India’s Energy Transition: Stranded coal power assets, workers and energy subsidies

This issue brief takes a detailed look at why such a large share of coal power is struggling today and the
structural drivers—including subsidies—that may cause similar crises to rear their heads in future. In
light of this, it sets out some broad proposals from international literature on the topic of “just transition,”
which encourages governments to recognize stranded workers and communities as much as stranded
private or public assets. Key findings:

The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration

Governments across the G20 countries are estimated to be spending $88 billion every year subsidising exploration for fossil fuels. Their exploration subsidies marry bad economics with potentially disastrous consequences for climate change. In effect, governments are propping up the development of oil, gas and coal reserves that cannot be exploited if the world is to avoid dangerous climate change.

Fuel Subsidies in India

The Government of India spent over US$ 9 billion subsidizing fuel products – diesel, kerosene, LPG and, to a lesser extent, gasoline – in 2010-11. The Government’s total subsidy expenditure (including for food and fertilizer) increased by nearly 27% in 2011-12, significantly contributing to the deterioration of India’s fiscal balance. In addition, national oil companies incurred over US$ 8 billion worth of under-recoveries.

Removing Energy Subsidies in Developing and Transition Economies.

Matthew Saunders and Karen Schneider. Australian Bureau of Agricultural and Resource Economics. June 2000. Australia is only one case in this international overview of problems with subsidies. AUSTRALIA, CANADA, UNITED STATES, JAPAN, EUROPEAN UNION, FORMER SOVIET UNION, EASTERN EUROPE, CHINA, INDONESIA, KOREA, THAILAND, INDIA, SOUTH AFRICA, MIDDLE EAST, MEXICO, ARGENTINA.