The long goodbye: India’s complex path to moving beyond coal

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India’s deep reliance on coal poses a significant challenge as it strives to meet global climate goals. Coal powers nearly half of India’s electricity, supporting millions of jobs and entire local economies in coal-dependent states like Jharkhand and Chhattisgarh. However, coal-fired power plants are major contributors to air pollution, which shortens life expectancy and leads to public health crises, especially in cities like Delhi. While India aims to expand renewable energy, issues like intermittency and the high costs of battery storage limit its immediate feasibility. Political divides between state and central governments, economic concerns over stranded assets, and the social cost of transitioning coal-dependent communities all complicate the path forward. A gradual, just transition, supported by domestic and international funding, is essential to balance India’s growth with environmental stewardship. Image courtesy: Ministry of Coal, Government of India

In India's vast landscape, coal is more than just a resource; it's the lifeblood of communities, the backbone of industries, and a key piece in the nation’s journey toward energy independence. As the world increasingly pushes toward green energy, India stands at a crossroads: How can a country so deeply reliant on coal transition to a cleaner future without leaving its economy — or its people —behind?

The coal powerhouse: A look at India’s dependence on coal: India’s relationship with coal stretches back over a century, with coal first mined here in the 18th century. Since then, it has fuelled industrialisation, economic growth, and electrification, becoming the dominant source of power in India’s energy-hungry economy. Today, coal accounts for nearly half of India’s electricity generation, and India’s coal fleet is one of the world’s largest, second only to China.

Yet as countries worldwide pledge to phase out coal and mitigate climate change, India’s trajectory stands out. Unlike mature economies where coal plants are decades old and increasingly uncompetitive, India’s coal infrastructure is relatively young, with many plants yet to reach their expected retirement age of 25-30 years. This means that while other countries are shutting down plants that have outlived their utility, India faces the possibility of ‘stranded assets’— investments in coal plants that may become obsolete before their financial return is realised.

In a nation of 1.4 billion people with rising energy demands, many argue that coal is essential to economic security. But as public health concerns, air pollution, and climate commitments pile on, the urgency to transition to cleaner energy has never been greater.

India’s air pollution crisis and the role of coal power: Air pollution in India is an escalating public health crisis, and coal-fired power plants are among its largest contributors. Studies estimate that the air quality in India’s coal-producing regions is some of the poorest in the world, with coal plants emitting large amounts of particulate matter (PM2.5), sulfur dioxide (SO₂), and nitrogen oxides (NOx) into the atmosphere. These pollutants not only lead to severe respiratory and cardiovascular diseases but also contribute to the shortening of life expectancy in heavily polluted areas.

According to the Air Quality Life Index (AQLI), if India’s pollution levels met the WHO guidelines, the average Indian’s life expectancy could rise by more than five years. In cities like Delhi, where coal plants and other industrial activities are concentrated, air pollution is especially severe, leading to regular health advisories and even emergency school closures.

With coal making up nearly 50% of India’s electricity generation, the challenge of reducing pollution without sacrificing energy security becomes even more complicated. Despite the government’s plans to scale up renewable energy, coal plants continue to operate across the country, and many, especially older ones, lack the necessary emissions-control technology.

Although some policies have mandated retrofitting plants with sulphur-scrubbing technology, these requirements have faced delays due to the high costs involved. As India balances its energy demands with the urgent need to address air pollution, the future of coal power will play a pivotal role in shaping the country’s health outcomes.

The Rise of Renewables and the Stranded Assets Dilemma: India’s ambition to scale up renewable energy is substantial. The country has set a goal to reach 500 gigawatts of renewable capacity by 2030, much of it in solar power. Solar, in particular, has grown dramatically, thanks to India’s favourable climate, falling solar panel costs, and government incentives. But renewable energy comes with its own set of challenges.

One of the most significant obstacles to integrating renewables into India’s grid is intermittency. Solar power, for instance, only generates electricity when the sun is shining. This unpredictability means that to ensure a stable power supply, India would need large-scale battery storage or backup from conventional sources like coal. Battery technology, while advancing, is still costly and not yet widely viable for a country as vast and diverse as India.

For India, the concept of ‘stranded assets’ is a pressing financial dilemma. As renewable energy continues to grow, coal plants operating below capacity or facing higher costs are likely to lose competitiveness. This could result in billions of dollars in investments that no longer provide value, especially in regions where new coal plants were only recently completed. Analysts argue that while it may be economically sensible to retire older, inefficient plants, the fate of younger plants is much harder to determine.

Political roadblocks: The tug of war between state and central governments: Electricity in India is governed by both state and central governments, creating a complex political web around energy decisions. While the central government often champions renewable energy and coal reduction as part of its national climate agenda, state governments hold significant sway over local resources and labour. For coal-dependent states like Jharkhand, Odisha, and Chhattisgarh, where coal mining and related industries provide a substantial number of jobs, abandoning coal is not just a policy decision — it’s an existential one.

This division between state and federal priorities complicates India’s coal phase-out. A recent study assessed the political and economic factors that influence coal plant closures, concluding that state-level resistance can significantly hinder national-level ambitions. In several coal-dependent states, political leaders have openly expressed concerns about scaling down coal without viable economic alternatives, citing potential job losses and local economic impacts as reasons to maintain the status quo.

State reluctance to retire coal plants can also stem from long-standing financial agreements, local tax revenue dependencies, and in some cases, outright resistance to central government influence. In certain regions, coal plants provide critical revenue, job security, and even influence over local infrastructure. Transitioning to solar or wind power alone, without local economic replacements or job retraining programmes, is a hard sell in these communities.

Caught in the crossfire: The social cost of India’s coal dependency: In the coalfields of eastern India, from Korba to Dhanbad, coal is not merely a power source; it’s a way of life. Generations of workers have relied on coal mining to support their families, build local economies, and sustain entire communities. But with calls to curb coal, these communities are now caught in the crossfire of a national debate about sustainability, development, and equity.

India’s coal sector employs millions of people directly and indirectly, supporting communities that have few alternative economic opportunities. Studies estimate that as many as 13 million people in India rely on coal for their livelihoods, with entire local economies, like those in the coal-rich regions of Jharkhand and Chhattisgarh, centred around mining, transportation, and coal power production. In some areas, up to a quarter of the population is tied to coal-related work, making any transition away from coal a potentially destabilising force for local economies.

For many in these communities, the push toward renewable energy is seen as a threat rather than a solution. Without concrete plans for a ‘just transition’— one that provides alternative employment, training programmes, and support for displaced workers — coal-dependent communities face a bleak future.

This makes a case for policies that prioritise the welfare of these communities. Recent plant closures, such as Delhi’s Badarpur thermal plant, highlight the social ramifications of shutting down coal plants without robust support. When the Badarpur plant closed, local workers who relied on it faced job losses without immediate recourse, sparking local discontent and raising questions about the fairness of coal transitions.

International pressure and India’s climate commitments: As one of the world’s most populous and fastest-growing economies, India is under increasing international pressure to reduce its reliance on coal. India has committed to achieving net-zero carbon emissions by 2070, an ambitious goal that aligns with global climate targets. However, unlike wealthier nations, India’s capacity to fund a large-scale energy transition is constrained. This is where international cooperation becomes crucial.

Developed countries have initiated programmes like the Just Energy Transition Partnership (JETP), which aims to support coal-dependent economies in transitioning to cleaner energy. However, funding mechanisms for JETP remain controversial. India and other developing countries often face high borrowing costs, and past experiences, like South Africa’s JETP partnership, show that these programs can sometimes fail to deliver promised support, offering mostly loans rather than grants.

India’s path to net-zero emissions will require substantial investment in renewables and, more critically, battery storage technology to address the challenges of renewable intermittency. Many in India argue that the international community’s climate demands must be matched by financial and technological support if the country is to realistically achieve its climate goals without compromising economic growth.

Retiring coal: Economic analyses and key challenges: Several studies have explored the economic feasibility of retiring India’s coal plants, each using different criteria. Some studies prioritise age, efficiency, and pollution levels, identifying older, less efficient plants for closure. For example, in 2018, the Central Electricity Authority identified around 48 GW of coal capacity for potential retirement. However, recent energy shortages and rising demand have complicated the retirement conversation, leading the government to caution against retiring plants prematurely.

A 2022 study introduced a multidimensional framework to assess coal plants based on their economic, technical, and environmental factors, pinpointing those with high operating costs and low efficiency as prime candidates for closure. The study argues that retiring such plants would bring economic and health benefits by reducing costs and cutting pollution. Yet this approach faces challenges, especially in states where political resistance and coal dependence create substantial roadblocks.

For policymakers, the decision to close a coal plant is not merely a technical or economic one — it involves weighing the human, political, and social costs of retirement. This multifaceted approach illustrates why coal phase-out in India is not a simple task, even as the nation seeks to embrace a greener energy future.

A just transition: Balancing environment and equity: The concept of a ‘just transition’ has become central to the conversation about coal retirements. A just transition prioritises economic support and retraining programmes for workers in coal-dependent regions, aiming to protect these communities from the adverse effects of a shift to renewables. Countries like Germany and Canada have implemented extensive just transition plans that include job retraining, economic diversification, and social safety nets, with significant government investment.

For India, achieving a just transition will require substantial investment in retraining programmes, social infrastructure, and community development, especially in vulnerable regions. Analysts argue that the cost of transitioning workers from coal to other sectors would be far lower than the environmental and health costs of delaying action on coal.

Yet a major barrier remains: who will fund these initiatives? As India navigates these decisions, it faces a critical need for both domestic funding and international financial support to make a just transition viable. Without adequate resources, the path to a coal-free India could leave many communities behind, exacerbating inequalities and undermining the very purpose of sustainable development.

Coal’s long goodbye: India’s journey away from coal is complex, filled with economic, political, and social hurdles that make a swift transition difficult. Yet the need for change is clear. Air pollution, public health, and climate considerations demand that India move toward a future where renewables play a larger role.

Balancing this shift with economic realities and social equity will be the defining challenge. While India has taken strides toward embracing renewable energy, coal remains deeply embedded in its economic fabric. As the country moves forward, it will require not only innovation in energy technology but also policies that address the unique needs of coal-dependent communities and states.

Ultimately, India’s coal transition offers lessons for other developing nations caught between growth and environmental stewardship. With international support, a focus on community welfare, and continued advancements in clean technology, India has the potential to become a model for a balanced and equitable energy transition. However, the journey to a coal-free future will be a gradual and complex one — a long goodbye that will shape India’s energy landscape for decades to come.

 

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