Preparing India’s great coal gasification dream for a takeoff

New Delhi: India is blessed with a huge reserve of coal, and at the current rate of consumption, it is expected to last for more than five decades. About 80 percent of coal produced within the country is used in thermal power plants. However, the reality of climate change and growing environmental concerns have necessitated that we review the way we use coal and think of sustainable and ‘greener’ ways to use the conventional fuel. The need to switch to greener and more sustainable way of generating energy may be urgent today, but it’s a subject that has long fascinated scientists in the field. And that led to the discovery of a technology that has turned out to be the buzzword in the coal sector at the moment — Coal gasification.

What is coal gasification?

Gasification of coal is a process in which coal is partially oxidated by air, oxygen, steam or carbon dioxide under controlled conditions to produce a fuel gas, known as Syn Gas. It is considered as a cleaner option as compared to burning of coal. Syn Gas produced from coal gasification can be utilised for generation of power, producing Synthetic Natural Gas (SNG), energy fuel (methanol and ethanol), production of urea for fertilisers and production of chemicals such as Acetic Acid, Methyl Acetate, Acetic Anhydride, DME, Ethylene and Propylene, Oxo chemicals and Poly Olefins. Even though the first mention of coal gasification dates back to the 1800s, it has not achieved wide commercial deployment to date.

Bringing coal gasification technology to scale: Challenges

In the Indian context, the advantages of bringing the coal gasification technology to scale are widespread because India is largely dependent on imports for meeting its energy needs. From the perspective of Atmanirbhar Bharat Abhiyan, coal gasification can help the government immensely in substituting imports and generate local employment due to investment of around Rs 4 lakh crore.

The value chain for this business consists of making coal available for gasification, setting up of coal gasification plants to produce Syn Gas, utilisation of Syn Gas for various industrial applications, financial modelling for making the product cost competitive and related policy changes which are in line with existing government policies. Coal Availability can be ensured by utilising the coal production potential of Coal India Limited (CIL). Coal can be supplied to CIL’s own proposed plants, devising suitable coal linkage policy for coal gasification, and policy provisions can be made on all future auctions of coal blocks for commercial mining.

One of the other issues facing the development of coal gasification in India is that proven technologies in several countries, like in China, use low ash coal (up to 25 percent), whereas most of Indian coal has high ash content (above 35 percent). The reserves of low ash content coal are limited and can be found in West Bengal’s Raniganj and Korea Riwa Coalfield in Madhya Pradesh. However, high ash content coal can also be gasified by blending with pet coke or low ash coal or by washing. Either of the two options will add to the cost and this is a sore spot because ultimately the commercial deployment of Syn Gas depends on how it competes with natural gas. 

The current strategy

In order to implement coal gasification projects, the government has already framed a three-phased strategy. Under Phase I, three commercial projects are in the pipeline which will employ coal gasification for steel-making, production of urea and methanol and will require 9 Million Tonnes (MT) of coal. The first project is under implementation at Angul DRI plant in Odisha which will use high-ash coal from Mahanadi Coalfields Ltd (MCL) after washing and blending with pet coke and gasify it for making steel. The other two projects are the Talcher Fertilizer Plant (also in Odisha) and Dankuni Coal to Chemical plant in Dankuni coal complex in West Bengal. 

The Phase II of the strategy will focus on identification of gasification projects based on low ash coal and a pilot project on high ash coal and Phase III will ensure achievement of at least 10 percent coal gasification by each coal producing company. 

What can the govt do?

Setting up of coal gasification plant is a capital intensive work and requires at least 48 months’ time. With no indigenous gasification licensor or foreign licensor looking for investment opportunity, various models like LSTK, BOO, BOM etc could be tried, utilising plant construction capabilities of Indian companies in association with foreign licensors for commercial gasification of coal. 

ALSO READ: Coal mines safety: High-level committee formed to review one coal company in 2 months

The scheme of import substitution will help in marketing of methanol, ethanol, urea, ammonium nitrate and gas-based DRI plants for steel making. And the Atmanirbhar Bharat Scheme will boost the requirement of gasification in pharmaceutical industry for production of APIs and methanol as solvent. Considering four years’ time frame for the construction of gasification plant, the Centre’s strategy aims at achieving 100 MT of coal gasification by 2030. Through directed policy initiatives and by incentivising the technology through less overhead cost and ensuring availability of coal, it is possible to usher commercial deployment of the technology. Coal gasification, if brought to scale, can accelerate India’s energy shift, reduce dependence on imports and go a long way in building an Atmanirbhar Bharat. 

The article has been reproduced from an address given by Peeyush Kumar, who is currently looking after the work of Director (Technical) at the Ministry of Coal, at ICOMS 2020 on January 23. Kumar is closely associated with the implementation of the government’s coal gasification plan.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)