India to launch programme to boost coal gasification

Market: Biofuels, Coal, Emissions, Fertilizers, Hydrogen, Natural gas
17/07/23

India plans to launch a programme to bolster coal and lignite gasification projects in the country, as part of its broader push to reduce reliance on natural gas imports and promote cleaner sources of energy.

The programme will involve use of 100mn t of domestic coal and lignite in gasification projects. Coal gasification is the process of converting coal into syngas — a mixture of carbon monoxide, hydrogen, carbon dioxide, natural gas, and water vapour. The syngas can be processed to produce energy fuel, methanol, and products such as ammonia and urea.

The comprehensive coal gasification programme will incur an estimated investment of 60bn rupees ($730mn) by 2030, the coal ministry said. The plan is part of Delhi's broader vision of reducing imports and attaining self-reliance, as the country currently imports about 50pc of its natural gas requirement, the ministry said. Imports account for over 90pc of India's methanol consumption and as much as 13-15pc of ammonia demand, it said.

But the ministry did not provide any timeline for the launch of the programme.

India has been making efforts towards coal gasification, with state-controlled coal producer Coal India (CIL) initiating surface coal gasification projects in its coalfields. CIL signed agreement with state-controlled power equipment maker Bhel in October 2022, besides entering into initial pacts with state-controlled refiner IOC and state-controlled natural gas transmission and distribution company Gail. CIL has accepted pre-feasibility reports for three joint venture projects and has approved pre-project activities for the same.

The methanol produced could be used for blending with gasoline, CIL said. CIL had earlier held discussions with IOC and other state-controlled oil companies for long-term tie-ups to market the methanol and boost fuel blending, given wider ambitions of cutting India's dependency on crude oil imports.

Indian policy makers have also been considering coal liquefaction projects. In 2020, the coal ministry said coal-gasification and coal liquefaction projects could together entail a total investment of Rs4 trillion by 2030.

Bidding process

The government programme will involve auctioning of coal and lignite blocks for gasification projects, the ministry said.

The Indian government could provide fiscal support such as reimbursement of goods and services tax compensation cess on coal for a period of 10 years from the date of commissioning of the project, the ministry added.

By Saurabh Chaturvedi

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