Incentive Scheme for Coal Gasification
The Union Cabinet has approved a significant incentive scheme worth ₹37,500 crore to promote coal gasification, marking a major policy shift in India’s use of coal.
Key Features of the Scheme
- The state support for coal gasification projects has increased to ₹3,000 crore per project, up from ₹1,000 crore for private firms and ₹1,350 crore for public-sector units.
- Coal gasification involves converting coal into synthesis gas (syngas) which can be utilized to produce methanol, ammonia, urea, synthetic natural gas, and hydrogen.
Importance of Coal Gasification
- India imports over 90% of its methanol, significant quantities of liquefied natural gas, and ammonia, making it highly import-dependent.
- A robust coal gasification ecosystem could potentially reduce imports by $15 billion annually.
India’s Position and Potential
- India produced more than 1 billion tonnes of coal in FY25, with large reserves making it well-positioned for transitioning to gasification.
- Currently, 80% of coal is used for direct combustion, which is inefficient due to high ash content and low calorific value.
Industry and Policy Developments
- The Talcher Fertilizers plant in Odisha will be India’s first coal gasification-based urea complex, expected to produce 1.27 million tonnes annually.
- Jindal Steel’s Angul facility is a significant syngas-based steel plant, with more projects planned across the country.
- Joint ventures involving Coal India, GAIL, and Bharat Heavy Electricals are developing an integrated gasification ecosystem.
Challenges
- Gasification projects are capital-intensive and technologically complex, with sensitivity to global price cycles.
- China leads in coal-derived methanol and ammonia production, having invested continuously through commodity cycles.
Strategic Considerations
The debate should not be between coal and clean energy; rather, India should aim to use coal in cleaner, higher-value industrial pathways through strategic execution of coal gasification.
