Syllabus: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Context
- India fell 13 places to 23rd in the Climate Change Performance Index 2025, largely due to limited progress on coal phase-out.
- Coal remains central to India’s energy supply but contributes significantly to environmental and health damage.
India’s Coal Profile
- Coal constitutes over half of India’s total energy use.
- Despite rapid renewable expansion (capacity doubled 2021–25), only 20% of electricity generation in 2024 came from renewables.
- Coal still produced 75% of electricity, with domestic coal output rising.
Chile’s Transition Experience
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- Chile reduced coal-based electricity from 43.6% (2016) to 17.5% (2024).
- Renewables now exceed 60% of its power mix.
- Key measures:
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- Carbon tax of USD 5/ton (2014).
- Strict emission standards, increasing plant compliance costs by 30%.
- Competitive auctions for solar and wind.
- Expansion of energy storage systems and commitment to complete coal exit by 2040.
- Fewer coal plants, a smaller dependent workforce, and a market-friendly political environment aided the transition.
Challenges for India
- Deep coal dependence in Jharkhand, Chhattisgarh, Odisha, West Bengal increases socio-economic vulnerability.
- Coal phase-out is a “no-regrets” pathway, preventing GDP losses of 3–10% by 2100 and reducing health impacts like higher infant mortality near coal plants.
Path to Decarbonisation
- Systematic Coal Retirement: Remove ageing, high-polluting plants; stop new approvals.
- Firm Renewable Replacement: Expand storage and electrify transport, industry, and households.
- Market Reforms: Carbon pricing, removal of coal subsidies, clean-dispatch rules, renewable-favoured contracts.
- Just Transition: Reskilling, livelihood support and a Green Energy Transition India Fund.
Financing the Shift
- Adopt blended financing: public funds for community welfare and reskilling; private capital for clean-energy expansion.
- Use District Mineral Foundation resources to diversify economies in coal belts.
Conclusion
- India’s renewable momentum is strong, but climate goals require a time-bound coal exit plan, credible market reforms, and robust social protection—drawing critical lessons from Chile’s transition model.