Relevance: GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Key Phrases: Union ministries of power and coal, Coking and non-coking coal, High carbon content, Less moisture, Coal-based power plants, Central Electricity Authority, Foreign Direct Investment, Inter-Ministerial Committee, Single Window Clearance, Mines and Minerals (Development and Regulation) Act, 1957.

Context:

• The Parliamentary Standing Committee on Energy has said that the Union Ministries of Power and Coal should ensure optimum utilization of locally produced coal through effective collaboration so that imports can be phased out over time.

Coal production and import in India:

• India is the world’s second-largest producer, consumer, and importer of coal after China.
• In 2020, India had the fifth-largest coal reserves of over 111 billion tonnes, just below China, which had the fourth-largest reserves of 143 billion tonnes.
• Raw coal (coking and non-coking) production in India increased from 341.272 MT in 2002-03 to 777.31 MT in 2021-22 implying an annual growth rate of just over 8 percent.
• Coal production grew by 8.6 percent from 716.08 MT to 777.31 MT but imports fell by 13.31 percent from 215.25 MT in 2020-21 to 186.58 MT in 2021-22.
• Indonesia, Australia, and South Africa account for over 80 percent of India’s coal imports.
• In 2020-21, Indonesia accounted for 42.98 percent of India’s coal imports followed by Australia 25.53 percent, and South Africa (14.45 percent).
• Indonesia was the largest source of thermal coal imports accounting for 55.56 percent, followed by South Africa (18.95 percent), and Australia (10.98 percent).
• Australia alone accounted for 70.21 percent of India’s coking coal imports in 2020-21.

Why does India import coal when it has enough coal reserves?

• Land Acquisition problems:
  • Despite India holding the fifth largest coal reserves in the world, domestic coal production has not come close to meeting domestic demand due to Land Acquisition problems and land availability.
• Lower cost of imported coal:
  • The international coal price has decreased considerably in the last several years.
  • Imported high-energy coal is now a lower cost than similar coal purchased from Coal India for a large number of coal-fired power plants.
• Delayed environment and forest clearances:
  • Environment Ministry in past has classified ecological sensitive areas in ‘Go and No Go areas’ and there was total prohibition on mining in no-go areas.
  • Further, there are other clearances required from State and Central Governments.
• Coal transport infrastructure:
  • To produce coal is only one part of the process. Transporting the coal to the power plants is another challenge altogether. India has a vast railway network, yet connectivity from the coal mines to the power plants in the coastal regions is a major bottleneck.
• Gap in demand and supply:
  • There is a gap between demand and domestic production capacity.
  • Since 2001, the country's coal production has increased at 8% per year. However, this increase was unable to meet the rising demand.
• Lack of good quality coal reserve:
  • India does not have enough reserves for good quality coking coal and most of it is imported from Indonesia, South Africa, Russia, and Australia
  • The lack of coking coal reserves used as a raw material in steelmaking and allied industries is the main reason India imports millions of tonnes of coal.

Highlights of Report of Parliamentary Standing Committee on Energy:

• It highlights efforts made by Union Ministries of Power and Coal, which led to a 56% drop in coal imports for blending in FY21.
• Higher international prices hit the import of coal for the coal-based power plants. This led to increased demand for domestic coal, and consequently reduced domestic coal stocks at power plants.
• The report said the Central Electricity Authority and the Power Ministry had advised power-generating companies to import to replenish critical coal stocks at power plants.
• It recommended that the Ministry of Power and Ministry of Coal should collaborate effectively on coal crisis issue and make concerted efforts for optimum utilization of domestic coal reserves keeping in view the basic objective of doing away with the import of coal in a phased manner.
• The Centre should try to convince imported coal-based power plants to modify their infrastructure to use domestic coal.
• The panel said the quality of indigenous coal can be enhanced and design of boilers at power plants can be modified to enable them to run on domestic coal.

Government initiatives to boost domestic coal production:

• Foreign Direct Investment:
  • 100% Foreign Direct Investment is allowed for commercial mining.
• Inter-Ministerial Committee:
  • An Inter-Ministerial Committee has also been constituted in 2020 for the purpose of coal import substitution.
  • Except allowing for very essential import like coking coal and other higher-grade coal which are presently non-substitutable, efforts are being taken to substitute import of lower grade coal by increasing domestic production.
• Single Window Clearance:
  • Single Window Clearance portal has been launched for the coal sector to speed up the operationalisation of coal mines.
  • It is a unified platform that facilitates grant of clearances and approvals required for starting a coal mine in India.
• Amendment to Mines and Minerals (Development and Regulation) Act, 1957
  • Mines and Minerals (Development and Regulation) Act, 1957 amended to allow sale up to 50% of their annual production after meeting the requirement of the end use plant.
  • Commercial auction of coal blocks on revenue sharing basis and allotment of specific coal blocks for captive end use.
• Advanced Technologies
  • Advanced Technologies like surface miners, etc. for open cast mining and Power Supported Longwall (PSLW), High wall Mining, continuous miner etc. for underground mines are being deployed for efficiency and higher production of coal.

Way Forward

• There is a need for formulating a clear-cut policy that is in consonance with the idea of ‘Atmanirbhar Bharat’, besides helping achieve energy security and provide affordable power for the common man.

Source: Live-Mint

Mains Question:

Q. Why does India import coal when it has enough coal reserves? Suggest measures to boost domestic coal production in India? (250 Words).