Socio-Economic Constrains to India’s Transition Away from Coal

Abstract:

India is the second largest coal producer in the world after China, producing over 700 million tonnes in 2018 and directly employing over 1.2 million in the mining sector. Despite supplying over 70% of India's electricity demand, decreasing costs of renewable energy has enabled the government to announce an ambitious target of 450 GW by 2030. Furthermore, concerns over air pollution and climate change have led the public to demand a transition away from coal to cleaner fuels. While various studies have analyzed the technical challenges of integrating significant wind and solar resources with the grid, the socio-economic impact of this transition has not been explored. Achieving the twin goals of economic development and climate action within the framework of a just transition requires critical understanding of the needs of coal-dependent communities. These communities are often poor and depend on Coal India – India’s national coal company – to provide ancillary services such as infrastructure, education, and health facilities. In effect, Coal India and its subsidiaries substitute for state capacity in the districts they operate.

In this work, we quantify the socio-economic impact of Coal India across three sectors – infrastructure, education, and health services – in six major coal producing states: Orissa, Madhya Pradesh, Telangana, Jharkhand, Chhattisgarh, and West Bengal. We combine data from multiple sources to estimate the scale of community resources that would be impacted by a transition away from coal. First, we use Coal India’s annual reports, budget outlays, and other publicly available documents between 2008 and 2018 to estimate investments in the three sectors at the district-level. Second, we use data from the annual budget of state and central governments to estimate sector-specific subsidies in the districts where Coal India operators. Finally, we combine the two datasets at the district-level along with the 2011 Census data to understand recent trends in investments, progress along developmental indicators, and the ‘investment gap’ that would be created under a rapid transition away from coal.

This work will help policy makers understand the role of the state in providing infrastructure, education, and health services in the absence of a robust coal mining economy.