Context

• India’s sharp drop in the Climate Change Performance Index (CCPI) underscores a central contradiction in its energy landscape: significant renewable-energy growth alongside continued deep dependence on coal.
• This dependence has become India’s largest obstacle to decarbonisation, with severe implications for climate, health, and economic stability.
• A comparison with Chile highlights both possibilities and constraints in accelerating a coal phaseout.

India’s Coal Conundrum

• Despite rapid expansion of clean energy, coal remains the dominant source of India’s electricity.
• Renewables represent half of installed capacity but produce only one-fifth of total electricity, while coal accounts for nearly 75% of power generation.
• Domestic coal production continues to increase, reinforcing the dependence.
• This creates a severe policy dilemma. Phasing out coal risks job losses and higher electricity costs for coal-dependent States.
• Yet retaining it heightens the threat of climate-induced economic damage, projected to cut 3%-10% of India’s GDP by 2100, and worsens public health risks.
• A one-gigawatt increase in coal-fired capacity corresponds to a 14% rise in infant mortality in nearby districts.
• Coal phaseout is therefore a no regrets strategy essential for protecting long-term economic and social welfare.

Chile’s Accelerated Shift: A Contrast and a Lesson

• Chile demonstrates how clear policy signals and market reform can drive rapid energy transformation.
• Between 2016 and 2024, coal’s share in electricity generation fell from 43.6% to 17.5%, while renewables, mainly solar and wind, exceeded 60% of the power mix.
• This shift was enabled by a carbon tax, strict emission standards that increased coal-plant costs by 30%, and competitive renewable auctions that delivered cheaper clean power.
• Large-scale investments in storage strengthened grid reliability, and the country committed to a complete coal phaseout by 2040.
• Chile’s transition was made easier by a smaller coal sector, fewer workers to reskill, and a political context that supported swift reforms.
• Pre-existing alternative industries helped absorb displaced labour. In contrast, India’s coal sector spans entire districts of Jharkhand, Chhattisgarh, Odisha, and West Bengal, making transition more complex and socially sensitive.

A Road Map for India’s Decarbonisation

• Strengthening Renewable Integration
  • Addressing renewable limitations is essential for reducing coal dependence.
  • This includes expanding storage capacity, modernising the grid, and supporting electrification of transport, industry, and households to increase renewable power demand.
• Reforming Energy Markets and Regulations
  • Market reform must disincentivise coal and reward clean energy.
  • Priority steps include carbon pricing, removal of coal subsidies, clean-dispatch rules that prioritise renewable power, and procurement contracts that favour flexible, clean-energy supply.
  • Such reforms can replicate the competitive environment that accelerated Chile’s transition.
• Ensuring a Just Transition for Workers and Regions
  • A coal exit must be socially inclusive. This requires reskilling programmes, income support, and new livelihood opportunities for workers in coal-dependent regions.
  • A national mechanism such as the Green Energy Transition India Fund can coordinate support efforts, while the District Mineral Foundation can promote local entrepreneurship and diversification in mining districts.
• Financing the Transition
  • A blended finance model will be crucial. Public funds should target community welfare, worker protection, and enabling infrastructure, while private capital drives renewables deployment, storage expansion, and technological innovation.
  • Aligning financial incentives with decarbonisation will strengthen execution and investor confidence.

Conclusion

• India’s renewable-energy progress provides a strong foundation, but without a clear and actionable coal-exit plan, climate ambition will remain incomplete.
• A national coal phaseout road map must now be a top political priority, integrating timelines, financing mechanisms, regulatory reform, and robust social protection.
• Learning from Chile’s experience, India can build a transition that is economically resilient, socially just, and aligned with its long-term climate goals.