India’s Energy Transition: Stranded coal power assets, workers and energy subsidies
5. April 2019
India's 2018 crisis of stressed coal power assets may rear its head in future years as various drivers suggest increased coal power costs in the future. Government interventions should not only focus on the short term, they also need to support a managed transition fair for all involved, including workers. Current drivers of stressed assets include coal shortages and the financial distress of energy distribution companies (DISCOMs), while future drivers are likely to include water scarcity, air pollution regulations and cost-competitiveness of renewables. Policy support mechanisms for coal artificially dampen market signals that affect coal power costs. These take the form of subsidies, public finance through loan preferential rates, or the delay or lack of enforcement of policies (such as air pollution regulations) that would otherwise increase costs to producers. As part of an ongoing dialogue about labour in the coal sector, policy-makers should consider the complementary policies that can ensure that the burden of asset stranding does not fall on workers and communities. This might include general employment schemes, targeted social protection measures and financing mechanisms.
International Institute for Sustainable Development | India's Energy Transition: Stranded coal power assets, workers and energy subsidies