Relevance: GS-3 (Economy, Energy Security, Environment) | Source: The Indian Express

1. What is the News?

The Union Cabinet has approved a massive ₹37,500 crore financial scheme to promote “Coal Gasification” in India. The main goal is to produce cleaner energy, reduce our dependency on imported fuels, and protect India’s economy from global supply chain shocks (like the ongoing West Asia crisis).

2. The Concept: What is Coal Gasification?

To understand this simply, we are changing how we use coal.

• The Process: Instead of directly burning solid coal for electricity, we heat it chemically with steam and oxygen. This turns the solid coal into a highly valuable, combustible gas called Syngas (Synthetic Gas).
• Why is it ‘Clean’? Because we turn it into a gas first, we can filter out harmful pollutants (like sulfur and ash) before using it.
• The Magic of Syngas: This gas is incredibly useful. It acts as a raw material to manufacture three critical things for India:
  1. Fertilisers: Like Urea and Ammonia.
  2. Clean Fuels: Like Methanol and Synthetic Natural Gas.
  3. Steel: It replaces expensive, imported ‘coking coal’ in steel making.

3. Key Features of the Scheme

• Equal Opportunity: Unlike older policies, this scheme treats both government companies (PSUs) and private companies equally.
• Massive Funding: The government will give financial help of up to ₹3,000 crore for a single project to encourage companies to build these plants.
• The National Target: The ultimate mission is to achieve 100 Million Tonnes (MT) of coal gasification capacity by the year 2030.

4. Administrative Significance (Why does India need this?)

• Import Substitution: India currently spends billions of dollars importing Liquefied Natural Gas (LNG), urea, and coking coal. By making these directly from our own coal, we save precious foreign exchange and improve our national trade balance.
• Energy Independence (Atmanirbhar Bharat): India has massive domestic coal reserves (over 401 billion tonnes). Gasification allows us to maximize our own natural wealth rather than depending on unstable Middle Eastern suppliers.

5. Challenges to Implementation

Despite the government push, private companies face three major hurdles:

• Costly Setup (High Capital): Building a coal gasification plant is almost twice as expensive as setting up a standard gas-based power plant.
• Heavy Taxation: The special machinery required for these plants must be imported and attracts very high GST and customs duties.
• Market Risk: Private companies hesitate to invest heavily because there are no guaranteed long-term buyers (offtake agreements) for the end products they manufacture.

UPSC Value Box 

• Syngas Composition: A mixture made primarily of Carbon Monoxide (CO) and Hydrogen (H2).
• Auction Incentives: To attract private companies, the government is offering a 50% discount on revenue sharing for commercial coal mines, provided the company uses at least 10% of that mined coal for gasification.
• Strategic JVs: Coal India Limited (CIL) has formed special Joint Ventures with BHEL and GAIL to set up these massive plants.

With reference to ‘Coal Gasification’ and India’s energy transition, consider the following statements:

1. Coal gasification is a process of complete combustion that converts solid coal directly into electricity with zero carbon emissions.
2. Syngas (Synthetic Gas), the primary product of coal gasification, is predominantly a mixture of Carbon Monoxide and Hydrogen.
3. The Government of India has set a strategic target to achieve 100 million tonnes of coal gasification capacity by the year 2030.

Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3

Correct Answer: (b)