Coal and Mining Sector

[op-ed snap] A coal commission for India

Note4students

Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Coal commission of India


Context

  1. Renewable energy will replace coal as most important part of our energy mix
  2. After a few years of renewable energy (RE) deployment, supplemented by unprecedented declines in RE prices, the consensus around RE seems to be clear: Within a few decades, RE will become an increasing part of India’s energy mix replacing coal.

Why we need a coal commission?

  1. India’s thermal coal base, which still provides over 60 per cent of the country’s overall generation, is still growing .
  2. Roughly 15-20 million people in the coal belt are dependent on the coal industry, either directly or indirectly, for their livelihood.
  3. The comparative geography of India’s wind and solar resources versus coal makes one thing abundantly clear: RE jobs will not be coming to the coal belt in large numbers.

Importance of public investment and PSU for Coal belt

  1. Many coal-bearing states are also in the bottom third by income per capita (Jharkhand, MP, Odisha, Chhattisgarh and West Bengal in ascending order).
  2. But one of the big benefits of public investments is that they can be guided.
  3. This is already visible from the way the current government has been taking financial surpluses from both the NTPC and Coal India to invest in solar power, fertiliser plants, and other areas far from the core business areas of these companies.
  4. In fact, for all the criticisms of the public sector, one of its greatest achievements is that PSUs have continued to operate in eastern India for decades, despite the political complexities, adverse business environment, and infrastructural constraints that accompany the region.
  5. While large private investment has largely evaded the coal belt, PSUs like Coal India have built up considerable social and political capital in these regions which allow them to conduct business.

Questions coal commission will consider:

  1. It will consider the future of India’s coal industry, and the PSUs engaged in these industries.
  2. Can this social and political capital be used to pivot towards other activities?
  3. Can companies like Coal India become diversified national champions as part of a new industrial policy for the coal belt?
  4. Can Indian coal be used for non-combustion purposes and what technologies would be necessary for such a transition?

Way forward

  1. Ultimately, an Indian “coal commission” needs to articulate a credible economic future for the coal belt and the companies that exist there.
  2. As the latest COP in Katowice (Poland’s coal capital) delivers another disappointing outcome, it is clear that international financing for coal projects is an unrealistic expectation.
  3. Instead, if the Indian state can engage in some good old long-term planning it can anticipate and prevent the large-scale economic distress which will be experienced in eastern India with the decline of the coal industry.
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