The political economy of coal in India – Evidence from expert interviews

The political economy of coal in India – Evidence from expert interviews

By Lorenzo Montrone, Nils Ohlendorf, and Rohit Chandra
Energy for Sustainable Development, 24 March 2021

Indian coal power capacity has doubled in the last ten years, and its coal pipeline is the second largest on the globe. This paper analyzes the political economy determinants of India's reliance on coal in the power sector. We base our analysis on a novel theoretical framework to assess how actors having different objectives shape coal investment decisions in India. Our results are based on the analysis of 28 semi-structured expert interviews conducted in Delhi. We find that India's substantial expansion of coal power can be explained by the following factors. First, the power sector was liberalized to ensure sufficient supply. This resulted in large industry conglomerates investing in coal and securing long-term profits as renewable energy support was ineffective. Second, the planned public investments in new coal capacity are motivated by securing the long term availability of electricity. Third, the reliance on coal in Eastern India for jobs, and the presence of local vested interests, are major barriers to a transformation away from coal. Fourth, pollution regulations that would limit coal use are ineffective because of the strong political influence of coal-proponents.