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G20 Coal phase-out plan: The case of India and China

by Ashika Thomas

As the most recent G20 summit to discuss climate change ended inconclusively, energy consumption, more specifically coal consumption, has captured the current discourse. India falls short of many parameters to meet the Paris Climate Agreement, the most notable one being ‘total coal phase-out’ by 2040. Since China and India have declined a coal-phaseout in the G20 meet, we need to understand the reason why it is almost impossible for India and China to do so at a short notice. Additionally, we need to know why India and China’s energy situation is incomparable to developed countries like the United States, United Kingdom, and Canada. The table shows some basic numbers on energy consumption of India, China, US, UK, and Canada, for reference.

NamePopulation (2019)Primary Energy Consumption (2019) (Twh)Per-capita Energy Consumption (2019) (KWh)

Energy consumption — various measures and comparisons

The most common way to observe energy consumption is total energy consumption. But this measure ignores the distribution of energy consumption. Energy consumption often includes electricity, transport, and heating. The problem with considering total consumption becomes clear when we see that while China consumes the most primary energy, this doesn’t automatically translate to more energy consumption per person. This difference is similar to that of GDP and GDP per capita.

Another aspect of energy use is what kind of energy the country uses. In the case of China, in 2016, around 561.67 million people only had access to solid fuel which includes coal and wood sources. This value was approximately 780.73 million people in India. This problem however, is visibly non-existent in countries such as the UK, US and Canada ever since the 2000s. Clean fuel such as natural gas, ethanol or electric technologies was widely accessible in the latter countries but in India and China, the number, though showing a downward trend, is still disproportionately high. Solid fuel is cheap and accessible to the poor in these countries and is therefore consumed on a daily basis. It is also such fuel which has increased the access to electricity in China and India.

China, India and other developing countries are not just expected to close the gap in economic development but also switch over to an uncertain ,relatively more expensive and resource intensive system for their larger populations. These countries have a combined population of 2,80,02,01,440 or approximately 2.8 billion people while the UK, US and Canada have only approximately 434 million altogether as per the table shown above. 

Despite this, one look at the per capita energy consumption chart will show that while the UK, US have peaked in per capita consumption in the 1970s and Canada has only shown a downward trend recently, India and China have not even come remotely close to achieving that level 50 years later. This means that India and China are working towards the energy availability and consumption of the developed countries in the 1970s. “In the West, the growth in energy demand has plateaued,” An Environment and Sustainability researcher at the University of British Columbia, told the Caravan, “But, in India, we are still witnessing a surge in energy requirements. Many areas are yet to be electrified.”

Hurdles for Indian and Chinese coal phase out

China and India are two of the largest coal producers and consumers in the world, and since their energy production is largely dependent on coal — 70% for India and 57.7% for China — it is no surprise that coal mines are one of the largest employers. In India, Chhattisgarh, Jharkhand, Orissa, Madhya Pradesh, Telangana make up 85% of the coal production of the country and have hired around 744,984 workers. While in China, 9 provinces produce 90% of the coal, with a workforce of  61 lakh miners. Since the highest producing coal mines of the country are located in a handful of regions, the workforce of that area will be largely employed here.

A phase-out would mean a loss of employment with no way to transition over to other means of livelihood. Moreover, coal is the main source of fuel for low income communities in both the countries and  such communities will be negatively affected unless the replaced source of energy is equally cheap and widely available. Since coal mines are concentrated only in a few regions, a shift to a new energy source (unless its solar energy for India) also means a shift to a new region which translates to job loss for specific areas. A study reveals that there is also a large number of indirect jobs connected to the coal industry which will be negatively affected by a phase-out. A re-skill and employment scheme specific to the coal workers is a possible solution to this.

A total phase-out also translates to these states and provinces losing revenue. In the case of India, “almost six percent of the total state revenues (came) from coal mining royalties and contributions to the District Mineral Foundation (DMF) fund” as stated in a 2021 case study by Climate Investment Funds. For solar or wind energy, the energy plant will have to be shifted to other states like Karnataka, Gujarat, Rajasthan and a few others. “In Shanxi, one of the largest coal producers in China, coal-related industries contributed 29% of its GDP and 46% of its tax revenues in 2018”, says a study on the socio-economic impact of a quick transition from a coal dependent income. This problem seems more detrimental to China than India as all the states currently producing coal will also be able to produce wind energy , but this is not the case for the Chinese provinces.

As of late, the Indian government has put up almost 70% of coal mines for auction to private entities in an attempt to improve the technology and efficiency of production. This can be understood as India wanting to move away as a major importer of coal, to be self-sufficient in its largest energy source. Contrary to phasing out, India’s recent policies seem to want to improve coal as a source of fuel. The auction, a step taken by the government to push the economy back to pre-covid times, came at the cost of tribal lands and forests. The private entities who now own the coal mines could extract coal with no restrictions on how much they could extract and for what purpose they could extract. Even in the case of China, as recently as 2020, they “brought 38.4 gigawatts of new coal-fired power into operation, more than three times what was brought on line everywhere else.”

Looking Forward

A sustainable energy transition in both China and India is definitely possible, albeit not a sudden one. Shutting down old coal plants, which use more coal for a unit of power, could save a lot of money and reduce not only the emissions but also the coal consumption. Another solution is international support, which aligns with the articles 9, 10 and 11 of the Paris Agreement 2015, encouraging developed countries to financially support developing countries’ efforts in mitigating climate change.

On the whole, while it is a necessity for India and China to move away from coal as a fuel source, the phase out process cannot be expected to be identical and immediate in all countries of the G20.

Ashika Thomas is a third-year student who is pursuing an Economics major and an Environmental Science minor at Ashoka University.

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