Coal Beneficiation Policies: Sticks but no carrots

With the increase in demand for coal, the only viable option left for the government is to go against its policy of self-reliance with coal beneficiation being a feasible step in this regard.

This article is part of the series Comprehensive Energy Monitor: India and the World

In 2021-22, an increase in demand for power in India increased demand for coal to such an extent that the Government had to go against its policy of self-reliance and issue directions to power generators to import coal. The government also directed banks to offer financial assistance to power plants that were classified as financially unviable or too old to operate. These developments highlight the ultimate irony of extreme weather in summer and winter across the world presumed to be caused by climate change pushing the world back to burning coal, one of the key causes of climate change. These developments justify a review of India's policies for increasing the production of cleaner coal domestically. Cleaner coal combusted efficiently can reduce both local pollution and carbon emissions. The first step to achieving this goal is coal beneficiation.

Coal beneficiation is a process that improves the consistency in size and improvement in the quality of coal by reducing the non-combustible extraneous matter and associated ash. Beneficiation can be done with dry-deshaling where non-coal matter is removed using no liquid media. It can also be done through a wet process where coal is crushed and put into a liquid media (usually water) of adjustable specific gravity to separate lighter coal (with low ash content) from heavier coal (high ash content, ‘rejects’). The rejects also contain carbonaceous matter and need to be utilised economically.

Indian coal is said to be of ‘drift origin’ and has mineral matter finely disseminated with coal matter causing significant deterioration in quality in the formation stage itself.

More than 75 percent of Indian coal has an ash content of more than 30 percent or higher with somewhere the ash content is as high as 50 percent. Indian coal is said to be of ‘drift origin’ and has mineral matter finely disseminated with coal matter causing significant deterioration in quality in the formation stage itself. The mineral matter of which ash is a major part is inherent ash (as opposed to free ash) embedded in the combustible part of the coal and therefore cannot be easily removed. This is one of the challenges of coal beneficiation in India.

Power plants that use coal of higher quality have a performance advantage over lower-quality coal. In general, the higher the ash content of coal, the lower the heating value of coal per unit weight of coal. When the percentage of ash content is reduced, the heating value of coal is increased and so less raw coal can be burnt to produce a given quality of electricity. When low ash coal is used, plant operators can reduce scheduled and unscheduled maintenance required to remove ash collection. Lower ash coal can also reduce corrosion on plant ductwork which reduces plant life.

Low ash coal can reduce damage to all coal handling equipment such as conveyors, pulverisers, crushers, and storage. The use of higher ash coals increases the load on the plant which increases the quantity of plant site energy needed to operate the plant which reduces the energy available for power generation. This increases plant operating costs and decreases its profit potential.

Beneficiation improves overall plant operations that directly affect the profitability of a coal plant over the long term and also improves its ability to avoid environmental penalties and disputes. It also improves the life of emission control devices. Most of the ash present in coal travels through the combustion process and is captured by emission control devices such as electrostatic precipitators. Washed coal use reduces the amount of ash produced and collected by these devices and extends their useful lives.

The use of higher ash coals increases the load on the plant which increases the quantity of plant site energy needed to operate the plant which reduces the energy available for power generation.

India is unique amongst nations that use coal for power generation in that it hauls coal over much greater distances from the mine to the power station. Besides its detrimental effect on the environment, the extra load which the railway system would have to carry meant extra cost to the economy as well as added air pollution through the transport system. Given the long haulage distances, the lower ash coal will result in reductions in freight costs for transporting the same energy content. India continues to use the same track for freight and passenger traffic, unlike most developed countries that use dedicated tracks. The difference in speed between the two (passenger and freight) erodes the capacity of the Indian rail network. Network congestion is further aggravated because the share of coal traffic is concentrated on about a dozen routes.

The coal mines (nationalisation) act, 1973 was amended in 1993 to allow coal mining by both private and public sectors for captive consumption for the production of iron and steel, generation of power, washing of coal obtained from a mine and other end-use, which would be notified by the Government from time to time. Policymakers acknowledged the need for coal beneficiation in India's five-year plans in the last three decades and they also identified some reasons for low-capacity utilisation. For example, the 10th plan (1997-2002) stated that the washing capacity for coking coal is underutilised because the quality of coal in India made it uneconomical to wash. It also stated that existing coking coal washeries were designed to beneficiate coking coal of relatively easy to moderately difficult ‘washability’ characteristics, but coal production had shifted to more ‘difficult to wash’ coals. The 10th plan document observed that though the setting up of washeries was open to the private sector, "there were no takers." The 11th plan (2007-2012) observed that coal washing would ensure consistent fuel supply to conventional pulverised coal combustion (PCC) boilers and improve efficiency by 1 percent. It cautioned that an increase in washing capacity would consequently increase the demand for raw coal unless fines were used productively.

In 1997, a notification by the ministry of environment, forests, and climate change (MOEF&CC) required all power plants located beyond 1000 km (kilometres) from the pithead or located in urban and sensitive areas to use coal ash content of not more than 34 per cent with effect from 2001. In 2012 the MOEF&CC revised national ambient air quality standards (NAAQS) for 12 pollutants.

Policymakers acknowledged the need for coal beneficiation in India's five-year plans in the last three decades and they also identified some reasons for low-capacity utilisation.

In 2014, MOEF&CC notified that power plants of capacity above 100 MW located between 500-749 km from the pit head shall be supplied with raw or blended or beneficiated coal with ash content not exceeding 34 percent on a quarterly average basis from June 2016. In addition, all new coal plants have been mandated to use supercritical technology and 144 existing plants have been assigned mandatory efficiency targets which will require the use of higher-quality coal.

Despite the technical benefits and policy interventions that have been in place for over two decades, coal washing has not been adopted on a large scale by coal producers and users (particularly, power generators). In 2020-21, the production of washed coal (coking and non-coking) was 22.951 MT or just 3 percent of raw coal production of 716.083 MT 2020-21. Of this, about 20 percent was coking coal and the rest was non-coking coal. Total washing capacity was 29.98 MT which means capacity utilisation was over 75 percent. Public sector washeries accounted for over 83 percent of washed coal production. It is likely that if policies to promote coal beneficiation focus more on incentives ("carrots") rather than mandates ("sticks"), demand for washed coal will increase substantially.

The policy directive that influenced the setting up of washeries prioritised environmental desirability over economic viability and did not consider the cost of compliance.

Overall, the expansion of coal beneficiation capacity and the use of clean coal in India for greater energy security and environmental protection appears to be less of a technical or regulatory compliance problem but rather an economic problem. The policy directive that influenced the setting up of washeries prioritised environmental desirability over economic viability and did not consider the cost of compliance. It was at variance with the growing influence of commercial and market forces on all segments of the coal mining and power generation value chain. Power generators are under pressure to contain generation costs to keep power tariff levels stable whilst at the same time they are also expected to invest in technologies to reduce pollution. In other words, they are expected to produce a public good such as clean air at the expense of a private investment that they cannot recover. It is unlikely that washing will be done voluntarily unless there is an incentive to do so such as public funding support on the scale it is available for renewable energy.

As the economic and environmental benefits of coal beneficiation at the national level do not often translate into financial savings at the plant level, a case for justifying public support may be made. The utilisation of the National Clean Environment Fund (NCEF) for investment in coal quality improvement in general and coal washing, in particular, will offer unambiguous support for shifting coal policy from quantity to quality. The 2020 report on coal washing by Niti Aayog concludes that washing coal to reduce ash content to 30-34 percent translates into an environmental benefit of INR0.01-0.02/kWh (kilowatt-hour) under a conservative assumption of a carbon price of about US$2.5/tonne. The current carbon price at the EU ETS (European union emission trading system) is over US$80/tonne which means the environmental benefit from coal washing could be higher. This benefit could be transferred to power generators who would be incentivised to use washed coal. Overall policies should be technology and fuel-neutral and reward all efforts that reduce carbon emissions.

The views expressed above belong to the author(s).