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| Introduction: Contextual introduction. Body: Write some benefits of reducing coal imports and increasing domestic production of coal. Also, write some challenges in domestic production of coal. Conclusion: Write a way forward. |
India is the 2nd largest producer and consumer of coal in the world after China. Coal stocks at power plants across the country are down in comparison to their normal levels. It accounts for 55% of the country’s energy needs. Since the onset of the pandemic, after the Ukraine-Russia war, commodity prices, especially that of energy, have surged worldwide.
Benefits of reducing coal imports and increasing domestic production of coal:
- An increase of over 30 per cent in coal production from April to June this year, has helped reduce inflationary pressures in the economy.
- There is need of increasing domestic coal production to meet the growing energy demand.
- To reduce the exposure of the domestic economy to the price volatility of international markets.
- It would help in bridging the current account deficit of the country.
Challenges:
- External constraints: The coal sector has been facing a number of like environment and forest clearances and acquisition of land.
- Complex norms and procedures: Governments should revise and simplify the norms and procedures to the extent possible.
- Lacking in technology: There is also urgent need for introducing more advanced technologies and reorienting managements to adopt modern management systems in operations.
- No dedicated regulator: To address the issues arising from a greater role of the private sector. There are several issues where new private commercial miners would need help.
- The coal companies are lacking in strategic action plans to improve mine productivity, capital equipment utilization, mine recovery ratio etc., to international standards.
- Uneven distribution of coal reserves across the country.
- The draft National Electricity Policy has not yet been finalised by Ministry of Power and not clearly articulate the importance of domestic coal-based generation.
- Increasing domestic production of coal and diversifying the production base are both needed but there is issue with the quality of the coal
The path to achieving 500 GW of renewables needs to be gradual, ensuring an orderly transition as coal is unavoidable in the near future. Actions on the existing issues should to be taken to overcome the challenges and deepen and strengthen coal sector reforms.
