In a strategic move towards cleaner energy and efficient coal utilization, the Government of India has launched a series of initiatives to promote coal and lignite gasification across both the public and private sectors. On January 24, 2024, the Cabinet approved a major financial incentive scheme with an outlay of ₹8,500 crore aimed at encouraging the establishment of coal and lignite gasification projects throughout the country.
This initiative is part of the broader energy transition strategy and is designed to facilitate the use of syngas (synthetic gas) derived from coal. Under the scheme, public sector undertakings (PSUs) and private companies are eligible for financial assistance based on their project category. To support this, Coal India Limited (CIL) has been given approval to invest in joint ventures with Bharat Heavy Electricals Limited (CIL-BHEL) and Gas Authority of India Limited (CIL-GAIL) to implement large-scale coal gasification projects. Both joint ventures have now been established and are expected to play a pivotal role in India’s clean energy mission.
In a significant policy reform introduced in 2022, a new sub-sector titled “Production of Syngas leading to coal gasification” was carved out under the Non-Regulated Sector (NRS) linkage auction policy. This measure ensures that coal supply is more accessible and affordable for gasification projects. To further incentivize this sector, the Government has permitted coal supply to such projects under the NRS auction framework, pegged at the notified prices of the regulated sector, provided the projects are commissioned within seven years.
In the realm of commercial coal block auctions, a 50% rebate on revenue share for coal used in gasification has been introduced, provided a minimum of 10% of the coal extracted is used for gasification purposes. This move is expected to make coal gasification a commercially attractive option.
The Government has also simplified procedures for international technology collaboration by setting up a framework to consider waivers for Transfer of Technology (ToT) from countries sharing land borders with India, on a case-by-case basis. One such waiver has already been granted.
The ₹8,500 crore financial incentive scheme has been divided into three categories:
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Category I: Allocated ₹4,050 crores exclusively for PSUs. Three projects have been approved under this category, each receiving ₹1,350 crores in government support.
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Category II: Allocated ₹3,850 crores for both public and private sector projects. Three private sector projects have been approved with a total government contribution of ₹1,983.06 crores.
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Category III: With a smaller provision of ₹600 crores, this category supports demonstration and small-scale projects. One private sector project has been approved with ₹100 crores in government assistance.
These comprehensive initiatives reflect the government’s commitment to promoting alternative uses of coal through clean technologies, ultimately reducing dependence on conventional combustion and paving the way for a sustainable energy future.
