Govt plans financial support for coal gasification plants in 2024

Rolling out a policy to provide financial support for coal gasification projects, augmenting production and promoting underground mining activities are among the government's priorities for the coal sector, which is the key to meet the country's rising electricity demand. Besides, efforts will be made to bring more captive and commercial coal mines into operation, improve the quality of the dry fuel and transportation infrastructure for environmental sustainability. Digitisation of mine records is also on the cards.

In an interview, Coal Secretary Amrit Lal Meena said the government has already notified two policies with respect to coal gasification and plans to provide financial support as well as tax incentives for such projects. The ministry of coal has set a target to gasify 100 Million Tonnes (MT) of coal by FY30 in line with its energy transition plans. "Now, we are coming out with a policy for certain financial support and tax incentives (for coal gasification projects). This is under consideration... and we will ensure that coal gasification will see positive acceleration," Meena said.

He also emphasised that the government is working to create an enabling environment to promote coal gasification. Coal gasification is expected to reduce imports by 2030 as well as reduce carbon emissions and foster sustainable practices. In order to address environmental concerns in the coal gasification process, the government has mandated grant of green clearance wherein the project proponent has to conduct environment impact assessment studies and prepare an environment management plan. The plan will be duly examined by an expert committee before taking up any activities related to establishment of a coal gasification plant.

The Centre has also formulated a policy wherein, a provision has been made for 50 per cent rebate in revenue share for all future commercial coal block auctions for the fossil fuel used for gasification. This will be subject to the condition that the quantity used for gasification is at least 10 per cent of the total production. Separate auction window under the non-regulated sector has also been put in place for making coal available for new coal gasification plants.

According to the secretary, out of the total 91 commercial blocks and 55 captive mines, 51 mines are currently operational. These blocks produced 116 MT of coal in the last financial year and the target is 162 MT for the current fiscal ending March 2024. The government is aiming to scale up coal production from underground mines to 100 MT by 2030 by deploying mass production technology.

India's coal sector is the second largest in the world with production rising 14.8 per cent to 893 MT in 2022–2023 financial year. The country accounts for more than 10 per cent of the global coal production and is second after China.

In order to achieve self-reliance in coal production and reduce imports, the government is working towards increasing the domestic coal production output to over 1 billion tonnes in 2023–2024 and further increase it to 1.5 billion tonnes by 2029–2030.

For now, coal, which powers thermal power plants, is key for meeting the country's rising electricity demand. Regular reviews by the coal ministry to expedite the development of coal blocks and single window clearance portal for the sector, among other factors, have helped in increasing the production of the dry fuel.

A Project Monitoring Unit has also been set up for hand-holding coal block allottees for obtaining various clearances for early operationalisation of coal mines.