Coal news and updates

The Union cabinet will further review gas prices and no immediate change is in the offing. While a calibration in the Rangarajan formula to work out natural gas prices that would make it cheaper initially is needed, creating an environment for eventual market-based pricing of natural gas must remain at the heart of policy. This makes sense as we are in the midst of eventful changes in the global energy sector at a moment when India needs energy security to kick-start industrial growth. 

 

Commercial exploitation of gas from shale formations in the US is set to loosen oil's chokehold on the global economy. In this fast-changing environment, India's interests are best served by transitioning to an energy regime where market determined prices provide the main signal in investment and consumption decisions. Most buyers of natural gas are power and fertiliser companies who do not have freedom to increase prices. In this backdrop, a phased transition to market price is the best way forward. Recent gas discoveries in North America and simultaneous massive investments in extraction technology there have begun to open hitherto unviable fields for exploitation. This is the right time for India to prepare itself to take advantage of new developments in natural gas. 

 

While North America leads the way in shale gas discoveries, NDA should take the initiative here to set right India's coal sector. Coal accounts for more than half of our primary commercial energy. India's power sector will remain heavily dependent on coal. Yet, it is in coal that we remain in a rut and three governments in succession have been unable to make progress. Despite having large untapped reserves, India continues to import coal. The least NDA can do is revive and pass a legislative Bill, first introduced 14 years ago, to denationalise coal. Monopolies harm consumers and Coal India's shoddy performance has extracted an enormous economic toll. 

 

One of the lessons of the shale gas story is that innovations can quickly change the economics of a source of energy. Even if hydrocarbons continue their dominance, it would not be prudent to write off renewable sources of energy. We could well be on the threshold of a wave of innovations that make them commercially viable. India's energy policy must be tweaked to exploit such a scenario as policy flexibility remains the only constant in a fast-changing world. 

 

 

Source: ToI