The Ministry of Coal in India is laying groundwork for a Comprehensive Scheme to promote Coal Gasification. Their ambitious aim is to achieve 100 Million Tonne (MT) coal Gasification by the fiscal year (FY) 2030. This comes amidst considerations for an incentive that would reimburse the Goods and Services Tax (GST) compensation cess on coal utilized in gasification projects for a period of 10 years, following the commercial operational date (COD). This would only come into effect provided that the GST compensation cess is extended beyond FY27. This latest move is designed to offset the inability of entities to claim Input Tax Credit for the same.
Insight into the Proposed Comprehensive Scheme
This initiative is a strategic combination of measures aimed at maximizing natural resources usage while illustrating the financial and technical feasibility of Coal Gasification. Its principal objective is to draw in Government PSUs (Public Sector Units) and the private sector, thereby stimulating innovation, investment, and sustainable development in coal gasification.
The scheme proposes a competitive and transparent bidding process through which entities will be selected for the coal/lignite gasification scheme. Budgetary support will be provided by the government to eligible Government PSUs and private sector to spearhead coal gasification projects.
The significance of this initiative is its potential to alleviate environmental impact by reducing carbon emissions and promoting sustainable practices. This will contribute positively towards our worldwide commitments for a greener future.
An Overview of Coal Gasification
Coal gasification involves partially oxidizing coal with air, oxygen, steam, or carbon dioxide to form a fuel gas, which can replace piped Natural Gas, methane, and others, for energy production. In-situ gasification of coal, also known as Underground Coal Gasification (UCG), refers to the process of converting coal into gas while still in the seam and then extracting the gas through wells.
This process results in the production of Syngas, a mixture primarily composed of methane (CH4), carbon monoxide (CO), hydrogen (H2), carbon dioxide (CO2), and water vapour (H2O). Syngas can be utilized to manufacture a wide array of fertilizers, fuels, solvents, and synthetic materials.
For steel companies, switching to syngas derived from coal gasification plants could translate into substantial savings as they can replace the currently imported coking coal, which is expensive. The hydrogen obtained from this process can be utilized for diverse applications such as ammonia production and powering a hydrogen economy.
Promoting Coal Gasification Projects in India: A Necessity
India’s adoption of gasification technology has the potential to revolutionize the coal sector, lessening dependency on imports of Natural Gas, Methanol, Ammonia, and other indispensable products. Currently, India is importing about 50% of its Natural Gas, over 90% of its total Methanol consumption, and approximately 13-15% of its total ammonia consumption to meet domestic demand. This strategy aligns with India’s ‘Aatmanirbhar’ vision and could stimulate a surge in employment opportunities.
The integration of coal gasification is projected to contribute significantly towards the nation’s development by slashing imports by 2030.
A Sustainable Path Forward
To ensure sustainable implementation, it’s essential to carry out a comprehensive evaluation of the environmental, economic, and social implications of coal gasification projects. Continued investment in research and development will be instrumental in driving improvements in coal gasification technology, leading to higher efficiency and more environmentally friendly practices.
The development of a diversified energy mix that integrates renewable energy sources, energy efficiency measures, and sustainable alternatives to coal-based energy production should be a priority.
Learning from global experiences and applying best practices in coal gasification and the hydrogen economy implementation will lay the foundation for sustainable development.
