Why is there a coal crisis in India? – INSIGHTSIAS

GS Paper 3:

Topics Covered: Infrastructure- Energy.

 

Why is there a coal crisis in India?

Context:

To battle the looming energy crisis in the country due to constraints on domestic coal supply, the central government has decided to take a number of steps to increase the use of imported coal for power generation, including for blending purposes.

 

These steps include:

• All the companies have been asked to operationalise their power plants at full capacity to reduce pressure on domestic coal demand.
• The Centre has decided to allow the cost of imported coal as a pass-through till December 2022.
• It has asked all the states to use imported coal for blending purposes to the extent of 10% instead of only 4% to ensure maintaining adequate coal stocks at the power plant as per the advised coal stock norms.

 

 

What’s the issue?

India is the world’s second largest coal producer, with the world’s fourth largest reserves, but a steep surge in power demand that has outstripped pre-pandemic levels means state-run Coal India’s supplies are no longer enough.

 

How bad is the situation?

The situation is “touch and go”, and could be “uncomfortable” for up to six months.

• The coal stocks at its thermal power plants can supply just days of fuel.
• The coal stocks at the power plant end were only 36% of the normative requirement which would be sufficient for only about 11 days.
• This is worrisome because coal-fired plants make up nearly 70% of India’s power source mix.
• It is expected that the peak demand may increase up to 210 GW in April’2022.
• Therefore, all the coal-based power plants need to have adequate coal stocks, enabling supply of coal-based power to the extent of about 160 GW during peak hours.

 

Reasons for the shortage:

• Sharp fall in imports due to high prices.
• Increased economic activity after the second wave of the pandemic has driven up demand for coal.

 

Impact of the shortage:

• If industries face electricity shortages it could delay India’s economic reopening.
• Some businesses might downscale production.
• India’s population and underdeveloped energy infrastructure will mean the Power Crisis could hit long and hard.

 

What next?

• Coal India and NTPC Limited are working to raise output from mines.
• The government is trying to bring more mines on stream to boost supply.
• India will need to amp its imports despite the financial cost.

 

Recent Reforms In Coal Sector:

• Commercial mining of coal allowed, with 50 blocks to be offered to the private sector.
• Entry norms will be liberalised as it has done away with the regulation requiring power plants to use “washed” coal.
• Coal blocks to be offered to private companies on revenue sharing basis in place of fixed cost.
• Coal gasification/liquefaction to be incentivised through rebate in revenue share.
• Coal bed methane (CBM) extraction rights to be auctioned from Coal India’s coal mines.

 

Challenges ahead:

1. Coal is the most important and abundant fossil fuel in India. It accounts for 55% of the country’s energy needs. The country’s industrial heritage was built upon indigenous coal.
2. Commercial primary energy consumption in India has grown by about 700% in the last four decades.
3. The current per capita commercial primary energy consumption in India is about 350 kgoe/year which is well below that of developed countries.
4. Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise.
5. Considering the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India’s energy scenario.

 

 

Insta Curious:

Have you heard about the National Coal Index? Why is it useful? Reference: read this.

 

InstaLinks:

Prelims Link:

1. About NCI.
2. Key features.
3. Types of coal.
4. What is Coal Gasification?
5. How is it done?
6. What are the byproducts?
7. Benefits of Gasification?
8. What is Underground Coal Gasification?
9. What is coal liquefaction?
10. Benefits of Liquefaction.

Mains Link:

Write a note on goal gasification and liquefaction. Discuss their significance.

Sources: Indian Express.