Last Update 24 April 2023

Why coal gasification may play a pivotal role in India's energy mix

SCG projects are pushed by GoI to attract more private investments.

Coal gasification may play a pivotal role in India's energy mix in the coming decade. Globally, energy prices especially that of gas are going up and in this milieu it becomes quintessential for India to evaluate all possible alternatives to reduce the import burden induced from LNG sourcing.

"A fast-growing economy like India needs greater investment in coal production and gasification projects" - Mrs. N.Sitharaman, Finance Minister -GoI.

Therefore,  the Coal ministry is in the works to design a detailed policy framework in order to incentivise private sector companies for developing coal gasification projects. The policy is most likely aimed at providing capital subsidy, tax exemption and assured availability of coal and could possibly be ready by May 2023.

Mr. Ravi Shekhar, Director & Head, of Eninrac Consulting says “Surface coal gasification (SCG) might evolve as a preferential alternative to substitute the burden of importing LNG in India substantially. Additionally, with coal to chemical tapping opportunity of producing methanol, ammonia and ammonium nitrate it could lead as a catalyst for India’s reduction in import volumes of these chemicals. For instance, the country imports 92% of Methanol for its consumption which has diversified end use extending from olefins to gasoline blending options. Separate auction window of coal from CIL, allocation of ear-marked land for development of SCG projects, dedicated policy for methanol blending programs such as M15, M85 and M100, incentivizing the domestic off-take of methanol and incentivizing revenue share of coal block auction may serve as the right fillip to push enhanced SCG ecosystem in the country. Essentially different models could serve as potential for SCG projects like capital grant, hybrid model and operational grant model as per interests of the industry and Government”
The policy will aim to incentivize private sector companies for developing coal gasification projects, Ministry of Coal has formulated a policy wherein, a provision has been made for 50% rebate in revenue share for all future commercial coal block auctions for the coal used in gasification purpose provided the coal quantity used for gasification is at least 10% of total coal production. Further, separate auction window under NRS sector has been created for making coal available for new coal gasification plants.

- Communications Team


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