New Delhi: India just signed a land-leasing agreement for its first-ever indigenous coal gasification project to come up in Odisha, six years after the National Coal Gasification Mission was launched by the central government. Union Minister of Mines, G Kishan Reddy, addressed the signing ceremony in the throes of the war in West Asia and consequent LPG crisis, on Wednesday.
“Coal gasification will be a game-changer, with the potential to significantly reduce import dependency and conserve valuable foreign exchange,” said Reddy in a press release.
The land-leasing agreement was signed between Bharat Coal Gasification and Chemicals Limited (BCGCL) and Mahanadi Coalfields Limited (MCL), both public sector undertakings, to build a Coal to Ammonium Nitrate project plant in Lakahnpur, Odisha. This will be the first time that a coal gasification project will come up in India using indigenous technology, which was developed by Bharat Heavy Electricals Limited (BHEL).
Coal gasification is the process of converting coal into various gases, rather than burning it directly, and then using those gases for multiple purposes. Through controlled heating using oxygen and steam, coal is converted into a fuel gas known as syngas. This syngas is what acts as the base for other products like ammonia for fertilisers, synthetic diesel for fuel, and even methanol and dimethyl ether, which can be used as LPG (liquified petroleum gas) substitutes.
Despite having the world’s fifth-largest coal reserves, India’s actual coal gasification projects are minimal. The National Coal Gasification Mission was introduced in 2020 to develop 100 million tonnes of capacity by 2030. However, the only operational coal gasification project right now is one run by Jindal Steel in Angul, Odisha, which makes up around 2 per cent of the government’s capacity goal.
“All the petroleum, crude oil, ammonium that we import currently – India has a ready alternative, which is coal gasification,” said Reddy to the media on Thursday. “We invite more investments in this field, both private and public players.”
What is coal gasification?
The earliest evidence of coal gasification comes from London’s streetlights in the 1800s, when the city introduced public lighting. These lights were lit using flammable gas made from coal distillation, and even until the 1930s, London still used coal-produced gas to light its streets.
However, the strategic usage of coal gasification technique for producing synthetic fuels only became prevalent during World War II, when Germany, severely lacking energy imports, decided to invest in underground coal-to-liquid technologies to produce fuels. Coal gasification and liquefaction work on similar technologies, and were popular well into the 1950s in Europe and South Africa, according to a report titled Fuelling the Fire, by environmental NGO Friends of the Earth International.
After the prevalence of oil and global supply chains in the 1970s, buoyed by the Organisation of Petroleum Exporting Countries (OPEC) in the West Asian region, coal gasification took a back seat in national priorities. However, in the 1990s, countries like South Africa and China began investing in coal gasification technologies again, to produce materials for alternative fuels and fertilisers.
Currently, China is the undisputed leader in coal gasification technology, with over 340 million metric tonnes of capacity already running. Coal gasification produces 60 per cent of China’s methanol, reducing the reliance on imports and building energy security on the way. For comparison, India currently imports 90 per cent of its methanol requirements. This is also what the Indian government had in mind while introducing the National Coal Gasification Mission.
Also read: India ready for ‘unprecedented demand for coal,’ says Coal ministry
India’s coal gasification plans
The Union government has approved an outlay of Rs 8,500 crore to promote coal gasification in the country, with seven plants finalised and three ‘bhoomi pujans’ completed. The latest BCGCL and MCL plant, whose land agreement was signed on 1 April, will, however, take a minimum of two years to come up, since coal gasification plants are capital-intensive initiatives.
This capital intensity was cited as one of the challenges facing India’s coal gasification plans by a report in Deloitte. The author Anish Mandal, a Partner at Deloitte India, also spoke about how India has very limited capacity to provide technology for coal gasification plants, and how coal gasification plants are still ambiguous from a business point of view.
However, the Indian government has recently encouraged faster adoption of coal gasification technologies, even allowing Indian state-run companies to import critical equipment from China. In a report on 30 March, Reuters said that Indian PSUs like BHEL and SAIL have been allowed to source equipment, including coal-gasification equipment, from China.
(Edited by Ratan Priya)