Post on 11-Feb-2017
A REVIEW OF INDIAN COAL
SECTOR
IGCC AND CCS: FURTHER
DEVELOPMENT NEEDED
Thanks to; MANOJ JHAWAR , MBA,IIT KANPUR
INTRODUCTION
Coal was the key energy source for the first industrial revolution
before Oil and Gas were developed.
Through steam engine and steam turbine development, it has
provided amenities like railways, steam shipping for transport,
thermal plant for electricity, new materials (steel, cement and
fertilizers), and advanced communications.
Coal replaced wood combustion because of coal’s abundance,
its higher volumetric energy density and the relative ease of
transportation for coal.
Coal on Indian perspective
According to the Ministry of Coal, India is currently the
third largest producer of coal in the world, with a
production of about 407 million tons (MT) of hard coal
and 30 MT of lignite in 2005–06.
India has significant coal resources, but there is
considerable uncertainty about the coal reserve
estimates for the country.
Coal on Indian perspective
Without improvements in coal technology and
economics, the existing power plants and the new plants
added in the next 10–15 years could consume most of
India’s extractable coal over the course of the plants’
estimated 40- to 50-year lifespans.
Heavy investments in the coal sector, particularly in
underground mining, is needed to increase the pace of
domestic coal production.
Environmental Impact of coal combustion
Coal can have significant adverse
environmental impacts in its production and use.
Over the past two decades major progress has
been made in reducing the emissions of so-
called “criteria” air pollutants: sulfur oxides,
nitrogen oxides, and particulates from coal
combustion plants. It contributes to cost.
CO2 capture and sequestration (CCS) is the critical
enabling technology that would reduce CO2 emissions
significantly while also allowing coal to meet the India’s
pressing energy needs.
The priority objective with respect to coal should be the
successful large-scale demonstration of the technical,
economic, and environmental performance of the
technologies:
that make up all of the major components of a large-
scale integrated CCS system — capture, transportation
and storage.
Mitigation of GHG emission
Broad deployment at a large enough scale in
response to the adoption of a future carbon
mitigation policy, as well as for easing the trade-
off between restraining emissions from fossil
resource use and meeting the future energy
needs. Coal utilization has to consider this
aspect seriously.
o The risk of adverse climate change from global
warming forced in part by growing greenhouse
gas emissions is serious.
o While projections vary, there is now wide
acceptance among the scientific community that
global warming is occurring, that the human
contribution is important, and that
o the effects may impose significant costs on the
Indian economy.
Brief facts about India Coal Industry
India has the fifth largest coal reserves in the world.
88% are non-coking coal reserves & 12% coking coal
reserves
Indian coal is characterized by its high ash content
(45%) and low Sulphur content
Power sector is the largest consumer of coal followed by
the iron and steel and cement segments
Demand -Supply scene
Coal production has increased from~431 MT in
2006-07 to ~554 MT* in 2011-12 (an increase of
28.5%).
Demand for coal has grown at a CAGR of more
than 7% in the last decade and has reached
around 600 MT
Country’s total demand-supply gap (including
coking coal) at about 98MT
India imports about 85 million tonne of coal
Trends in Coal consumption (Industry
wise)
During 1970-71, the railways were the major
consumer of coal (15.58 MTs), followed by steel
and washery industries (13.53 MTs), electricity
generation (13.21 MT) and cement (3.52 MTs).
Since 1975, the electricity generation is the biggest
consumer of coal, followed by steel industries.
Estimated coal consumption for electricity
generation increased from 23 MTs during 1975-76
to 435 MTs during 2011-12.
Coal consumption has increased in almost all industry segments with
electricity contributing the highest consumption clocking a CAGR of
nearly 9% over the years from 1970 to 2011.Except cotton
industry which shows a negative CAGR, the consumption of coal for other industries has gone up over
the years.
For steel and cement sector, coal consumption almost remained
stagnant in 2007 to 2009 due to global slump. It recovered in 2009,
but recorded a down swing in 2010-11 indicating the slow
growth of the segment due to global recession and European
crisis.
Trend in Coal Import
Gross import of coal has steadily increased from 20.93 MTs during 2000-01 to 73.26 MTs during 2009-10.During this period, the quantum of coal exported increased from 1.29 MTs during 2000-01 to 2.45 MTs during 2009-10. However, there was a decline of 5.92% in gross import and 8.89% in net imports of coal in 2010-11 over the previous year. The exports to neighbouring countries increased by about 80% during the same period
Important observations: Coal import
China & India are the highest importer of the
coal.
India was traditionally a coking coal importer due
to unavailability of good quality coking coal for
steel. In the past five years the non coking coal
imports rose from countries like Indonesia and
South Africa.
Important observations: Coal import
Further, the coal washing capacity in the country
has not increased sufficiently, due to various
reasons, to generate the required quantity of
washed coal for consumption, particularly in
steel plants.
This necessitates the import of high quality coal
to meet the requirements of steel plants
Electricity Sector
India is the world’s fifth largest energy consumer,
accounting for 4.1% of the global energy consumption.
The current per capita consumption of energy in India
is 0.5 toe against the global average of 1.9 toe,
indicating a high potential for growth in this sector
Total electricity consumed in India approximately 60%
is produced from coal
Steel sector
In 2011, the world crude steel production reached
1,518 MT, reflecting a growth of 6.2% over 2010.
The per capita finished steel consumption in 2011
is estimated at 215 kg for world and 460 kg for
China, while that for India it is estimated currently
at 55 kg (provisional). This clearly indicates scope
for increasing the per capita steel consumption, a
factor which correlates to the coking coal
availability and production within the country.
Cement sector
India is the second largest producer of cement
in the world
Around 450g of coal is consumed to produce
900g of cement. Ratio of 1:2
cement industry is the third largest consumer
of coal in the country.
Major Coal Mining Companies
Based on production data from Coal controller
organization report 2011-12, top 5 coal producing
company in terms of coal production are :
1. CIL (PSU)
2. SCCL (PSU)
3. PANEM (Private)
4. TSL (Private)
5. JPL (Private)
NCDP (New Coal distribution Policy)
The category of Core/Non Core sector was dispensed with
Defense and Railways requirement of coal to be met in full
Power and Fertilizer sector normative requirement to be met with 100% supply
Other sectors demand to be met with 75% of their normative requirement
State nominated agencies to be provided with coal to further distribution to small and medium industries for capacity of 4200 tonnes per annum
Steel plants will be supplied coal, but price to be linked with import parity
Fuel Supply Agreement to be signed with all end consumers lifting coal from CIL
Ways to increase coal supplies in India
Operational or sustenance issues
Fund raising
Performance improvement
All the minerals are not reported as per UNFC classification
Key administrative issues
Long queue of mining applications pending at different levels with the state and centre: This is a deterrent for future investments.
Single window clearance agency (SWCA)
Large number of compliance reports to be filed by the investors to CCO, state DMG, DGMS, tribunals, state and central agencies
Multiple registration requirements for miners, transporters, traders and end-users
Ways to increase coal supplies in India...
Regulatory issues
Lack of policy support for transfer of mining concessions
Blocking of resources
Lack of incentives for exploration
Fiscal issues
Poor connectivity of mining areas and poor evacuation
facilities
Infrastructural issues
Cadastral (Khasra) maps are either not digitised or the geo-
referencing has not been done properly. This creates problems
in lease boundary determination, thus hampering genuine
miners.
Challenges in increasing the production
capacity
For CIL,179 forestry proposals are awaiting clearances and if all approvals are secured on time, it can more than double its output to 1,132 MT, given that mines start production from 2016-17.
Majority of the coal projects have been halted and delayed due to issues in acquiring land and strict rules and regulations (R&R).
Bottlenecks in domestic coal transportation and lack of proper road connectivity further increase the challenge. Also, availability of railway wagons and mismatch of demand and supply of wagons and coal offtake affect production capacity.
Delay in mining activities at captive coal blocks and concerns relating to the increasing ash content of run-of-mine (ROM) coal further hinder production
Way Forward for CIL
CIL needs to strengthen the operations in its
core area of mining
Aggressive investment of surplus available with
CIL, may go in for new technology and UG
mining, improvement in transport and logistics
Switch to market driven pricing for different
consumers (regulated pricing for power and
fertilizer sector and market price at par with
other unregulated sector)
Way forward for Coal Ministry
Attract private investment in exploration, drilling and
planning activities and also in mining through necessary
policy changes and welcome the private players
Competitive bidding for coal blocks but only after full
exploration of coal blocks
The government has initiated the process of competitive bidding
of 54 coal blocks and Crisil has submitted its report on coal
bidding guidelines. It is under evaluation from different stake
holders. The government has identified coal blocks and
segregated them so that the coal blocks come under different
categories for power, steel and state companies.
Way Forward for Private Players
Coal washeries is lucrative business option, need
to partner with state or central government, else
develop captive coal washery for own use
Aggressively foreign asset acquisition and
exploring arbitrage opportunity, whether to source
coal to the country or trade in global platform
Observations
Private players in coal mining operations have the best
opportunity as huge investment and big push in underground
mining is the future sustainability coal mining operations.
Only explored coal blocks are competitive for captive coal
block allocation and government should fast track the
process. Exploration offers the maximum opportunity for
private players, When opened fully, coal washing the next big
thing
The priority objective with respect to coal should be the
successful large-scale demonstration of the technical,
economic, and environmental performance of the
technologies that make up all of the major components of a
large-scale integrated CCS system — capture, transport and
storage.
Such demonstrations are a prerequisite for broad
deployment at large scale in response to the adoption of a
future carbon mitigation policy, as well as for easing the
trade-off between restraining emissions from fossil resource
use and meeting the world’s future energy needs
IGCC and CCS: Further development needed
CO2 capture for several alternative coal combustion and conversion technologies is needed.
At present Integrated Gasification Combined Cycle (IGCC) is the leading candidate for electricity production with CO2 capture.
It is estimated to have lower cost than pulverized coal with capture. It is critical that the government RD&D program develop a suitable technology for IGCC and CCS