GS Paper 3
Syllabus: Envirionment Conservation
Source: IE
Context: The transition to green energy in India is encountering challenges, especially in coal-rich states. While there’s a global focus on decarbonization and renewable energy (RE), coal continues to play a significant role in India’s energy landscape.
What is Energy transition?
Energy transition involves shifting from fossil-based energy production to renewable sources, aiming to reduce or eliminate carbon emissions and greenhouse gases. In India, by 2030, solar and wind energy could make up 51% of generation capacity, a significant increase from about 8% in 2019 to 31% in 2030
Status of Energy Transition in India
Renewable electricity is growing at a faster rate in India than any other major economy, with new capacity additions on track to double by 2026. In 2022, wind and solar made up 92% of India’s capacity additions to power generation.
What is the issues with this energy transition?
The growth of RE assets primarily benefits western and southern states, leading to potential fiscal consequences for RE-poor, coal-rich states such as Jharkhand, Odisha, and West Bengal (mainly Eastern states). They face a decline in coal royalties as RE expands, and they’ll have to import more power from other states, which will strain their budgets.
Other Challenges in phasing out coal for India due to energy transition:
| Challenge | Description |
| Energy Security | Coal is a vital source of energy for India’s economy. It powers 55% of the country’s energy needs and generates 72% of India’s electricity. Coal is also a vital source of jobs and economic growth. |
| Government Revenue | Coal mining and related activities generate significant revenue for the government through royalties, cesses, levies, and dividend payouts. Reducing coal usage impacts this revenue. |
| Direct Employment | Coal production employs hundreds of thousands of people directly, providing social security benefits. The decline in coal usage may result in job losses. |
| Indirect Employment | Numerous auxiliary services and businesses, such as coal washery workers, traders, and transporters, depend on coal-related activities. A coal phase-out affects their employment. |
| Induced Dependence | Communities and businesses in areas near coal mining have developed an induced dependence on coal. A transition impacts their economic well-being. |
| Informal Coal Economy | Small-scale coal operations and illegal trades support a significant informal coal economy with millions of dependents. Their livelihoods are at stake. |
| Social Welfare Provider | Coal India Limited (CIL) has assumed the role of a welfare provider in coal regions, offering essential services like housing, roads, schools, and healthcare. Transitioning from coal may disrupt this support. |
Strategies for ensuring a Balanced Energy Transition:
| Strategy | Description |
| Support for RE-Poor States | Provide support and involvement in the transition for states with fewer renewable energy resources to address their unique challenges. |
| Financial Assistance | Offer preferential lending for renewable energy (RE) projects in states with limited RE resources to encourage investment and development. |
| Increased Federal Negotiations | Empower RE-poor states by giving them a more significant role in federal power discussions, potentially by reviving institutions like the Inter-State Council to ensure their voices are heard. |
| Financial Transfers | The Finance Commission can play a crucial role by providing explicit financial aid to RE-poor states, helping them navigate the transition. |
| Collaborative Policies | Implement just transition mechanisms and collaborative industrial policies that consider the economic well-being of communities affected by the energy transition. |
| Equitable Green Policy | Ensure that all states, not just historically privileged ones, benefit from green industrial policies, creating a more equitable transition for all regions. |
About Coal in India:
| Keyword | Explanation |
| Coal | A type of fossil fuel found in sedimentary rocks, often referred to as ‘Black Gold.‘ It is a conventional energy source used for various purposes, including domestic heating, industrial processes, and electricity generation. |
| Leading Coal Producers | China is the world’s largest coal producer. In 2022, China produced over 52% of the world’s coal. India is the second largest producer, with a global share of nearly 9%, however, despite high production, around 30% of India’s coal is imported. |
| Distribution of Coal in India | Different regions in India where coal is found, such as Gondwana Coal Fields (predominantly found in regions like Jharkhand-West Bengal, Chhattisgarh-Odisha, and Maharashtra) and Tertiary Coal Fields (mainly in extra-peninsular regions like Assam, Meghalaya, and others). |
| Reserve | The top 5 States in terms of total coal reserves in India are Jharkhand > Odisha > Chhattisgarh > West Bengal > Madhya Pradesh |
| Classification | Various types of coal based on their carbon content and properties, including Anthracite, Bituminous, Lignite, and Peat. |
India, the largest coal producer, relies on coal imports for several reasons:
- Domestic Demand and Buffer Stock: To meet the high domestic demand and maintain buffer stocks, India imports coal. Domestic supplies often fall short, leading to the import route.
- Shortage of Good Coking Coal: India lacks reserves of high-quality coking coal crucial for steel and related industries, necessitating imports.
- Lower Cost of Imported Coal: Imported coal is cost-effective compared to similar coal from Coal India for many coal-fired power plants.
- Coal Transport Challenges: Despite a vast railway network, transporting coal from mines to coastal power plants faces major connectivity bottlenecks.
Government Initiatives for the Coal sector
- Exploration of Coal and Lignite scheme: This initiative focuses on assessing coal resources, preparing project reports for mining, and facilitating the auction of new coal blocks to recover costs from successful bidders
- UTTAM(Unlocking Transparency by Third Party Assessment of Mined Coal) Application for coal quality monitoring
- New coal linkage policyto ensure adequate supply of fuel to power plants through reverse auction
- Online Coal Clearances System
- Coal Allocation Monitoring System (CAMS)
- Opening up of commercial coal mining
For Major points of the Coal Ministry Action Plan 2023-24: Click Here
Conclusion
Coal accounts for 55% of the country’s energy needs. Coal is and will continue to be the backbone of India’s economic and development growth. Thus India has to go for ‘Just transition’ to balance the need for Renewable, without severely affecting Coal depedent economy.
Related News:
The Ministry of Coal has made a request to the Department of Financial Services (DFS) to classify coal as part of the infrastructure sector.
Source: ET
The inclusion of coal in the master list of Infrastructure sub-sectors has several benefits, including securing financial assistance for commercial coal mines, making the coal sector more investor-friendly, and enabling banks and financial institutions to formulate effective policies.
The Ministry of Finance introduced the Harmonized Master List of Infrastructure sub-sectors (HMLIS) in 2012 to guide financial institutions and agencies supporting infrastructure development. Inclusion in the HMLIS is based on criteria such as economic importance and contributions to human capital. This inclusion facilitates easier access to long-term funding at lower interest rates
Insta Links
Mains Links
Despite India being one of the countries of Gondwanaland, its mining industry contributes much less to its Gross Domestic Product (GDP) in percentage. Discuss. (UPSC 2021)
“In spite of adverse environmental impact, coal mining is still inevitable for development”. Discuss. (UPSC 2017)
Prelims Links:
Consider the following statements: (UPSC 2019)
- Coal sector was nationalized by the Government of India under Indira Gandhi.
- Now, coal blocks are allocated on lottery basis.
- Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
Ans: A
Which of the following is/are the characteristic/characteristics of Indian coal? (UPSC 2013)
- High ash content
- Low sulphur content
- Low ash fusion temperature
Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Ans: A
