible U.S. green trade sanctions has led Canada to mirror, and even get in front of, costly and pointless initiatives.  For example, while Saskatchewan Premier Brad Wall was welcoming the Indian uranium deal this week, he was also claiming how great the province’s heavily-subsidized venture in sequestering coal emissions had been. These claims look a little shaky given that his neighbour, Alberta Premier Jim Prentice, has given up on carbon capture and storage. Still, if you believe the Ecofiscal Commission, what Canada needs is lots of such cross-purpose provincial policy posturing.

Mr. Obama’s domestic coal policies are more unconstitutional than merely contentious. The U.S./Chinese climate “agreement” signed late last year – in which the Chinese conceded nothing — indicated his desperation to make climate his legacy issue. The AIIB initiative – and its boost to coal-fired funding – leaves the U.S. president looking even more lonely on the geopolitical shore, a lame duck Canute vainly commanding the seas — and smokestacks — not to rise.

Mr. Obama must long for the good old days when, like Prime Minister Modi, he was greeted as a “rock star” in Canada. Now he has put himself between a coal seam and a hard place.

  1. Garry Mallett permalink
    April 18, 2015 9:02 am

    Good on the Indians. Putting the welfare of their people ahead of slavish subjugatio to the outright lies of global warming

  2. Paul2 permalink
    April 18, 2015 2:32 pm

    Don’t forget April 20 at 2pm. Daily Politics environment debate.

  3. John Ellyssen permalink
    April 18, 2015 4:00 pm

    Mr. Modi seems to be a dangerous man. His many recent actions are leading to greater governmental control over citizens (loss of freedoms). I doubt that he is market friendly except to use it for his own agenda gains. He appears to be seeking to both build his nuclear power infrastructure to reduce expenditures in foreign energy imports while simultaneously building more nuclear weapons. Remove this post if it bothers you.

    • manicbeancounter permalink
      April 18, 2015 6:29 pm

      Now I thought Mr Modi’s major concern was with economic growth, which means increasing energy output. That seems to be both through nuclear and coal power. It also means freeing markets to function better.
      The loss of freedoms I have heard about are the freedom of foreign organizations, such as Greenpeace, to undermine democracy with external funding.

    • David A permalink
      April 19, 2015 11:32 am

      Mr Modi has legitimate reason to be concerned about China, and a strong national defense is an obligation.

  4. April 19, 2015 12:13 am

    “China, the world’s biggest energy consumer, is cutting down on coal use to fight pollution.”

    How many coal plants are planned or under construction? China raises a wind turbine every two hours and a new coal plant every week. So percentage wise only are they cutting back. In carbon emissions they’re going strong. That really concerns Russia. They’ve been hoping for global warming for ages. –AGF

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