Government Constraints in the availability of domestic coal
India’s Coal Industry:
- India has been mining coal since 1774.
- With 716 million metric tonnes (789 million short tonnes) extracted in 2018, the country is the second largest producer and user of coal after China.
- Coal is responsible for more than 40% of India’s energy supply. Coal is imported in around 30% of the time.
- Due to high demand and poor average quality, India imports coking coal to meet the needs of its steel manufacturers.
- Dhanbad, India’s largest coal producing city, is the country’s coal capital. Coal India, a state-owned company, had a monopoly on coal mining from 1973 until 2018.
- The bulk of coal is burned to generate energy, and coal-fired power plants generate the majority of electricity, although they have been accused of breaking environmental regulations. The coal industry has a significant health and environmental impact, and the benefits of phasing out coal would have far outweighed the costs in the short term.
- In India, electricity generated by new solar farms is less expensive than electricity generated by the country’s existing coal plants.
Coal’s History in India:
- Coal mining was nationalised in phases by the Indira Gandhi administration, starting with coking coal mines in 1971–72 and continuing to non-coking coal mines in 1973.
- With the enactment of the Coal Mines (Nationalization) Act in May 1973, all coal mines in India were nationalised.
- This policy was revoked by the present administration four decades later.
- In March 2015, the government granted private companies permission to mine coal for use in their own cement, steel, energy, or aluminium plants.
- Coking Coal Mines (Nationalization) Act of 1972 and Coal Mines (Nationalization) Act of 1973 were repealed in January 2018.
- By permitting private companies to enter the commercial coal mining industry in February 2018, the government took the final step toward denationalisation.
- Under the new plan, mines were auctioned off to the company with the highest per-tonne price. Coal India’s monopoly on commercial mining, which it had maintained since its nationalisation in 1973, was broken by the action.
Why is it that India cannot exist without coal?
- India imports almost a quarter of its total consumption, the majority of which is coking coal, which is used in steel blast furnaces and is not available domestically.
- In 108 of the company’s 173 power plants, coal supplies are currently assessed to be critically low. Because of the Ukraine crisis, global coal and natural gas prices have soared, making imports prohibitively expensive.
- Currently, wind and solar power contribute for 10% of worldwide electricity output.
- To keep passenger fares cheap, India’s greatest employer, the railroads, overpay for transporting coal, the primary product it transports.
- To lessen its reliance on coal, India has vowed to increase renewable energy capacity to 450 gigatonnes by 2030. India’s coal, on the other hand, contains a high percentage of ash (35 percent or more), making it exceedingly polluting. Coal pollution kills more than 100,000 Indians per year, according to Greenpeace.
- Coal-fired power plants provide 70 percent of India’s electricity.
The Current Situation:
- According to the latest statistics, coal supplies at more than 100 thermal power plants in India have fallen below 25% of what is required (critical mark).
- More than 50 thermal plants have run out of coal, leading governments to seek more supplies from Coal India Ltd, India’s sole coal supplier (CIL).
- Thermal power plants, which are mostly powered by coal, provide 70% of India’s electricity.
- India’s electricity output via thermal plants using domestic coal was 182.39 GW as of April 19, 2022, according to the Central Electricity Authority (CEA), with an average of 34% coal stock in them.
- Meanwhile, imported coal-fired power plants generated 16.73 GW, with an average coal stock of 34%. Nine thermal power stations with a combined capacity of 3.56 GW are now offline.
Why does India have a coal shortage?
- Rising electricity consumption is the primary cause of coal scarcity. In 2021, demand increased to 124.2 BU per month, up from 106.6 BU in 2019. By 2022, the demand will have risen to 132 BU.
How will the Centre deal with the coal crisis?
- To meet rising domestic demand, the Centre has allowed states to use up to 25% of their captive coal reserves. It has also allowed power plants to incorporate up to 10% imported coal to alleviate CIL pressure (Coal India Limited). Increased coal costs make stockpiling imported coal more difficult for the Centre.
- The Centre passed mining reforms in 2020 to end CIL’s monopoly on coal production in India. The law made commercial coal mining possible, with 50 blocks available right away. It also allowed everyone, not just captive consumers, to bid on coal mines (i.e., companies which use coal for running their businesses).
The Importance of Coal in India:
- India’s most important and abundant fossil fuel is coal. It provides energy for 55% of the country’s needs. The nation’s industrial legacy is built on domestic coal.
- Coal will continue to play a significant part in India’s energy scenario, given the poor reserve potentiality of petroleum and natural gas, the environmental limits on hydel projects, and the geopolitical view of nuclear power.
- Commercial primary energy consumption in India has surged by about 700 percent in the last four decades.
- Because of India’s rising population, developing economy, and yearning for a better quality of life, energy consumption is expected to rise.
Coal Reserves in India:
- Coal is made from organic materials like wood. The wood burns and decomposes when large portions of forest are buried beneath sediments due to heat from below and pressure from above. Although the process yields coal, it takes decades to complete.
- The country’s eastern and south-central regions have the most hard coal resources, which are spread throughout 27 major coalfields.
- The older Gondwana Formations of peninsular India and the younger tertiary formations of the north-eastern area are where India’s coal reserves are found.
- The lignite deposits are believed to be around 36 billion tonnes, with 90% of them in Tamil Nadu in the south.
- In terms of total coal reserves, Jharkhand leads India, followed by Odisha, Chhattisgarh, West Bengal, and Madhya Pradesh.
The effects of scarcity:
- India’s economic reopening may be delayed if factories experience power shortages.
- Some businesses may restrict their output.
- The Power Crisis in India may endure for a long time due to the country’s vast population and underdeveloped energy infrastructure.
Low coal production is due to the following factors:
- The current coal shortage is caused by a surge in electricity usage as the economy recovers from the Covid-19 outbreak, as well as supply problems.
- India used 124 billion units of electricity in August 2021, up from 106 billion units in August 2019, when the pandemic had no effect.
- Coal-fired thermal power plants have also contributed more to the increase in demand, increasing thermal power’s share of India’s power mix to 66.4 percent in 2019 from 61.9 percent in 2019.
- Despite meeting nearly three-quarters of domestic demand, torrential rains have swamped mines and critical transit lines.
- Other key contributors to the supply constraint include lower-than-normal stock accumulation by thermal power plants in April-June and prolonged rains in coal-producing areas in August and September, which resulted in lower output and fewer coal despatches from mines.
- Plants have reduced imports due to a sustained trend toward less imports and high international coal costs.
Government actions include:
- Coal supply to thermal power plants are being monitored by an inter-ministerial committee made up of representatives from the Power and Railway Ministries, Coal India Ltd, the Central Electricity Authority, and the Power System Operation Corporation.
- The government is pressuring thermal power plants with captive coal mines to enhance coal output so that they can meet more of their own demand, and coal supply for thermal power plants with low stock levels is being prioritised.
- The Power Ministry is also aiming to boost coal supplies by hastening production at a handful of mines that have already received the appropriate licences.
- The government has also raised the quantity of coal rakes sent to thermal power plants on a daily basis, with 263 rakes (up from 248) being delivered from coal mines.
What else is there to be done?
- Coal India and NTPC Ltd., both government-owned companies, could work together to boost mine output.
- India must expand its imports regardless of the financial costs.
- Planning ahead of time and stocking up on supplies before the monsoons begin is a good strategy.
