India plans to expand financial support for its coal gasification programme as Delhi seeks to trim reliance on imported energy products and commodities because the US-Iran conflict has disrupted supplies.
The coal ministry is awaiting cabinet approval for a 375bn rupee ($3.9bn) incentive package to accelerate projects under the national coal gasification mission, a senior government official told Argus, adding that the approval is expected this month. The programme was launched in 2024 with an initial allocation of Rs85bn, which some industry experts viewed as insufficient to catalyse large-scale investment.
Delhi's push comes as the disruptions to energy supplies because of the US-Iran war has increased overall energy costs. Prime minister Narendra Modi on 10 May urged consumers to curb fuel consumption and limit overseas travel, warning that rising oil prices could widen the import bill and strain foreign exchange reserves.
The country targets the use of 100mn t/yr of domestic coal and lignite in surface gasification projects by 2030. 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. Methanol output could also support India's blending ambitions and help reduce crude import dependence.
The ministry plans to auction coal and lignite blocks dedicated to gasification projects, with tenders to be issued in phases, the official said. The revised plan would seek to streamline the incentive structure and attract investments and reduce some reliance on energy imports, they added.
India holds an estimated 400.7bn t of coal reserves, with coal accounting for more than 70pc of power generation. The country aims to unlock part of these reserves through cleaner utilisation pathways, converting coal into higher-value downstream products via gasification to meet its growing energy demand. This could also help in trimming direct emissions as India seeks to achieve net zero emissions by 2070. The move could also prop up the sluggish domestic coal consumption pattern.
Ongoing projects
India's coal ministry has signed four development and production agreements for four commercial coal blocks with provisions for underground coal gasification.
The agreements were signed under the 14th round of commercial coal mining auctions. Reliance Industries secured the Recherla and Chintalpudi blocks in Andhra Pradesh state, while Axis Energy Ventures India acquired Belpahar and Tangardihi East in Odisha state.
Meanwhile, state-controlled Coal India (CIL) has advanced several surface gasification initiatives across its coalfields. CIL signed a joint venture agreement with state-run equipment maker BHEL in October 2022 and has entered preliminary partnerships with Indian Oil (IOC) and gas distributor Gail for coal gasification.
