Transformation of Coal Through Gasification in India

Coal in India is transitioning from being a mere combustion fuel to a strategic industrial feedstock, thanks to advancements in coal gasification. This process, now a national priority, involves a chemical process where coal is heated in a low-oxygen environment to produce synthesis gas (syngas), which can be used to create various industrial products.

Gasification Process and Potential

• Gasification is a chemical process occurring at temperatures between 700-1,500°C.
• Produces syngas, a mixture of hydrogen and carbon monoxide, unlocking a value chain for products like ammonia, urea, methanol, and synthetic natural gas.
• Supports value maximisation in resource-constrained economies like India.

India's Initiative and Resource Position

• Underground Coal Gasification (UCG) is being piloted in Jharkhand.
• BHEL developed technology for India's high-ash coal to produce methanol.
• India produced over 1,047 million tonnes of coal in FY25 with vast proven reserves.
• Despite large reserves, 80% of mined coal is used for power—an underutilisation scenario.

Addressing Import Dependence

• India imports 88% of crude oil, 90% of methanol, and 13-15% of ammonia.
• Ammonia imports cost $982 million in 2024, with geopolitical disruptions impacting inflation.
• Coal gasification could reduce imports by $15 billion annually and save between ₹60,000-90,000 crore.

Policy and Investment Momentum

• The ₹8,500 crore viability gap funding scheme aims for 100 mt of gasification by 2030.
• A ₹37,500 crore unified incentive scheme supports projects in LNG, urea, ammonia, methanol, and reduced iron.
• Seven major gasification projects worth ₹64,000 crore are underway across India.

Private Sector and Project Developments

• Jindal Steel’s Angul facility is among the world's largest syngas-based steel plants.
• New Era Cleantech and NLC India are expanding the ecosystem with significant investments.
• Several joint ventures and projects are in progress, including initiatives by L&T Energy Hydrocarbon Onshore.

Enabling Conditions and Economic Logic

• India benefits from abundant coal supply, adapted technology, policy support, and increased private participation.
• Syngas can replace imported LNG, provide domestic urea, and aid in the transition to a hydrogen economy.

Challenges and Strategic Execution

• Gasification projects are capital-intensive and susceptible to global price cycles.
• China’s approach shows the importance of strategic prioritization and patient capital deployment.

India is at a pivotal juncture where coal gasification could redefine its energy security, industrial policy, and economic resilience if executed strategically. The focus should be on transforming coal from fuel to feedstock, offering economic and environmental opportunities.