NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, March 7, 2016

The Australian government continues to claim that coal will play a vital role in bringing cheap energy to developing nations. In particular, it has claimed India’s poor will benefit from the development of coal reserves in Queensland’s Galilee Basin. But is that really the case?

In our recent research, my colleagues and I tested claims that coal will help India’s poor, relative to the impact of alternative, renewable energy sources. We found that when you add up all the costs and benefits of coal—including positives such as jobs, and adverse impacts such as those on health—renewable energy is cheaper.

The cost of coal

We calculated the cost of delivering coal-powered electricity from Australia’s Galilee Basin to the Indian state of Bihar. It’s a poor, farming-dependent state with annual gross domestic product of about $565 (Rs37,888) per person. It has India’s highest proportion of households without access to electricity—roughly 75 million people without power.

In our analysis, we added proportionate costs for developing the Galilee Basin; expanding the coal terminal at Abbot Point on the Great Barrier Reef; shipping the coal to India; developing infrastructure to transport it to Bihar; building coal-fired power stations; and improving the electricity network.