New Delhi: India has been blessed with large coal deposits, especially in the eastern part of the country. Recent reforms in the coal sector, like commercial coal block auctions, engagement of MDO by Coal India Limited (CIL) for faster development of Greenfield projects, single-window system developed by the Ministry of Coal for the faster clearances, auction of abandoned/discontinued mines by CIL on the revenue-sharing basis and better coordination between Central and State Governments, have paved the path for increased self-dependency in the coal sector. The domestic supply of coal is expected to be more than the requirement for power generation in the next 2-3 years which will ensure that coal is available to other sectors.
Due to poor deposits of oil and gas in India, coal can be a way for India to reduce import dependency. And one of the best ways to ensure the clean utilisation of coal is through coal gasification. Coal gasification is a process that is more environment-friendly as compared to the combustion of coal and can be a better option for the future use of coal. Through products derived from Syn gas (produced via gasification of coal), such as Methanol, Ethanol, Ammonia, Ammonium Nitrate, and Dimethyl Ether (DME), imports can be substituted. And syn-gas can also be used for producing Grey/Blue Hydrogen for steel-making and for usage in refineries.
With India targeting net zero emissions by 2070, the future of coal depends on coal gasification as the process generates less CO2 and it is also easy to capture CO2 produced during the gasification process. Coal gasification strategies consist of four major components, such as — making coal available for coal gasification projects, identifying suitable coal gasification technologies, including Carbon Capture, Utilisation and Storage (CCUS) and setting up coal gasification projects and market dynamics for the end-products which are expected to face a challenge from imported products based on natural gas.
The coal sector in India has witnessed steady growth over the last eight years. All India coal production in FY22 was 777 MT, with a growth of 8.5 percent over FY21, and registering a substantial increase from 566 MT in FY14. Coal production from captive mines has also registered a 30 percent growth in FY'22 with a production of 86 MT. Similarly, domestic coal offtake witnessed 18.4 percent growth in FY'22, amounting to 818 MT, which is substantially higher than the offtake level of 572 MT in FY14. In FY23, till December, there has been a growth of 16.1 percent in coal production over the last year as the figure settled at 607.3 MT and an increase of 6.9 percent in offtake with 637.2 MT. Five tranches of commercial coal auctions have been successful, consisting of 64 coal blocks with a total peak-rated capacity of 152.4 MT. In FY24, coal production from captive/commercial blocks will also supplement Coal India's production target of 780 MT and SCCL's 75 MT and will ensure domestic coal production of 1 BT.
The measures taken by the Ministry of Coal are expected to make coal available to sectors other than power, including for coal gasification. With a view to incentivise the availability of coal for coal gasification, the Ministry of Coal has also issued directions to CIL/SCCL to create a separate window under NRS Linkage Auction Policy 2016 for coal gasification projects for long-term supply with desired quality and quantity. Further, to ensure the availability of coal at a reasonable price, provisions have been made for a 50 percent rebate in revenue share for commercial coal block allocatees when coal is supplied/used for gasification projects. These measures will ensure long-term availability of coal from a single source for companies interested in setting up plants through the linkage of coal.
Indian coal has inherent high ash and most of the gasification projects running outside the country, including in China, are based on low-ash coal. Finding the right technology for coal gasification for Indian coal has been a challenge. Jindal Steel and Power Ltd (JSPL), in its Angul plant, is successfully running a gasification project based on fixed bed technology for steel-making under the DRI route and is planning to increase its capacity. Similarly, Talcher Fertiliser Plant (TFL) is under construction and it will utilise high-ash coal blended with pet coke in gasifiers using Entrained Bed technology. Through the Department of Science and Technology (DST) and CSIR, the government has been developing indigenous technology. Agencies such as BHEL and THERMAX, in association with IIT-Delhi and CIMFR, Dhanbad, are working on developing Fluidised Bed technology for coal gasification which appears to be the most suited for high ash coal.
BHEL, in its Trichy plant, has developed 168 TPD combined cycle Fluidised Bed Gasifier integrated with 6.3 MW IGCC Electric Power Generating facility and Advanced Pressurised Fluidised Bed Gasifier in Hyderabad with 1.2 TPD with multiple fuel firing. Similarly, THERMAX, along with IIT-Delhi, has developed a 6-TPD Oxy blown Bubbling Fluidised Bed Gasifier, which has been tested with high ash Indian coal, and this gasifier was operated till 6 bar pressure.
CIMFR is also working on developing Oxy blown Pressurised Fluidised Bed gasifier of 1.5 TPD capacity which is running on a pilot scale. The government is planning to come up with a policy to support these initiatives and take up projects upto demonstration level of 100-300 TPD size by providing financial support in terms of capital subsidy. However, till the development of Fluidised Bed technology in India up to commercial scale and the advancement of Entrained Bed technology for high ash coal, new gasification projects are expected to utilise dry feed Entrained Bed technologies such as Air Products (Shell), Siemens (BBP Babcok Borsig Power /Noell), Uhde (Prenflo /Krupp Coppers) and Eagle, Bubbling Fluidised Bed technologies from ThyssenKrupp Uhde (HTW), SES (U-GAS) and KRW Kellog Rust Westinghouse and Fluidised bed technology from KBR Transport Gasifier. Air Liquid (LURGI) Dry Bottom Fixed Bed is already in use in India.
The government has already announced support for the setting up of four pilot projects for coal gasification and the conversion of coal to chemicals to help evolve the technical and financial viability of these technologies. In line with the announcement, the Ministry of Coal is planning to provide capital subsidy (15 percent max) to the first five projects, both in the public as well as the private sector, amounting to Rs 6,000 crore. The financial assistance will be disbursed in two stages — a 50 percent upfront payment and the balance on the successful completion of the plant. These will be in addition to the support for small-scale plants and R&D efforts for demonstration-scale plants. Further, for ensuring the availability of coal at an appropriate price, the government is also considering the reimbursement of the GST compensation cess levied on coal used for coal gasification. Coal gasification projects are capital-intensive and with climate concerns, organising finances for these projects is a challenge. Most of the products derived from Syn Gas like methanol, ethanol, ammonia, and ammonium nitrate, and its usage for iron reduction, will have to face challenges from imported products derived from natural gas.
In the public sector, to achieve the mission of coal gasification, besides the individual efforts of Western Coalfields Limited (WCL) and NLC India Limited (NLCIL) for lignite gasification, the constitution of joint venture companies has been planned to utilise the experience and expertise of Coal India in coal mining, the expertise of technology providers such as BHEL and of oil and gas companies like Indian Oil Corporation (IOC), and GAIL for marketing of end products. Coal India has already signed an MoU with BHEL, IOC, and GAIL for setting up coal gasification projects and the Coal India board has approved the formation of Joint Venture Companies for the purpose.
The supply of Synthetic Natural Gas to the fertiliser sector on a long-term basis has been agreed upon in principle as a substitute for imported natural gas and will ensure a long-term market for SNG produced from Syn Gas. This will ensure import substitution and threat against price volatility. The G20 policy for ethanol blending is also expected to include ethanol produced from coal gasification. And the Ministry for Petroleum and Natural Gas in its National Policy on Biofuels has made provisions for biofuels produced from Syn Gas to be considered as Advanced Biofuels [Clause 3.2(iii)]. A policy for 20 percent DME blending with LPG is also under consideration to ensure the substitution of imports.
Coal will continue to play a dominant role in meeting the energy demand of the country until 2047. However, with the development of indigenous technology in coal gasification, especially for high ash coal, various products from Syn gas will help in reducing import dependence in the energy sector as well as imports in chemical and pharmaceutical industries. The requirement of coking coal for steel-making through the blast furnace route is also expected to go down with the implementation of Syn Gas-based DRI plants and the availability of huge coal reserves will definitely help in cutting down the import dependency in power, steel, chemical and fertilizer sectors. Considering the import dependency of the country on oil and gas, coal (used for gasification) can be a better substitute for these imported fuels. And the varied use of coal will be in line with the government's policy of Make in India and Atmanirbhar Bharat.
The author is currently an Officer on Special Duty (OSD), Clean Coal Technologies, and a former Director (Technical) at the Ministry of Coal.
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