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Relevance: Issues involved in transitioning from coal-based industries to a clean energy model
Synopsis: In light of the recently released IPCC report, it is clear that India needs an energy transition towards cleaner energy sources from the current coal-based scenario, but it must be done in a way which secures an equitable outcome for the vulnerable sections of the society.
Issues involved
- Asymmetry in energy distribution: While 85% of coal production is concentrated in relatively poor eastern and central states of Jharkhand, Odisha, Chhattisgarh, West Bengal and Madhya Pradesh, over 60% of renewable energy potential (and 80% of current capacity) is concentrated in relatively wealthy southern and western states – Gujarat, Maharashtra, Rajasthan, Andhra Pradesh, Karnataka, Tamil Nadu and Telangana.
- Implications on govt revenue: The fossil fuel industries contribute significantly to the exchequer. Taxes on coal, oil and gas contributed 18.8% of the total revenue receipts of the central government and about 8.3% of the state governments in 2019-20. Thus, these taxes are essential for the government’s revenue and spending.
- Large scale of employment: The industry employs a large number of people, with at least 20 million people working in mines and factories. Automobile, iron and steel, and coal mining are the biggest employers. To put things in perspective, the coal-mining sector in the United States employed 54,000 people in 2019; in India, the figure is over 2.0 million.
- Lack of job security: In addition, the informal workforce is approximately four times the formal employees. As a result, a vast majority of workers don’t have employment security.
Therefore, the energy transition is more than technological fixes and investments; it is also about workers and communities who will be affected. To get this transition right, we will have to start developing policies and plans for a Just Transition and not merely an energy transition.
Measures
A Just Transition in India will need policy and planning for five key elements (the five R’s):
- Restructuring of the economy and industries in fossil fuel-dependent districts/ states;
- Repurposing of land and infrastructure, as these industries hold vast land and assets. For example, coal mines and thermal power plants alone have 0.3 million hectares of land, which can be repurposed to build a new green economy;
- Reskilling existing and skilling new workforce to avoid job loss and create a new workforce for the green industries;
- Revenue substitution and investments in Just Transition. This will require progressively moving taxes away from fossils and using fossil taxes like GST compensation cess (formerly coal cess) and District Mineral Foundation funds for Just Transition; and,
- Responsible social and environmental practices during the transition process to create a better world than today.
Way forward
Phase-out of fossil fuels is imminent; we have no choice.
