India’s Petcoke Ban To Impact US The Most

The Indian Government has submitted an affidavit in the Apex Court that it will ban the import and consumption of petroleum coke. Petcoke produces 11% more greenhouse gases than any other fossil fuel.

Petcoke Ban a Good Step, what’s the Alternative?

Amid the rising pollution, the Indian Supreme Court banned the usage of Petcoke in Delhi NCR region that is the world’s most polluted city. Following this, the Indian government filed an affidavit in the court stating to ban the usage and import of petcoke.

The ban on petcoke will badly impact not only the Industry working on it but also the biggest importer United States. India imported around 14 million tons of petcoke in the year 2016-17 which is less in comparison to the coal imports but it costs less than the coal.

Many industries in India like the cement industry relies on petcoke because of cost saving. A ton of petcoke costs around $39-40 while a ton of thermal coal came around $47-48 per ton. The other benefit for the petcoke was that it had higher calorific value then the thermal coal.

Now after the ban of petcoke it is evident that these industries will go for coal. India will have to increase the imports of coal that as per now is around 191.95 metric ton in FY 2016-17. India too produces coal in a huge quantity and has to produce more in order to meet the demands.

Impact on The US

US, that exported 8 million tonnes of petcoke to India in 2016 will suffer a huge loss. Though it is compensating somewhere with the supply of oil to India but the loss will be still huge. US may push for more export of oil to India which both countries initiated few months back. That would somehow balance the loss suffered.

Relieve for the Air Quality but can lead to Price Rise:

The removal of petcoke is certainly a very positive step in the direction to curb air pollution in India. The rise of pollution all over India is alarming. Nearly all the metro cities have crossed the mark of red zone. The alarming situation after several protests was addressed by the government which has decided to take some steps.

Though the decision to ban the petcoke is good but it will also increase the price in certain sectors that use petcoke. With coal replacing petcoke, the cost to purchase coal for the industries will be higher. A difference of around $7-9 will come with every ton of coal. It has to be seen what the government does to control the price rise.

Other expect can also be seen as the government will also push the domestic production amid petcoke ban. This will give huge revenues to India in coal auction. If the production is good then India will have to import less coal then required eventually controlling prices.