India: Rising Crude Oil And Coal Trade News

INDIA: CRUDE OIL AND COAL TRADE NEWS

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Since the latter half of the 19th century, industrialisation has ushered the global economy into an exciting new age of rapid development. In less than two centuries, man achieved what had hitherto not been seen in two millenniums. Due to this rapid industrialisation, more jobs became available to the common people than ever before; more and more cities became centres of culture; the convenience of the market economy showed itself at an unprecedented scale. 

The sine qua non of this golden era of industrialisation was fuel, more specifically, crude oil and coal. It wasnt until much later, the late 1990s and up until now that political forces around the world took notice of the ill effects of fossil fuel combustion and the greenhouse gas emissions that result from it.

70% of Indias energy comes from oil and coal. It has been estimated that the ensuing ten years will see Indias demand for energy increase twofold and we will become the third-largest consumer of electricity, behind only USA and China. Indias claims to lower emissions as per the Paris Agreement is dependent upon several factors, the primary of which is the government prioritizing its global energy commitments.

Crude Oil and Coal Crisis

India imported $17.44 Billion worth of oil in September 2021, which is 199.27% higher than the corresponding month last year when the number was $5.83 Billion. This is in part due to the resurgence of the economy after the COVID19 crisis. The high import rates explain the need for the Indian government to raise taxes on fuel and thereby the astronomical increase in commercial rates of diesel and petrol.

This brings us to the coal crisis that plagues Indian utilities and industries. Since 2018, coal production in India has stagnated due to its climate commitments and rising imports are unable to fulfil the demand. Coal is responsible for 70% of Indias energy consumption. Coal shortage has happened in the country before but not at the sky-high import rates of today. Data from the Central Electricity Authority shows that 16 of Indias 135 coal-fired power plants had run out of their coal stocks by September 2021. India imports coal from Indonesia, Australia and South Africa. In October, Coal India was able to increase production by 6.4% YoY. This slight increase will not completely alleviate fuel shortages in industries. Although, with winter approaching and the power demand falling, we could see India riding out this storm by the skin of its teeth.

On 10th October 2021, the Indian government released a statement in which they assured Businesses and Households of their coal reserves being ample for our domestic needs. There will be no disruption in power and claims that it could be so are entirely ‘misplaced’.

Export of Crude Oil and Coal

In the financial year 2020-2021, India had exported 8 Lakh tonnes of coal to its neighbours primarily Nepal and Bangladesh. India has large natural reserves of coal and oil although they will most likely remain untapped. Indian crude oil and coal exports have been steadily falling for almost a decade now, due to their adherence to the Paris Climate Agreement.

India and the Climate

Although India is the third-highest gross emitter of greenhouse gases, on a per capita level India stands at about 3 times lesser than the global average. Nevertheless, India has a pivotal role to execute in the climate fight. With a developing economy and rising global temperatures, India can either spearhead the climate fight or wallow about in flimsy development, only to be decimated by the deluge of the natural disasters that will be wrought by rising global temperatures. It is encouraging to see the Indian government fighting the good fight, being cornered by critics from across socio-political strands. 

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