The Ministry of Coal has announced a call for proposals from public and private sector entities for coal gasification projects under a ₹8,500-crore Viability Gap Funding (VGF) scheme.
The ministry’s initiative, unveiled on Tuesday, aims to foster the development of coal-to-chemical and gasification processes, leveraging surplus domestic coal for cleaner energy production. Proposals are required to be submitted by 12 September. The scheme, approved by the Union Cabinet in January, allocates substantial funding to support various categories of projects. For public sector units, each project will receive a viability gap funding of ₹1,350 crore. Private sector investors, classified under Category II, will be eligible for ₹1,000 crore per project. Additionally, demonstration projects falling under Category III will receive ₹100 crore each. In the fiscal year 2024, coal and lignite production in India reached 1 billion tonnes, with a target of 1.08 billion tonnes set for the current fiscal year. The ministry’s foresight anticipates a surplus of domestic coal, even after fulfilling the demands of the power and other sectors. These surplus paves the way for promoting coal gasification, which converts coal into cleaner fuel gases such as hydrogen, methane, methanol, and ethanol.
To further encourage private investment, the ministry has established a separate long-term linkage window and a policy enabling commercial or captive coal mine owners to use their coal for gasification. Under this policy, a 50% incentive on revenue share will be provided, enhancing the economic feasibility of such projects. Coal gasification offers a cleaner alternative to traditional coal combustion by converting coal into syngas, which can then be used to produce various fuels. This process significantly reduces the environmental impact compared to direct coal burning. However, the high ash content in Indian coal presents a technical challenge to broader adoption, requiring innovative solutions and advanced technologies. India boasts the fourth-largest coal reserves globally, with an estimated 361.41 billion tonnes, according to the coal ministry. Tapping into this vast resource through gasification could revolutionise India’s energy landscape, providing cleaner and more efficient fuel options.
The ministry’s initiative is a strategic move to align with global trends towards cleaner energy and to leverage domestic resources effectively. By inviting proposals and offering substantial funding, the government aims to accelerate the adoption of coal gasification technologies, contributing to a more sustainable and environmentally friendly energy sector. The Ministry of Coal’s call for proposals under the VGF scheme represents a significant step towards integrating coal gasification into India’s energy portfolio. This initiative underscores the government’s commitment to cleaner energy solutions while ensuring the optimal use of the country’s abundant coal reserves. As the deadline approaches, stakeholders in the energy sector will be closely watching the developments and potential impacts of this ambitious project.
