India is the third largest consumer of energy in the world and is highly dependent on its imports. The country imports almost 80 percent of its crude oil needs and 50 percent of its natural gas needs. In 2022-2023, the country imported almost 10 percent of its coal consumption. Rapid progress has been made in recent years in installing renewable energy capacity, reaching around 180 gigawatts and targeting 500 GW by 2030.
But the operating factor of renewable power plants is only 20 to 25 percent, compared to 80 to 85 percent of thermal plants that use coal or natural gas as fuel. The contribution of renewable energy, including hydropower, to total generation was about 16 percent in 2022-2023. The contribution of renewable energy to meeting increasing energy demand is likely to be limited in the short term. Therefore, the country will be dependent on conventional energy sources in the short and medium term. We must explore and exploit all possible energy sources.
Coal remains the workhorse of our energy sector. Coal and lignite accounted for almost 73 percent of energy generation in 2022-2023. India has abundant coal resources and it is only natural that this coal is used to meet a large part of our energy needs.
The coal gasification plan, announced in the Finance Minister’s budget speech in February, aims to gasify 100 million tonnes of coal by 2030. It’s a step in the right direction. The government has also approved financial support of up to 15 percent of the cost for public and private sector projects. Synthetic natural gas or coal gas generated by coal gasification can be used as a fuel or as a raw material for the production of chemicals such as ammonia and methanol. Coal gas can also be used to generate energy. In fact, a combined cycle power plant based on coal gasification gives much higher efficiency than conventional coal-based power plants. The composition of coal seam gas can be varied to meet the needs of downstream consumers who will use it as fuel or as animal feed or both. Coal gas can also be transported via existing pipelines. This will reduce the burden on the railways, a major transporter of coal.
Coal gasification technology has a long history. South Africa and China are pioneers in the use of coal gasification for the production of fertilizers and chemicals. In India, two large fertilizer plants based on coal gasification came into operation in 1980, at Talcher and Ramagundam. Unfortunately, these plants did not perform well for several reasons. The ash content in the coal supplied to these plants was higher than the design coal input for gasifiers. The problem could have been solved by installing an additional gasifier. But continued power disruptions and poor performance of other equipment added to the misery. Lack of additional investment to solve these problems made the facilities unviable. As losses continued to mount, the two factories were closed in 1999. All later generation fertilizer plants installed in-house power plants and proven equipment and have performed well. It was downright unfair to blame coal gasification for the poor performance of coal-fired power plants.
Subsequently, serious efforts have been made to develop indigenous coal gasification technology suitable for Indian coal. There was considerable success in operating pilot plants. At one point in the 2000s, there were studies to set up a fertilizer plant and a coal gasification power plant. A few other industries, including steel, have set up coal gasification plants. But no substantial progress was made.
The government, as part of its policy to increase urea production for self-sufficiency, has approved the construction of six gas-based urea plants that have been commissioned in the past five years. A coal-based urea plant was also part of the plan and is under construction at Talcher. Its commissioning is likely to take place in the next financial year. The latest developments in coal gasification technology and better equipment design should make the new plant successful. It will also be a viable route due to the high cost of competing fuels, i.e. natural gas. The bonus is that much of the carbon dioxide created during the process will be used to produce urea.
If the gasification target of 100 million tons of coal is achieved by 2030, it will more than double the country’s gas production. The challenge remains that Indian coal is not of very good quality and has a low heat value due to its high ash content of up to 35 percent. There are a number of washing areas at the mine head that remove excess ash. This is called the enrichment process. Although the enrichment process is well established, its economics are not always favorable due to the loss of carbon and therefore fuel and emissions. Therefore, one must optimize the degree of profit to minimize the losses. If the ash content is not very high, for example less than 15 percent, it may be better to use coal from the mine without enrichment.
It is hoped that Coal India Ltd (CIL), the driver of the gasification plan, and others will exercise due diligence regarding the type of coal supply, the gasification technology to be used, the composition and heat value of the gas produced and the engagement with downstream consumers . It is encouraging to note that CIL has initiated consultations with stakeholders, including potential investors and consumers of synthetic natural gas. This is essential to avoid the half-hearted attempts of the past and to make this energy supply alternative a success.
These are the personal opinions of the writer. They do not necessarily reflect the views of www.business-standard.com or ‘Business Standard’ newspaper
First print: March 8, 2024 | 5:18 PM IST
