Success in this respect requires path-breaking technological breakthroughs and large-scale affordable application of such breakthroughs. Neither country can afford to slacken the pace of their economic growth and wait for such breakthroughs.

Coal is the major fuel used by both countries, followed by oil. As the world’s second largest energy consumer, the 2,177 MTOE (million tonne oil equivalent) energy consumed by China in 2009 had 70.6 per cent contribution from coal. Oil was the second largest, accounting for 18.6 per cent of total energy consumed, followed by 6.4 per cent from hydroelectric power, 3.7 per cent from natural gas and less than 1 per cent from nuclear energy. India, despite consuming only 21.5 per cent of China’s energy consumption in 2009 (468.9 MTOE), was still the fourth largest energy consumer after the US (2,182 MTOE), China and Russia (635.3 MTOE). Its energy use pattern also shows a marked dominance of coal (52.4 per cent), followed by oil (31.7 per cent), gas (10 per cent) and hydroelectric power (5.1 per cent). Between them, China and India currently consume 54.4 per cent of the total coal produced in the world. Studies on coal consumption trends indicate that by 2030, they will account for 82 per cent of the increase in global coal demand.

Among major emerging markets, only South Africa has an energy-use pattern dominated by coal and oil and similar to those of China and India. Brazil, Mexico, Russia and Indonesia have much smaller contributions from coal in their energy use. Oil is the key source of energy for Brazil, Mexico and Indonesia, while gas is the leading source in Russia. Both China and India have now begun importing coal. This is rather unusual, given their large endowments of coal. China and India hold the 3rd and 4th largest proven coal reserves with 13.9 per cent and 7.1 per cent of total world reserves, respectively.

At its current level of coal production, it will take India 105 years to finish its remaining reserves. The similar length of time for China is 38 years. Thus while endowment is not an issue, extraction is. India’s poor mining policies have constrained its domestic production. Despite much greater capacities in mining, China, like India, has also been occasionally suffering from high costs of transporting coal from the hinterland to coastal industrial areas. For both countries, imported coal shipped through sea routes is often a more efficient supply option. Furthermore, the mined coal output in both countries is not always of the best quality. Most of the coal is low-sulphur but high in ash content. Both require more coking coal, which is in short supply at home, forcing them to resort to imports.

Endowment shortages in oil are much more pronounced. Both countries have traditionally been major importers of crude oil. Despite creating new refining capacities, demands for more refined oil products have forced both to import more crude oil. Because of certain peculiar pricing distortions in India’s domestic petroleum product market that put private producers at a disadvantage vis-à-vis state-owned firms, India has been occasionally experiencing shortage of refined products and importing these too. Nonetheless, it remains a net exporter of refined products, unlike China.

The current energy demand structures in both countries have some significant implications. First, overt dependence on coal and oil has forced both to become vulnerable to volatilities in international commodity prices. Such volatilities have often aggravated domestic inflation in both countries. Second, inabilities to shift to cleaner fuels such as gas and hydroelectric power are major impediments in fighting climate change concerns. Until such shifts occur, reducing carbon intensities in production will not be easy. Finally, and ironically, both countries realise that greater use of coal and oil and the problems arising from such use are actually downsides of their high growth. A moderation in growth will surely reduce economic activity. But it might save some energy for both till they take major strides in energy-saving techniques. Unfortunately, both also realise at the same time that managing growth can be more difficult than increasing it.

Amitendu Palit is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore.

This piece first appeared here, at The Financial Express.