Millennium Post

Towards carbon neutrality

Strategic transition will tackle the dual challenge of reducing carbon emissions and meeting energy requirements

Towards carbon neutrality

Greening of coal, a move towards net-zero carbon emission is, in essence, a subset of the wider issue of energy transition. The transition away from fossil fuels to environmentally benign sources of energy. On one side of the debate is the collective human effort to combat the challenge of climate change and contain global warming to 1.5 degree celsius in the long run. On the other side lies the challenge of improving the quality of life of billions of underprivileged people that requires a substantial rise in the flow of energy particularly in developing countries like India.

The GHG emission in 2019 is reportedly the largest in a year. It has set the globe on the course of a devastating 3 degree celsius global warming. As the world recovers from the pandemic, the cry for a reversal of the trend to net-zero emission by 2050 for containing global warming to 1.5 degree celsius is getting louder. The current decade till 2030 is considered most important in setting the right direction. A 45 per cent reduction by the end of the decade is deemed imperative for course correction to attain the long term goal. Around 120 countries and over 1,000 large corporations have committed to act in this direction.

Net-zero emission calls for offsetting the entire emission of CO2 caused by human activities through a combination of measures directed at emission reduction and carbon capture.

So how does coal, use of which is bound to emit CO2, become carbon neutral?

The two broad range of activities that facilitates the process are:

1) Mitigating emission of toxic gases by preparing the coal for use in High-Efficiency Low Emission (HELE) power generation technologies and coal gasification to produce syngas for use as feedstock.

2) Capturing the reduced carbon emission through large scale afforestation coupled with avoidance of deforestation initially, and adopting carbon sequestration and capture or utilization (CCS/CCUS) technologies, as and when these become available at affordable prices.

Indian coal is intrinsically high in ash. Preparing such coal for use in low emission power generation or coal gasification will essentially call for the reduction of ash. This can be achieved with available state of the art closed circuit technology for washing coal with minimum power and water consumption.

The progress of washery construction in India has suffered primarily due to low efficacy of coal washing in the old washeries of the coal companies as well as the controversies surrounding the washing practices of the private washeries. The clarity on the environmental impact of traditional coal washing, particularly the generation and use of rejects remains ambiguous. These factors led to the recent reversal of an earlier 2015 MOEF direction that mandated washing for coal consumed at distances exceeding 500 km or in cities. Also, a lack of consensus on who should bear the cost of washing — the coal producer or consumer — has hindered the progress of large scale washery construction.

With the statutory compulsion of coal washing withdrawn, it is primarily the economic benefits to consumer and producer that will determine the future trajectory of washeries. From the perspective of the consumer, it is not fair to expect them to bear the cost of washing. However, it is fair to expect them to accept a higher price in energy units (Rs/GCal) for washed coal with higher CV as opposed to unwashed coal of lower CV in line with international price trends.

Globally, the price of coal rises rapidly as CV increases. From the perspective of consumption by the power sector, High CV (HCV) coal may be defined as those with CV of 4,800 KCal/Kg and Low CV (LCV) as those with CV of 3,800 KCal/Kg. The FOB price of such coal in Indonesia/SA is around USD 43 pmt for HCV and USD 24 for LCV. This works out to a price increase of 80 per cent corresponding to CV increase of 26 per cent. In other words the price increases at three per cent for every one per cent rise in CV. The pricing norms enable absorbing the cost of washing fully. No wonder, the traded coal are largely washed.

In contrast, the latest notified price of coal supplied to power sector with GCV of 3,800 Kcal/Kg (LCV) and 4,800 KCal/Kg (GCV) from the subsidiaries of CIL except WCL & NEC are Rs 896 pmt and Rs 1,150 pmt respectively.

To create a proper incentive for producing and consuming washed coal, bringing in advanced technology for coal washing, which is fast emerging as a key imperative for greening coal, it is critical to restructure the pricing pattern along international practices, of course in a revenue-neutral manner.

Coming to carbon capture, till cost-effective technologies are developed, India should rely on intensifying afforestation and protect flora and fauna from the onslaught of mining activities. The track record of CIL, in the area of afforestation, pleasantly surprised the global investors during the IPO, contributing to its resounding success. It transpired from records that for every acre of forest land diverted for mining purposes, the coal companies recreated 2.5 acres of forest. The question regarding the density of artificial forests was squarely answered when the exercise carried out by MOEF to ascertain high density forests through satellite mapping indicated presence of these artificially created forests in the list. Also, in the area of land restoration and reclamation, it was established through satellite images that in most opencast mines these activities were carried out commensurately.

Therefore the thrust on coal washing and afforestation is already prevailing. Heightening these further is within the realms of possibility. Once carried out with rigour it should enable the coal sector to reduce carbon footprint considerably.

Emanating from the Paris accord, another area of focus of energy transition away from fossil fuel is to evolve a roadmap that makes the transition smooth rather than bumpy for people directly or indirectly dependent on coal mining. Any deliberation on the greening of coal must address this aspect as well.

As a first step, this requires recognizing the fact that the current operations comprise of a limited number of large and medium-sized mechanized opencast mines that contribute the bulk of production and profits besides a large number of legacy low productive high manpower non-mechanized underground and opencast mines in the older coalfields that are mostly loss-making.

There are around 200 mines in CIL incurring losses greater than Rs 1,000 pt. They engage 42 per cent of the total workforce to produce a meagre 6 per cent of coal entailing a loss of Rs 16,000 crore per year.

Therefore, an orderly transition can be facilitated by a planned and systematic closure of these 200 mines in the first phase. The regular employees may be partly allowed to leave by availing a specially formulated attractive VRS and rest retrained for proper mine closure, land reclamation and restoration and preparing the land for alternate use.

The closure of these loss-making mines will cause a fundamental shift in the coal scenario. It will release a large tract of land that can be made ready for diversifying into solar power or agriculture or alternate economic use as the local situation demands. It will also release substantial productive manpower for such activities. Most importantly, it will largely help the coal sector in its move to attain carbon neutrality.

Closure of loss-making operations coupled with the opening of a limited number of highly mechanized open-cast mines in the relatively newer coalfields will lead to financial consolidation and enhanced profitability. There is, therefore, a strong economic rationale to commence such planned and systematic closure of these mines now instead of waiting for coal to reach its peak before commencing the downhill journey two or three decades later. The resulting consequences on the livelihood of people engaged directly or indirectly with mining activity can be dealt fairly and equitably by a financially strong and consolidated coal sector. Needless to emphasize that the process will require committed support of political and administrative dispensation.

Once the 1st phase of orderly mine closure is completed in a time frame of 15 to 20 years, the stage will be set for Just Transition phase 2. The experience gained in phase 1, with the institutional framework maturing by then will ensure a seamless and less disruptive transition away from coal, besides getting closer, if not meeting, the objective of carbon neutrality for the coal sector.

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