Coal Logistics Plan and Policy | 09 Mar 2024

Source: PIB

Why in News?

India has taken a groundbreaking step in its coal sector with the unveiling of the "Coal Logistics Plan and Policy," a transformative initiative aimed at modernising coal transportation.

What is the Coal Logistics Plan and Policy?

• Background: Coal logistics has long been a persistent issue in India, particularly during the summer months when power plants face shortages of coal amid rising electricity demand.
  • Transportation of coal has frequently posed challenges, leading to the need for railways to implement special measures to prevent supply disruptions.
• About: The Coal Logistics Plan and Policy aims to enhance coal logistics by making it more affordable, efficient, and environmentally friendly.
  • It encompasses various aspects such as storage, loading, unloading, and delivery of coal to power plants, steel mills, cement factories, and washeries.
  • It proposes a strategic shift towards a railway-based system in First Mile Connectivity (FMC) projects, aiming for a 14% reduction in rail logistic costs, and an annual cost-saving of Rs 21,000 Crore.
• Expected Outcomes: It is expected to minimise air pollution, alleviate traffic congestion, and reduce carbon emissions by approximately 100,000 tonnes per annum.
  • Moreover, a 10% saving in the average turnaround time of wagons nationwide is expected.

What is the Status of the Coal Sector in India?

• Coal: Coal is a naturally occurring, combustible sedimentary rock composed primarily of carbon, along with hydrocarbons.
  • It forms through the accumulation and decomposition of plant material over millions of years. Under pressure and heat, this organic matter undergoes physical and chemical changes, transforming into coal.
• Coal Reserves in India: India’s coal reserves are concentrated in the eastern and central parts of the country.
  • The major coal-producing states are Odisha, Chhattisgarh and Jharkhand, along with parts of Madhya Pradesh, and they account for 75% of domestic raw coal dispatches in India.
• Types of Coal and Clusters in India:
  • Anthracite: With a carbon content ranging from 80% to 95%, it is present in limited quantities primarily in Jammu and Kashmir.
  • Bituminous coal: Containing between 60% to 80% carbon, it is predominantly found in regions such as Jharkhand, West Bengal, Odisha, Chhattisgarh, and Madhya Pradesh.
  • Lignite: It is characterised by its carbon content of 40% to 55% and high moisture levels, and is primarily found in areas including Tamil Nadu, Puducherry, Gujarat, Rajasthan and Jammu & Kashmir.
  • Peat: With a carbon content below 40%, it represents the earliest stage of the transformation from organic matter, such as wood, into coal.
• Significance of Coal for India: 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. Currently, 70% of India’s power demand is met by thermal power plants, which are mostly powered by coal.
  • Over the past four decades, commercial primary energy consumption in India has surged by approximately 700%.
  • Current per capita consumption stands at around 350 kilograms of oil equivalent per year, still lower than developed countries.
• Coal Imports in India: Present import policy allows for the unrestricted import of coal under Open General License.
  • Consumers, including the steel, power, and cement sectors, as well as coal traders, can import coal based on their commercial requirements.
  • Steel sector primarily imports coking coal to supplement domestic availability and improve quality.
  • Other sectors like power and cement, along with coal traders, import non-coking coal to meet their respective needs.

What are the Challenges Related to Coal for India?

• Environmental Impact: Coal mining and combustion contribute to air and water pollution, greenhouse gas emissions, deforestation, and habitat destruction. Addressing these environmental impacts while ensuring energy security is a significant challenge.
• Health Risks: Exposure to coal dust, particulate matter, and harmful emissions from coal-fired power plants poses health risks to communities living near coal mines and power plants, leading to respiratory diseases and other health issues.
• Land Acquisition and Rehabilitation: Acquiring land for coal mining projects often involves displacement of communities and disruption of livelihoods.
  • Proper rehabilitation and resettlement of affected populations remain a challenge, with many communities facing social and economic hardships.
• Technological Constraints: Despite advancements in clean coal technologies, such as carbon capture and storage (CCS), the widespread adoption of these technologies in India remains limited due to high costs and technical challenges.
• Transition to Renewable Energy: The coal sector in India faces challenges amidst the country's commitment to transitioning to renewable energy sources and reducing greenhouse gas emissions.
  • Finding a balance between ensuring energy security and meeting climate change mitigation objectives is a significant hurdle.
  • At COP28, India advocated for a "phase down" of coal power instead of a complete "phase out."

Why India Advocates for Phasing Down Coal Instead of Phasing Out?

• Energy Security: Coal currently plays a crucial role in India's energy security, providing a significant portion of the country's electricity generation.
  • Phasing out coal abruptly could lead to disruptions in energy supply, impacting industries, businesses, and households.
• Economic Considerations: Coal mining and related industries support millions of jobs and contribute significantly to India's economy.
  • A sudden shift away from coal could result in job losses and economic instability in coal-dependent regions.
  • Also, currently, renewable energy sources like solar and wind are not as cost-effective as coal.
• Infrastructure Investment: India has made substantial investments in coal-based infrastructure, including power plants and associated facilities.
  • Phasing out coal prematurely would lead to stranded assets and wasted investments, adversely affecting the economy.

Way Forward

• Improving Energy Efficiency: Enhancing energy efficiency across the coal value chain, from mining and transportation to power generation and consumption, can reduce energy consumption and environmental impact.
  • Also, implementing high-efficiency, low-emission (HELE) technologies in coal-fired power plants can significantly reduce emissions in the coal value chain while enhancing energy efficiency.
• Diversification of Energy Sources: India should prioritise diversifying its energy mix by increasing investments in renewable energy sources such as solar, wind, hydro, and biomass.
  • This diversification will reduce reliance on coal and contribute to a more sustainable and resilient energy system.
• Transition to Clean Coal Technologies: Investing in research, development, and deployment of clean coal technologies, including carbon capture, utilisation, and storage, can help mitigate the environmental impact of coal-based power generation.
• Promoting Sustainable Mining Practices: Implementing environmentally sustainable mining practices, including land reclamation, water conservation, and biodiversity conservation, can minimise the environmental footprint of coal mining operations.
  • Strengthening regulations and enforcement mechanisms to ensure compliance with environmental standards is essential.