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Renewed Focus on Alternative Coal Usage and De-Coaled Mines
Government considering alternative use of coal and emptied mines
Context: With a steady rise in domestic coal production and a stabilized supply to the power sector, the government is now planning to renew focus on alternative uses of coal and utilize de-coaled mines for other energy projects.
Emphasis on Coal Gasification
- The government aims to gasify 100 million tonnes of coal by 2030.
- Coal gasification is a capital-intensive process where coal is converted into syngas (synthetic gas), which can be further processed into methanol, ammonium nitrate, synthetic natural gas (SNG), and fertilisers.
- Gasification in India faces challenges due to the high capital intensity and the low quality of Indian coal.
Public Sector Investments
- The Centre has approved investments by Coal India Ltd (CIL) in joint ventures with Bharat Heavy Electricals Ltd (BHEL) and GAIL to undertake coal gasification projects.
Viability Gap Funding (VGF) Scheme
- To promote coal gasification, the government launched an ₹18,500 crore VGF scheme in January 2024.
- Companies selected under this initiative include: Jindal Steel and Power Ltd, New Era Clean-tech Solution Pvt Ltd, and Greta Energy Ltd.
Push for Pump Storage Projects (PSPs) in De-coaled Mines
- Initially proposed a few years ago, the plan to use de-coaled mines for hydro-based PSPs is being revived.
- PSPs involve two reservoirs at different heights; power is generated as water flows through turbines.
- De-coaled mines offer natural height advantages, making them suitable for hydro storage that can be used for night-time power generation.
- Though Coal India, NHPC, and the Ministry previously assessed PSP feasibility, the plan did not take off.
- A renewed push is expected to initiate actual work on these projects soon.
Context of Reforms and Production Growth
- Since 2020, significant reforms have included:
- Opening the coal sector for private participation.
- Launch of commercial coal mine auctions.
- Following the 2021 coal crisis, there was a rapid increase in coal production to meet the demands of the power sector, leading to record output levels.
