Coal Gasification Technologies in Building Energy Security - Some Policy Suggestions R.H. KHWAJA, I.A.S C&MD,SCCL

1. Coal Gasification Technologies in Building Energy Security - Some Policy Suggestions R.H. KHWAJA, I.A.S C&MD,SCCL 26th July 2006, ENERGY CONCLAVE -2006, NEW DELHI.

2. The price of oil hit record high of $78 per barrel on 10.7.2006. The energy crunch looks like heading from bad to worse in the coming days. • Report of Goldman Sach’s predicts that between 2000-2050 India’s GDP will rise 60 times and China’s 40 times. • It is impossible to meet this demand. The world crude oil production today is just 85 Million Barrels per day and does not seem likely rise much higher.

3. Approximately 94% of India’s energy consumption is based on 3 sources of fossil fuels – coal, oil and natural gas. Natural gas has experienced a fast rate of growth among the fuels in India’s primary energy supply. • The imperatives of such rise in demand for energy and the rising oil prices dictate that the Energy Security of our Nation is as important as that of territorial security. • As our President His Excellency Dr. Shri A.P.J.Abdul Kalam mentioned we should strive for “energy independence” to achieve the higher economic growth rate.

4. To build energy security of our nation, we should have a holistic approach towards various sources of energy, which includes renewable and non-renewable sources. There has to be an integrated approach in evolving a balanced fuel mix so that not only our energy needs but our environmental concerns are also addressed. • Approximately 80% of the world's energy consumption is based on three sources of fossil fuel: coal, oil, and natural gas.

5. If we continue to burn fossil fuel at our present rate, we could experience a quadrupling of world CO2 emissions over the course of the next 125 years as a consequence of population growth and increased energy demands. According to the International Energy Agency (IEA), emissions generated by world energy consumption will increase by 70% by 2020. • Since the Natural gas is combustible and burns more cleanly than any other energy sources helps reinforce its position as one of the most highly used energy sources in the future. Oil continues to drop even though the oil consumption has increased, while coal remains unchanged.

6. Therefore in the long run for eco-effective energy solutions India has to focus on coal gasification technologies like Coal bed Methane (CBM), Underground Coal Gasification (UGC), Surface Coal Gasification (SCG), Integrated Gasification Combined Cycles (IGCC) and Fluidized Bed Combustion which are cleanest, safest, and most useful forms of energy. R&D efforts require to be intensified to make these technologies commercially viable.

7. Coal gasification offers one of the most versatile and cleanest ways to convert coal into electricity, hydrogen, and other energy forms. The first coal gasification electric power plants are now operating commercially in the United States and in other nations, and many experts predict that coal gasification will be at the heart of the future generations of clean coal technology plants for several decades into the future.

8. Coal industry should be the flag bearer in this extensional domain of mining that is Coal Bed Methane and Underground Coal gasification. The power and fertilizer industries emerged as the key demand drivers for natural gas due to the scale of their operations, policy intervention and social impact. Another application to emerge is the use of CNG for vehicles to replace liquid fuels, as urban pollution grows to alarming levels. • Fossil fuels (coal, oil and gas) are non replenishable, hence they need to be utilized judiciously through the principle of sustainable development and coal gasification route is the best option to achieve it.

9. Fossil fuels (coal, oil and gas) are non replenishable, hence they need to be utilized judiciously through the principle of sustainable development and coal gasification route is the best option to achieve it. • India is endowed with rich deposits of coal reserves in different sedimentary basins. The bulk of the coal resources in our country are around 256 billion tonnes. Large resources of high rank coal in the country provide ample opportunities for harnessing this un-conventional source of energy.

10. Recent studies indicate that the coal seams in the depth range of 600-1000m may yield on an average 4.5m3/tonne of gas in the blocks identified for Coal Bed Methane in Godavari Basin. Possibilities, therefore, exist to extend these studies to other areas of this master basin in future, where coal mining is not anticipated for the next 30 / 35 years.

11. UNDERGROUND COAL GASIFICATION (UCG) • Underground Coal Gasification (UCG) is an emerging technology in which coal can be burnt in a controlled manner and gasified under insitu conditions to harness energy. • In India, UCG was taken up as national project in the early 80’s. ONGC is engaged in the UCG activities as it is having the required expertise in deeper drilling, 3D seismic imaging, directional drilling and underground ignition/ combustion.

12. SURFACE COAL GASIFICATION (SCG): • Surface Coal Gasification (SCG) is a process, which converts coal into combustible and non-combustible gases at high temperature and pressure at surface. The product derived by SCG known as syngas can be used for power generation and/ or as chemical feedstock. The down stream application of Syngas are : • Ammonia/ Urea • Dimethyl Ether (DME) – for power generation, as LPG substitute, as transportation fuel, as chemical feedstock etc.

13. Methanol for Gasoline Blending – Coal gasification route can be extended to manufacturing Olefins from Methanol (called MTO) • Coal to Liquid Petroleum (CTL) • Power generation – Syngas can be used for power generation through IGCC technique. This is the most common use of the syngas.

14. COAL TO OIL: • Last week, Finance Minister P. Chidambaram disclosed that South African Company Sasol is considering investing $1 billion, rising ultimately to $6 billion, for a project to convert Indian coal into petroleum products. Sasol is a pioneer in CTL (Coal to liquids) technology. It developed this technology in apartheid days to provide energy security to South Africa, which was then facing oil sanctions. • Oil produced by this process was costly and uneconomical at the time. But with the sharp rise in oil prices in the last two years, coal-to-liquids suddenly looks a bargain technology.

15. POLICY SUGGESTIONS FOR PROMOTING COAL GASIFICATION TECHNOLOGY: • With rich coal bed methane resources in this country, the development of coal bed methane industry will undoubtedly present an important impact on the improvement of the national social, economic and environmental development. We suggest that the government work out a detailed overall coal bed methane development program as a key component of energy security policy. This program shall be included in the national development program for the XI & XII Five-Year-Plans for implementation. • Develop transportation and distribution assets in the oil and gas sector that provide services under common carrier principles applicable to natural monopolies.

16. Allow foreign operators to bring technology and investment to recover oil/gas from currently abandoned and/or marginal fields on economic considerations. • Extend infrastructure status to the coal industry. Lower duties on capital goods imported for coal mines. • We suggest that the government put in appropriate amount of funds to increase investments in development of infrastructures for CBM and other coal gasification technologies in our country. Government should consider preferential loan inclination policies for the development of such alternate technologies.

17. We also suggest that preferential treatment of income tax reduction or income tax exemption be given to investments made for coal bed methane Projects and other coal gasification projects. • Every effort should be made to encourage the private investments in the sector and intensify technical and economic links with large enterprises and financial institutions at both home and abroad. • (VIII) Amendments to present labour laws would also be necessary for introduction of these technologies. Coal mining sector should get exemption from provisions u/s 10(1) of Contract Labour Act 1970 which restricts outsourcing of activities necessary for coal gasification technology.

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