Rethinking the coal issue 

Source: The post is based on an article “Rethinking the coal issue” published in the Business Standard on 2^nd August 2022.

Syllabus: GS 3 Infrastructure: Energy Sector

Relevance: Coal Sector Reforms

News: At present, the country has been frequently facing coal supply crises. India is compelled to import expensive coal to keep its thermal power plants running.

Status of coal reserves in India

According to the Geological Survey of India’s Inventory, India has one of the highest coal reserves in the world. The total assessed geological coal resource in the country is 352 billion tonnes.

The bulk of India’s reserves, i.e., over 282 billion tonnes, consist of the relatively low calorific value thermal or non-coking coal. This coal is used to power most of the thermal power plants.

The country has fewer reserves of the higher quality coking coal, which is used in the metallurgical industry. Therefore, India needs to import coking coal.

History of coal sector regulation in India

The bulk of India’s privately run coal mines were nationalized between 1971 and 1973. It was because, private mines were mismanaged and there were many serious accidents and safety-related concerns for coal miners. Further, private players lacked the resources and the inclination to improve coal mining efficiency and production.

Issues with the coal sector at present

It is not expected that India imports non-coking coal to power the thermal power plants of India because India possesses a large reserve of non-coking coal.

Causes for our failure to meet domestic demand for thermal coal

Proximate Causes

(1) Although Coal India Ltd (CIL) has increased its production, it has not been able to keep pace with rising demand.

(2) The perpetually cash-starved state DISCOMS, which delay payments to producers, who in turn delay payments to the CIL.

(3) Bad logistic planning in India, due to which the coal remains available at pithead instead of being available to power plants.

(4) The private sector coal mines are still marginal to India’s demand-supply equation.

(5) Another issue is the environmental one. The Union government’s enthusiasm for encouraging renewable power production has often made it turn a blind eye to the thermal power sector because coal emissions are seen as a chief villain on the climate change front by everyone.

Ultimate Causes: Policy failure to take the long view of the coal sector. The CIL has not been able to solve the problem of production lagging behind demand. Further, even during the period of the 1991 reforms, the coal issue was not on the priority list.

What should be done?

The government needs to realize that coal demand cannot be ignored for at least three decades, if not more. Therefore, India needs to plan for coal as it will remain the mainstay of thermal power generation. Simultaneously, India should look for solutions to utilize domestic coal reserves present across the country, while also minimizing emissions

The coal emissions can be reduced through technologies like coal liquefaction and carbon capture, storage, and utilization (CCUS) technologies.

India needs to encourage research and development of carbon capture, storage, and coal liquefaction technologies, like being done by China, Indonesia, and several other countries.

The coal liquefaction from domestic mines could serve as an alternative source of gas when crude and natural gas prices go too high.