Fossil fuel is the key issue today for climate change. This topic seems to occupy energy experts on the role of coal in India’s energy mix in the future against the backdrop of the COP26 conference. Despite the fact that coal meets around 55 per cent of the country’s primary commercial energy requirement the cry for coal’s exit emanates basically from the environmental point of view.
With environmental concerns intensifying the world over, eco-activists are seeing red when they hear about fossil fuel use. Rightly so, perhaps. Coal is responsible for 40 per cent carbon oxide emissions worldwide. The rallying cry against coal’s use is getting more strident, and the movement to phase out this fossil fuel from the global energy mix is gaining priority. But what make coal the preferred fuel of choice in the country is its availability, abundance and affordability. The country’s entire coal resources base is 326 billion tonnes.
Coal India Limited (CIL) the state owned Maharatna company, holds around 54 per cent of the coal resources base. CIL accounts for nearly 83 per cent of India’s entire coal output and fuels 127 thermal power plants, out of 135, monitored by Central Electricity Authority. Close to 80 per cent of CIL’s overall supplies stoke the coal-fired power plants of the country.
CIL’s production target for the ongoing fiscal is 670 mtpa but realistically the company could achieve around 650 mtpa. With the expected rise in future demand, 36 mining projects were cleared by CIL in FY21. This is the highest ever in a single year, with sanctioned capacity of 332.77 mtpa and incremental capacity addition of 220.12 mtpa for the existing mines. The new capacity will come up in phased manner from 2024 onward to ensure the nation’s energy security and reduction of coal imports to the greatest extent possible. The move would also result in curtailing forex outgo arising from coal imports.
India is not endowed with sufficient reserves of non-coking coal used in steel making. This necessitates import of this variety of coal, which is inevitable. Also, there are 14 imported coal-based power plants that rely on coal sourced from abroad for their generation. In FY20, India produced 730 mtpa of coal (by CIL and private companies) and the country imported 249 mt of coal – both coking and non-coking coal.
According to IEA, India is set to experience the largest increase in energy demand of any country worldwide over the next 20 years as its economy continues to develop and bring greater prosperity to its citizens. At the current rate of coal production and even after taking into account the projected growth in the ensuing years, the present coal resources under CIL’s fold will enable it to meet the expanding coal demand of the country to a considerable extent in the future. Also, more than 90 per cent of 195 coal plants being built around the world are in Asia according to data from Global Energy Monitor USA, of which 95 in China, 28 in India and 23 in Indonesia.
Now, a new generation coal-fired powerplant called the Ultra Super Critical Plant is becoming popular. This high efficiency plant results in less coal consumption for generating the same amount of electricity and reduces carbon dioxide emissions by 3.3 per cent. In 2019, NTPC had adopted the technology and set up India’s first Ultra Super Critical Plant in Khargone in Madhya Pradesh, with a capacity to produce 660 MW.
Proponents and opponents of using coal are aligned against each other across a clear divide, each convinced of their own arguments. Truly, much logic could be found on both sides. But it is too early to write coal’s epitaph. Realism dictates that a humongous energy contributor like CIL cannot disappear from the energy system abruptly. There is great peril in that.
Notwithstanding the role of renewable energy sources, the demand for coal in the country will be present for at least the next two decades or more. As indicated by a KPMG study, coal will continue to be the dominant fuel in the country’s energy landscape in the foreseeable future. Though its share may come down in percentage terms there will be increase in volume terms in the years to come.
CIL has stepped into clean energy. “Solar power generation sits high on our priority list of renewable energy. We have lined up solar power projects of 3,000 MW capacity by FY24 through joint venture models,” says CIL chairman Pramod Agrawal. In April, the company also signed a first of its kind power purchase agreement for the sale of 100 MW solar power with Gujarat Urja Vikas Nigam Limited (GUVNL). The tenure of the agreement period was for 25 years.
The company is also foraying into newer avenues like coal bed methane extraction, surface coal gasification, coal to methanol on the BOO model and setting up washeries. Other than solar projects, where much of the funding would be met internally, in newer diversification ventures the funding exposure will be minimal with no technological risk. Its prospective partners will bring most of the capital and technology to the table.
In a sample study conducted by CIL, a back-of-the-envelope calculation estimates 30 kg of CO2 emissions for every tonne of coal produced. However, there may be slight variance from mine to mine. Over the last four financial years CIL has planted around 78 lakh saplings spread over 3,212 hectares, under its afforestation programme. To date, a total of 40,000 hectares have been covered. The company is aiming for a further 10,000 hectares of afforestation till 2030, which translates into the removal of five lakh tonnes of C02 from the atmosphere by then.
The report by IEA suggests, that global spending on coal projects dropped to its lowest level in a decade in 2019. And, over the last 20 years, more coal-fired power plants have been retired or shelved than commissioned. The big holdouts are China, India and parts of Southeast Asia, but, even there, coal’s once-swift growth is nowhere as swift as it was just a few years ago.
Ten years down the line, the coal sector will still be a force to reckon with in the country’s energy frontline. The energy-source mix after a decade is envisaged to be different from the present scenario with renewable sources making inroads. However, coal will remain as the robust energy source. By then, spurred by commercial mining policies, private players would start contributing to coal’s growth. But the coal demand for the power sector may gradually slide with time. It has to then explore opportunities outside the power sector.
While pursuit of cleaner sources of energy is welcome from an environmental perspective, doing away with coal too soon in the country may have implications for the economy and the country’s energy security interests. The writing is on the wall – renewables will dethrone coal in the long run. The only big question is when?