Malcolm Turnbull talks up coal in Delhi, despite India's aim to stop imports

Malcolm Turnbull is adamant that Australian coal will play “a very big role” in powering India’s future despite a glut in the local market and clear signals from Delhi that it aims to eliminate imports of the fossil fuel as soon as possible. The prime minister touched down in New Delhi on Monday for his first official visit to the south Asian giant. Selling Australia as an attractive destination for Indian students and reviving negotiations over a free-trade agreement are high on the agenda as the government vies for a slice of the world’s fastest growing major economy. On Monday Turnbull met Gautam Adani, the mining magnate whose company will soon decide whether to begin building the world’s largest coalmine in Queensland’s Galilee basin. As well as concerns over its environmental impact, the $16bn Carmichael project has been dogged by questions over its economic viability, as worldwide demand for the fossil fuel stalls and Asian economies boost their commitments to renewable energy. Turnbull said in Delhi on Monday that India had an “enormous need for more electrification” which the Galilee basin mine, as well as Australian solar technology, would help to meet. But that assessment clashes with the forecasts of Indian power agencies and the latest data on the country’s energy use. After decades of importing coal, India’s domestic output is now surging: last year, for the first time, the country produced enough to become an energy exporter, shipping up to 3m tonnes of thermal coal to neighbouring Bangladesh. And although about 300 million Indians still lack access to electricity, the country’s energy demand has been much less than forecast. In December, India’s draft national electricity plan predicted that on the current trajectory, there would be no need to build more thermal coal-fired power stations until at least 2027. Should the cost of renewables – which hit record low prices in India in February – continue to decline, the Indian economy has the potential to be coal-free by 2050, according to a report from the Energy and Resources Institute, a Delhi-based think tank. Piyush Goyal, the Indian energy minister, has been clear about his intention to phase out foreign coal. “I urge you to stop all coal imports,” he told his state counterparts at a conference in October, adding that he was meeting private industry representatives to help wean them off the fuel “to the highest extent possible”. Goyal told the Indian parliament’s lower house in March that coal imports for the 2016-17 financial year had fallen for the third year running to about 145m tonnes, compared with 218m tonnes in 2014-15. In favour of Australian coal is its comparatively low ash content, requiring less “washing” in new, more advanced power stations. But coal from Carmichael would be lower in quality than Australia’s benchmark, Newcastle coal, in its calorific value and ash content. India has also announced plans to construct a slew of new washeries to treat domestic coal, further undermining the attractiveness of Australia’s product. A leading Indian energy policy specialist, Arunabha Ghosh, said coal would remain a “major source” of power in the country until at least the mid-2030s, but that its share in the energy mix would be diluted by “massive increases” in renewable energy. The financial case for the Galilee mine was weak in the short term, he said, but its longer-term prospects would “be determined by the economics of the moment”. The key factors would be whether Indian power demand surged beyond what domestic mines could supply, whether subsidies on coal for household consumers were kept in place, and if renewables continued to fall in price. “When household willingness and ability to pay increases, and renewables come much close to being grid parity with thermal power, then the need for imported coal diminishes,” Ghosh said. Turnbull also conceded on Monday that a free-trade agreement with India was at least five years away. “It will take time but the important thing is to persevere,” he said. “Prime minister Modi and I are committed to continuing work on that but I think we’ve got to be realistic about timing.” The Coalition government had previously held hopes the India-Australia trade deal could be sealed by the end of 2015 and then the end of 2016. The major hurdles to the deal are agricultural subsidies and freer movement of Indian labour to Australia. “Our commitment and determination is to ensure that when jobs can be done by Australians, they are done by Australians,” Turnbull said. “But where there is a genuine shortage of skills, then we can bring in skilled persons from overseas.”