Coal Ministry Drives Initiatives to Boost Coal Gasification Projects Across the Nation

• India's vast coal reserves, estimated at 378 billion tonnes with about 199 billion tonnes classified as 'proven', present significant opportunities for energy production.

Highlights:

• Currently, around 80% of India's coal is utilized in thermal power plants. As the country embraces cleaner energy solutions and renewable sources gain momentum, the Ministry of Coal is proactively ensuring sustainable use of coal.
• Coal gasification is a thermo-chemical process that converts coal into synthesis gas or "syngas", primarily consisting of carbon monoxide and hydrogen. With India importing approximately 83% of its oil, over 90% of its methanol, and 13-15% of its ammonia, coal gasification offers an opportunity to reduce reliance on imports and conserve foreign exchange, especially in the oil, gas, fertilizer, and petrochemical sectors. The gasification projects will lead to diversified use of coal partial import substitution for oil and gas and cleaner utilization of India’s abundant coal reserves.
• Furthermore, to promote coal gasification, the Ministry offers a 50% rebate in revenue share in commercial auction policies for gasification coal, established a new sub-sector for syngas production, and provides long-term coal allotments to gasification plants.

Key Features of Coal Gasification Scheme:

• Financial Outlay: ₹8,500 crores allocated across three categories:
• Selection Process: Category I involves a transparent selection process for Government PSUs/JVs, while Categories II and III utilize a transparent bidding process.
• Financial Incentives: Grants will be disbursed in two installments: the first after the bank loan disbursement and 30% equity contribution, and the second after achieving 50% production capacity and one year of continued production.
• The Ministry has published the Requests for Proposals (RFPs) for providing financial incentives to coal gasification projects on May 15, 2024, on the websites of the Ministry of Coal and MSTC. Interested private sector entities as well as Government PSUs can register themselves on the MSTC website for participating in the bid.
• The Ministry of Coal has also initiated India’s first pilot project for Underground Coal Gasification (UCG) at Kasta coal block in Jharkhand. This pilot initiative marks a major milestone for Coal India Limited (CIL) and its subsidiaries, positioning India at the forefront of adopting cutting-edge underground coal gasification technologies.
• The Ministry of Coal has invited applications for Coal/Lignite gasification projects from Government PSUs and Private sector entities across all categories, unlocking economic potential, boosting revenues and creating new job opportunities.
• Coal gasification is emerging as a highly promising initiative, drawing enthusiastic responses from various sectors. The project is not only showcasing a positive outlook for transforming coal into valuable products but is also generating significant interest from investors. With the potential to create numerous job opportunities and stimulate economic growth, coal gasification is set to revolutionize the industry paving the way for a more sustainable and prosperous future in energy security.
• The Ministry of Coal remains committed to promote coal gasification projects, which hold immense potential for transforming coal into various valuable products. The scheme and incentives are designed to attract Government PSUs and the Private Sector, thereby encouraging innovation, investment, and sustainable development in the coal sector.
• The coal/lignite gasification scheme represents a significant leap forward in our quest to transform the coal sector by adopting clean coal technologies and the government is committed to ensuring the success of coal gasification projects.

Prelims Takeaway:

• Coal
• Shale Gas