India's Coal Dependency and Transition

Climate Change Performance Index 2025

Key Findings:

• India dropped 13 places to 23rd in the Climate Change Performance Index at COP30 in Brazil.
• Primary factor for decline: Lack of progress in phasing out coal.

Renewable Energy Context:

• While India doubled its clean energy capacity between 2021-2025, coal still constitutes over 50% of total energy use.
• In 2024, coal contributed about 75% to electricity generation, with renewables accounting for only 20% of generated electricity.
• Comparatively, Chile reduced coal's share in electricity generation from 43.6% to 17.5% during 2016-2024. Renewables now make up over 60% of Chile's power mix.

Strategies for Transition (Chile's Experience):

• Chile's successful transition included:
  • Imposing a $5 per tonne carbon tax in 2014.
  • Enforcing stringent emission standards on coal plants.
  • Competitive auctions for renewable energy sources.
  • Committing to phase out coal by 2040.

Implications for India:

• To mitigate climate change impacts, a systematic coal phaseout is essential.
• Estimated GDP decline due to climate change by 2100: 3%-10%.
• Increasing coal-fired capacity linked to a 14% rise in infant mortality rates in proximate areas.

Proposed Actions for India:

1. Decarbonization Focus:

   • Systematic removal of the oldest and most polluting coal plants.
   • Cancellation of new coal approvals.
   • Replacement of coal output with renewables supported by energy storage.

2. Market and Regulatory Reforms:

   • Disincentivize coal usage through carbon pricing and removal of coal subsidies.
   • Implement clean dispatch rules favoring renewable sources.

3. Support for Workforce Transition:

   • Establish a dedicated transition fund, as proposed by the Green Energy Transition India Fund.
   • Robust reskilling programs for displaced workers in coal-dependent regions.

4. Strategic Financial Framework:

   • Use the District Mineral Foundation corpus to develop entrepreneurship and economic diversification in coal regions.
   • Advocate for a blended financing model involving both public and private sectors.

Socio-Ecological Considerations:

• A rapidly growing renewable sector paired with planned coal phaseout can prevent socioeconomic crises in coal-reliant districts, particularly in Jharkhand, Chhattisgarh, Odisha, and West Bengal.

Conclusion:

• A comprehensive coal exit roadmap is imperative for India's climate goals, incorporating clear timelines, financing for social protection, and learning from successful global examples like Chile. Without a actionable plan to transition away from coal, India’s climate ambitions may remain unachievable.