Member’s insight: A case of Coal Phase-In for India

Under the Paris Agreement coal phase out commitments are a necessity if we are to meet the goal of staying below 1.5C warming. In recent years the world has witnessed increased divestment from coal and several OECD countries have already committed to dates by which they will no longer use coal for electricity generation. For other groups of countries the challenges are bigger as domestic coal resources are seen as safe havens in economically difficult times. Has COVID 19’s arrival signaled an increased uptake of cheap, dirty fuels in developing and emerging economies? 

In India, recent policy changes suggest that coal mining for the time-being might be making a comeback. CMW’s supporting member Smt. Nandini Satpathy Memorial Trust SNSMT has been following these developments and provided some insights in their article below.

Mineral Laws Amendment Act 2020 of India shall streamline production but environment conservation shall go for a six

(The columnist Chandrachur Ghosh is a noted author of India as well as an expert on the coal sector. This column has been written with guidance from SNSMT Chairman Shri. Suparno Satpathy)

In 2014 when the new Government was formed by the National Democratic Alliance (NDA) led by the BJP (Bharatiya Janata Party, pro-Hindu political party), the mining sector was in the throes of significant turmoil. As the debate on determining ‘Go/No-Go’ areas raged on, the previous UPA-2 (United Progressive Alliance,centre-left coalition) Government grappled with the impact of irregularities in allocation and widespread illegal mining in the key mining states. Mining was banned in sensitive areas in the Western Ghats mountain range on the recommendation of expert committees, while the Shah Commission of Inquiry documented the cases of illegal mining. Soon after the NDA Government came to power, the Supreme Court cancelled the allotment of 214 coal mines in September 2014.

The job for the new Government was therefore cut out. While the mines allocation process had to be streamlined, production increased and availability ensured, environmental concerns too had to be addressed. A series of legislations have been enacted since then to impart momentum to the sector.

Yet, key concerns remain: The target of achieving a billion tonne of coal production by financial year (FY) 2019 has remained elusive. The coal production in FY 2020 has been at a much lower 729.10 million tonnes, registering an annual growth rate of just 0.05%. Cases of illegal mining 91,587 in FY14 to 115,492 in FY19. There is widespread concern regarding the fast-tracking of environmental and forest clearances.

Against this background, the new amendment addresses only some concerns, primarily to boost private participation in the mining sector. Measures such as the removal of restrictions on end-use of coal, thus allowing sale of coal mined by companies other than coal mining and the non-requirement of prior mining experience in India will undoubtedly free up coal for more efficient allocation and infuse new investments in the sector. Allowing the composite prospecting license-cum-mining lease will also reduce bureaucratic hassles and streamline the block allocation procedure. The clauses that allow State Governments to hold auctions for mines that are about to expire and removal of prior approval requirements from the Central Government are also welcome changes that will help avoid disruptions in operations and mineral production.

However, the exemptions to competitive bidding for blocks is in principle a step backward. The cancellation of coal block allotments by the Supreme Court was an indictment of the element of arbitrariness in non-competitive allocation that led to large-scale corruption. The other clause that allows automatic extension of environment and forest clearances for two years to new lessees to whom expired mining licenses are awarded afresh is a cause of concern. It is based on an underlying assumption that all stipulations related to the clearances are followed, whereas in reality it might incentivise recklessness in mining practices.

While the new measures partially address the problems associated with the mining sectors, there are larger issues that hang in the air. Under its national climate pledge to the UN, Nationally Determined Contributions (NDC), the Government of India committed to achieve 175 GW of installed renewable power capacity by 2022, and increase the share of renewable resources in the cumulative electric power installed capacity from 13% in 2015 to about 40% by 2030. Between 2011 and 2019(1), the share of renewables in India’s total installed power capacity more than doubled, from 10% to about 23%, but the share of power actually generated by renewables stood at a much lower 9.4% in December 2019. It is perhaps time to turn the focus on correcting this anomaly rather than put greater thrust on returning to a coal-based economy. As the statistics above demonstrates, it is also time to check the monster called illegal mining that has the potential to take away the benefits that might accrue from policy reforms.

If you would like further information on this case or you in India and would like to learn more you can contact our colleagues at Smt. Nandini Satpathy Memorial Trust (SNSMT) – [email protected] 

 

This article was produced for our NGO newsletter Watch This – for more from this publication please see here


  1. Explanation of this “anomaly” researched by CMW: ‘Government officials said curtailment of generation by states and slowdown in overall electricity demand are the key factors behind the low renewable energy generation … weak finances of state power distribution companies also impacted renewable energy generation … States are not letting renewable energy plants generate as they do not want to submit bank guarantees or letters of credit in favour of such plants.’  Read more at: Growth in India’s renewable energy sector has slumped to a five-year low (economictimes.indiatimes.com)