China insulated itself against energy shocks. India is ‘all talk, no walk’

China patiently invested capital, skill and technology in coal gasification. Unlike it, we won’t move from words to action. As crude prices decline, we lose interest.

Illustration: Shruti Naithani/ThePrint

While tracking India’s travails over LPG and natural gases impacting households, MSMEs and fertiliser production in particular, I got curious about how China, with a GDP five times ours, looks so calm. The upshot: it has been wise, and we, frightfully complacent.

Like us, China isn’t endowed with significant oil and gas, and imports much. Yet, unlike us, it isn’t in panic mode.

We know that China gets the bulk of its crude and some gas from Russia through land pipelines. Is that enough? Here, we’re in a panic about our fertiliser situation as we head into kharif planting. But, China is calm. Not only about its own needs but also its export commitments. We also depend on fertiliser imports from China. There are bitter memories of the fertiliser squeeze after the East Ladakh-Galwan crisis. The Chinese, however, have not invoked any force majeure on their fertiliser exports yet. The answer came as I researched beyond my usual domains. It was a shocking reality check. Shocking both, in terms of the Chinese success, and our usual pedestrianism. All talk, little outcome.

Here are some cruel facts. China has few gas fields, yet enough gas. It’s because China patiently invested capital, skill and technology in coal gasification. 

Predictable story: India started talking of the idea around the same time as China and produces no more than about 3-5 percent of the Chinese output of 80 million metric tonnes per annum (MMTPA). India consumes about 1.4 percent of the 340 MMTPA of coal China uses for this gasification.

In 2007, the UPA government talked big on coal-bed methane and set up a tiny pilot plant at Raniganj. The idea has mostly remained in deep freeze since. In any case, under the UPA, coal acquired a bad name. In the Covid-inspired flurry of reform in 2020, the Modi government unveiled a super-ambitious National Coal Gasification Mission.

I use the description super-ambitious consciously because the plan targeted gasification of 100 MMTPA of coal by 2030, entailing investments of Rs 4 trillion, or four lakh crore. At 100 MMTPA, our coal gas output—also called synthetic gas or syngas—will be 25 percent more than China’s. It made an incredible headline.

We’re well into the sixth of this ten-year plan, and the total production, whether from some legacy activity or the post-2020 initiatives, is just around 5 MMTPA in a good year. Of this, too, 1.8 MMTPA comes from the Jindal Steel and Power (JSPL) plant at Angul, Odisha. It uses an innovative modern process and is mostly for internal consumption.

Again, from what the coal ministry and NITI Aayog websites tell us, seven coal gasification projects involving investments of Rs 64,000 crore have been approved. Almost all of these, mostly in the public sector in joint ventures with Coal India Ltd, are meandering, or circling in the regulatory orbit. I read about Eastern Coalfields (Coal India subsidiary) underground coal gasification project at Kasta in Jharkhand’s Jamtara district. It should’ve started producing by now. It just got caught in an argument between the coal and environment ministries. Environment ministry insists the project should be 300 metres deep. Coal ministry wants 150-160 metres. The result, the usual Indian story. A dog’s breakfast in the name of governance delivery. 

To make us feel even more rotten I need to underline that we limit our coal extraction to opencast mining. All our underground coal is unexploited while the Chinese are going three kilometres underground.

The two good readings on the coal ministry website come from private sector conglomerates, Adani and Jindal. They remind us that India has the fifth largest stores of coal in the world. They explain the technical processes with flow-charts, list out the reforms and resources needed. Of course they invoke strategic benefits including that season’s favourite: energy aatmanirbharta. It’s all very neat.

Like China, we haven’t lacked foresight. But unlike China, we won’t move from words to action. As crude prices decline, we lose interest. And we’re not the only ones. Indonesia, with the seventh largest coal reserves and of high quality, has also been a laggard. It, too, is moving in the direction of gasification.

The Chinese don’t get distracted easily. They figured early enough that oil shocks will be a part of life, particularly with the US employing sanctions as leverage. They decided to invest in what they owned, and persisted relentlessly, whatever the market fluctuations. They didn’t lose their way or interest during the hydrocarbon downcycles. They saw energy independence through coal as a national strategic objective and achieved it. We, as usual, got caught in politico-bureaucratic-regulatory analysis-paralysis.

The peculiar problem with the Indian ‘system’ is that while these are long-gestation projects, at any point as the prices fall, somebody in some ‘Bhawan’ will knock their cost-effectiveness. That kills private sector enthusiasm.

Why did the Chinese succeed? They viewed this as a strategic project and stayed focused. It has protected China from these energy shocks, and India is nursing its wounded pride.

Coal, we know, is an unpopular fuel. But this is all India has. And while coal-to-chemicals is also a polluting activity, it’s much less so than burning it in power plants. In any case, more of our power generation is moving to renewables, and nuclear is poised to make a comeback. Donald Trump will be gone on 20 January 2029, and climate change will return to the global agenda. Coal will again become evil. The time to employ our large stores in a less polluting and more profitable way is now. It also brings strategic security. Finally, while burning coal for electricity may be evil, turning it into gas is much less so. And sulphur, a significant byproduct, is in much demand for industry as well as fertilisers. Again, it’s a chemical for which we are import-dependent.

Consumers, especially the middle class, have political power and so we get fixated on fuel, LPG, diesel, petrol availability or prices. Fertiliser shortages are an even bigger threat because this affects our food security. It’s just that our TV channels won’t go apoplectic on behalf of the farmers. The kharif season is coming up. Already, even before the war, surplus-producing states were rationing (mostly imported) Urea and DAP. 

Producing these fertilisers needs enormous volumes of gas and ammonia. In fact, 30 percent of all natural gas that India produces or imports goes to fertiliser plants. And now, for shock therapy, let me tell you the China story. China produces more than 90 percent of its ammonia from coal gasification. Ammonia is essential for Diammonium Phosphate (DAP). India imports much of it and so severe are the shortages that to prevent rioting or looting by desperate farmers many states store the supplies in their police stations, allocating to farmers on the basis of land holdings and Aadhaar-based registrations. Now, hold your breath. China uses syngas (synthetic gas) derived from coal to produce 40 percent of the entire world’s urea. It also produces 54 percent of all of the world’s methanol, around 70 percent of it from coal.

And where do we stand? Among the large agricultural producers we’re the most import-dependent for our fertilisers. Even the Chinese can turn that lever any time they feel irritated or want to put us in our place.

We routinely celebrate foodgrain self-sufficiency. The reality underneath is a national humiliation we hide. Our crippling dependence on fertiliser imports is also ship-to-mouth existence by another name. This war in the Gulf has driven home these vulnerabilities. It’s a call to action. How to do it? China has shown us the way.