Download Indian Coal Sector Reforms - More Change is Necessary?

Indian Coal Sector Reforms
More Change is Necessary?
Presentation at 9th Coal Trans India 2010
9 March 2010
By
T.L SANKAR
Administrative Staff College of India
1
The New Context
Energy has been an important issue in all discussions on economic and
social development.
For several decades, energy discussions in India revolved mainly around:
a. The role of indigenous coal as the primary source of supply of
commercial energy and its sustainability
b. The limited resources of hydro-carbon resources and the
accessibility and affordability of hydrocarbon imports.
After the Stockholm discussions the environmental impacts of energy
consumption were added to the agenda.
TO DAY: After Copenhagen discussion, climate change consequences
have become the core of energy discussions.
Will the new context call for a review of India’s coal policy and long-term
coal development plans?
2
The Agenda for Discussion today:
The role assigned to coal in India’s Energy Future in the
IEP.
Measures designed to enable India’s coal sector fulfill the
assigned role.
Action Taken Report on the Coal Sector reform measures
so far.
An evaluation of the Action Taken so far
What further action needs to be taken and what new
measures have to be added to the Reform Agenda
3
India’s Concern for Energy Security


o
o
o
o
o

To sustain the recently achieved high rates of GDP growth India has
to ensure energy security.
Energy security in India’ s is defined:
there should be adequate quantity of energy to meet all the legitimate
demands of “all people”.
“All people” should include the poor and the remote area residents.
The supply of energy should of appropriate quality and in the desired
fuel form.
The supply should be at prices affordable by all.
The production, transport and utilization of energy should be achieved
at all times with minimum adverse impact on environment and with
minimum addition to GHG emission.
Energy Security Plans should be harmonious with the National
Security plans.
4
Energy Security – Reliance on Coal
India set up a High Power Committee to evolve an Integrated Energy
Policy (IEP) for the country with a 25 year time horizon.
IEP (2006) on the basis of rational consideration of the relative
availability, accessibility and affordability of all sources of commercial
energy, concluded that Coal is and will continue to be the primary
source of supply of commercial energy in India.
In the changed context today, does this view need re-examination?
The issues for examination are:
a. Does the forecast of demand for different fuels need change?
b. Even if it needs no change, are reform measures proposed so far
adequate and efficiently implemented?
c. If on re-examination coal is to be continued as the dominant source
of supply of commercial energy, what further policy measures and
programme initiatives would need to avoid/mitigate the adverse
impact of large coal use on environment and the climate change
consequences?
5
Energy Consumption Pattern (1980 – 2005)
Total
PCES In
Mtoe
Coal
Mtoe / (%
Share)
Oil
Mtoe
NG
Mtoe
Primary
Electricity
Mtoe
Imports
Mtoe
As % of
TPCES
Total
Electricity
Generation
BkWh \ Mtoe
1980-81
98.0
58.5
(59.7)
34.0
(34.7)
1.3
(1.3)
4.2
(4.3)
23.7
(24.2)
119.2
(10.2)
1990-91
191.5
114.4
(59.7)
59.7
(31.2)
10.9
(5.7)
6.5
(3.4)
32.1
(16.8)
289.4
(24.9)
2000-01
314.1
175.2
(55.8)
107.4
(34.2)
23.9
(7.6)
7.6
(2.4)
93.6
(29.8)
560.8
(48.2)
2003-04
351.9
200.5
(57.0)
117.1
(33.3)
26.5
(7.5)
7.8
(2.2)
109.0
(31.0)
633.3
(54.5)
2005-06
387.6
229.2
(59.1)
121.8
(31.4)
26.8
(6.9)
9.8
(2.6)
129.9
730.0
(62.8)
5.7
5.6
5.2
-
-
-
7.5
Growth Rate %
per year 19802005
Figures in bracket in the table represents percentage share of the fuel in TPCES Total Primary
Commercial Energy Supply of the year.
The share of coal has remained around 60% and oil between 30-35%, natural gas share has
increased. In the total electricity generation the contribution from primary electricity has declined
steadily on account of the rapid increase in Thermal Power Generation.
6
Total Energy Requirement in Different
forms in Original Units
YEAR
Hydro Nuclear
BKwhr BKwhr
Coal
MT
Oil
MT
Natural
Gas BCM
2011-12
140
65
690
166
53
2016-17
209
118
914
214
71
2021-22
267
172
1270
278
108
2026-27
337
272
1722
365
150
2031-32
407
375
2285
486
219
Growth Rates
2011-2031 (%)
per year
5.9
11.2
6.3
5.6
7.2
Source: IEP Report Forecast Estimates based on 9% growth of GDP during 2011-31
period
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Misgivings Regarding Coal Forecast
1.
2.
3.
4.
5.
The basis of energy demand forecast is 9% growth of GDP for next
25 years. Is this realizable in the context of global recession?
The forecast implies a total coal requirement of 2285 Million Tonnes.
Is this achievable with our present knowledge of our minable coal
resources?
The forecast production will call for underground mining of deep
mines, below 600 meters.
Do we have the technology for UG
mining ,particularly deep UG mining ?
Such high coal production targets would lead to very large legal and
institutional challenges. Can we over come these?
Will this rapid increase, raise the level of contribution by India to
climate change impacts. What measures are to be taken to mitigate
these impacts? How can we avoid global protest against increased use
of coal?
8
IEP Forecast Needs No Change as of now
India’s GDP growth continues is 7-8% even in the recession period
The forecast rate of growth of coal production is 6.3% per year as compared to 5.6%
achieved over the past 25 years(1980-2005) when only two PUs were engaged in coal
production; now number of producers has increased.
India’ s desired of coal production in 2031-32 is less than China’s production today
and likely to be close to USA’s production in the next few years.
The ranking of important countries who produce large quantities of coal;.
In Million Tonnes
Country/
Year
1995
2004
USA
1033
1112
China
1537
2156
India
321
444
The relative price of coal and other fossil fuels has remained in favour of coal with
the steep increases and continuing volatility of hydro carbon prices.
The demand of coal in 2031-32 as forecast needs no change.
The questions which remain are
Is our knowledge of coal resources are adequate?
How do we ensure the acceleration of coal production and productivity?
9
Coal Resources of India
Geological Resources in-situ are finite . But the total minable quantity of a
resource like coal known to each country will depend on the extent of
exploration, the state of technology and price of coal relative to other alternate
fuel resources. The known coal resources in India has been increasing in last
decade due to accelerated exploration activity.
As on
1.1.2004
1.1.2005
1.1.2006
1.1.2007
1.4.2007
1.4.2008
1.4.2009
Geological Resources of Coal
Proved
Indicated
Inferred
91631
116174
37888
92960
117090
37797
95866
119769
37666
97920
118992
38260
99060
120177
38144
101829
124216
38490
105820
123470
37920
Total
245693
247847
253301
255172
257381
264535
267210
In 2005 the total known resources were 248 Billion Tonnes of with the
proved resources were 93 Billion Tonnes. As of 01-04-2009 it has increased
267 Billion Tonnes and the proved resources are 106 Billion Tonnes.
10
Extractable Reserves of Coal
The Quantity of Coal that can be extracted is always lower than the proved
reserves. An authoritative estimate of the extractable reserves made as part of
the National Coal Inventory in 2005 upto 1200 mtrs depth is.
In Billion Tonnes
Area
Geological Reserves as on 1.1.2005*
Proved
Indicated
Inferred
Total
Extractable
Reserves*
CIL Blocks
67.71
19.42
4.56
91.69
30.03**
Rest
25.25
97.66
33.24
156.15
22.21@
Total
92.96
117.08
37.80
247.84
52.24
* Includes reserves standing on pillars.
** Based on 2004 CMPDI study of 287 blocks
@ Based on CMPDI study of 114 blocks
Can extractable reserves sustain the production targets upto 2031?
11
How Long Will Coal Last
Plan Period
Upto
Demand in end
year-mt
Total Demand in
five years-mt
Cumulative
consumption mt
2011-12
690
2693
2693
2016-17
914
4010
6703
2021-22
1270
5460
12613
2026-27
1722
7480
20093
2031-32
2285
10017
30110
 As seen from slide 12 the extractable / usable reserves is about 52 bt of which
the extractable coal from “Proved Blocks” estimated to be 30 bt.
 The reserve requirement upto 2031-2032 is only 30.11 bt. At 2031-32 level
of production the extractable coal can sustain production for a few more
years. Meanwhile the extractable coal limits might increase due to
technology and further exploration.
12
Institutional & Managerial Reform in the Coal Sector
An Expert Committee headed by T.L. Sankar was set up to design the Road Map for
Coal Sector development has suggested (in 2007) several measures:
1. Captive coal mining provisions should liberalized to create competitive conditions.
2. Special incentives should be given to encourage Under Ground (UG) coal mining.
3. Modern Technologies like long-wall face mining, continuous mining etc, should be
adopted towards productivity and quality improvement.
4. Methods to reduce pollution should be adopted at every stage of the supply chain.
5. Coal sector should evolve ways of introducing ultra mega coal mines on the lines of
ultra mega power projects, especially develop under ground mines.
6. Management should be restructure to give greater autonomy through Navaratna status.
7. Procedures for approval of Environmental Impact Analyses (EIA) and Environment
Management Plan (EMP) and for giving clearance for forest lands conversion to
mining should be simplified and should be made time bound .
8. Seller – Buyer Relationship should be rationalized.
9. A regulator should be appointed for the coal sector.
10. R&D in Coal Technologies should be deepened and widened.
11. Coal Policy should be harmonized with National Security Concerns.
Many of the Institutional & Managerial Challenges are being faced effectively
13
Liberalising Captive Coal Mining to Create Competitive Conditions
1. On the Expert Committee’s recommendation, all coal blocks which
are not planned to be exploited till 12th plan end were released from
CIL and allotted to private captive coal mining applicants.
2. Now beside 2 large PU coal mining companies there are over 30
captive coal mines operatives.
3. The definition of captive coal mines extended to group captive coal
mines.
4. Coal mine allottees could do mining through a joint venture partner
with at least 26% of the equity.
Result:
1 Large companies including giant power companies like NTPC and
other Private Sector Companies are into captive coal mining.
2 The coal users are enthusiastic to take up captive coal mining. The
new applications are likely to be decided by public auction.
14
Challenges that Remain for the Coal Sector
Challenge 1:
Challenge 2:
Challenge 3:
Challenge 4:
Challenge 5:
Challenge 6:
Speeding up the efforts to increase competitiveness in coal
exploration and mining by opening it to private sector.
Increasing productivity in OC and UG mines and improving
the share of coal production in UG mines. Even JV with
foreign coal companies permitted.
Creating facilities for washing and transportation of larger
quantities of coal.
Enhancing the capability of the officialdom dealing with
approval of mine plans and environmental management in
coal mines to speed up the issue of permission & approvals.
Introducing regulation and more effective governance in coal
sector.
Designing and Implementing an effective programme for
reducing the climate change consequences of coal production
and usage.
15
Response to Challenges in Coal Production
The competition between CIL & Private Captive Coal Mines has led to the acceleration of the
mine development work by most agencies.
1. Coal India (CIL) has Identified 134 new mines and Implementation started in many of
them.
2. CIL has abundant restarted 18 abandoned mines with the appropriate New Technology.
3. Seven (7) large under ground mines identified for development by CIL with International
Technology.
4. Acquisition of coal properties abroad through Coal Videsh and also by Private Industries.
5. CIL as well as private players are introducing larger size dumpers, more modern, heavy
earth moving machines (HEMM).
6. Measures have been initiated for importing more coal from Abroad during the next 5 years
till our production could match the requirements.
7. A regulator for the coal sector will be appointed in early 2010-11.
But the challenge still remains: How to Expedite the Coal Mine Plans Approval & Issue of
Environmental Clearances.
16
India’s Position on Climate Change Questions
1. All Countries are responsible for the GHG Emissions over time. The action
plan and its financing future action to mitigate GHG Emissions should be based
on the “Common but Differentiated Responsibilities of the Countries” accepted
in the Stockholm resolution 1992, and under UN Framework Convention on
Climate Change (UNFCC).
2. The level of responsibility would depend on the current level of emission, the
efficiency of use of energy resources (Energy Intensity of the Economy),
current emission levels and the total addition to the accumulated global CO2 and
the consequent contribution to temperature increase.
3. Analysis of the relevant data clearly shows that India has responsibility far
lower as compared to the developing countries and China. In terms of energy
efficiency India has a much lower Energy Intensity than other countries.
4. This position and the data which determine the relative responsibilities have not
changed since 1992 and later reiterated in Kyoto discussions.
5. Unfortunately the Copenhagen discussions of 2009 have diluted the principles
of “common but differentiated responsibilities”.
The relevant data is in the next few slides
17
Emission Levels in India, China & USA
Name of the
Country
Total Emission in Million
Tonnes / Year
Per Capita Emission in Tonnes / Year
1990
2002
2005
2006
1990
2002
2005
2006
USA
2241
3276
5323
5606
19.0
19.6
19.5
19.0
China
5001
5763
5967
5697
2.1
2.9
4.3
4.6
India
575
1015
1163
1250
0.8
1.2
1.3
1.2
Cumulative CO2 Emission 1850-2002
Country
% of World
(Rank)
United States
29.3
(1)
China
7.6
(2)
India
2.2
(3)
18
The GDP – Energy – Emission Nexus in Different Countries
GDP-PPP
per capita
(thousand 2000 $)
Energy
use per
capita
(toe)
Energy
intensity
(toe per
million
2000 $)
CO2
emissions
(percentage
of global
total)
CO2 per
capita (tC)
CO2
Emissions
Contributi
on to temp
increase,
1850-2003
(percentage
of global
total_
World
7743
1.68
217
100.0
1.13
100.0
USA
35373
7.84
222
22.3
5.42
28.9
Japan
26270
4.05
154
4.90
2.69
4.20
China
5385
1.09
203
17.3
0.95
7.80
India
2731
0.52
190
4.40
0.29
2.20
Source: Collected WRI CAIT Tool Courtesy : Ananth Chikkatur, KSG Harvard University Cambridge, USA
1. The CO2 per capita emission in India is only 0.29 tonnes as compared to USA 5.42 & China 0.95.
2. In terms of the percentage of contribution of India to the total global CO2 emission is only 4.4%
compare to 22.3% by USA and 17.3% of China.
3. India has contributed only 2.2% to the global temperature increase in over 50 years, while USA is
over 28.9% and China 7.8%.
19
India’s efforts to meet climate change challenges
Though India has consistently rejected the demand for fixing limits to
emission with date - lines as in the case of developed economies, it has taken
several important measures to mitigate the climate change impact.
India has setup has announced National Action Plan on Climate Change.
As per the plan 8 National Mission has been set up
1. National Solar Mission
2. National Mission for Enhanced Energy Efficiency
3. National Mission on Sustainable Habitat
4. National Water Mission
5. National Mission Coastal Regions
6. National Mission for Himalayan Ecosystems
7. National Mission for a “Green India”
8. National Mission on Strategic Knowledge for Climate Change
20
National Solar Mission
Among the 8 Missions the two which are directly related to the issue of fuel
resource utilisation on National Solar Mission and the National Mission for
Enhanced Energy Efficiency.
o
o
National Solar Mission has outlined a policy to
Installed 20,000 MW of Solar PV Power Generation Capacity by 2022.
Deploying at least 1000 MW of solar thermal power generation.
Increase production of photo voltaic cells to 1000 MW / year.
National Solar Mission needs reconsideration on certain aspects;
Proposal is to add additional solar PV power generation of 20000 MW
would have benefits equivalent to adding about 6500 Mw of thermal power
capacity when the total power generation capacity would be over 2.5 lakhs
of power utility capacity.
Achieving this would involve a subsidy of 40,000 crores
While encouraging PV panel manufacturing capacity panel should first be
used for decentralized power generation to electrify the still known
electrified villages and the 60 million households which do not have grid
connection electricity due to the poverty of such families.
Whatever deployment of strategy is adopted it will be a great contribution
to the development of global green power generation
21
National Mission for Enhanced Energy Efficiency
The mission builds on the efforts already initiated under the Energy
Conservation Act 2001 and through programmes which have been
initiated and actively pursued by the Bureau of Energy Efficiency
(BEE)
This mission set a target of saving 10000 MW of power through energy
efficiency improvements through;
Mandating specific energy consumption decreases in large energyconsuming industries, with a system for companies to trade energysavings certificates.
Energy incentives, including reduced taxes on energy-efficient
appliances.
Financing for public-private partnerships to reduce energy
consumption
through demand-side management programs in
the municipal, buildings and agricultural sectors.
22
Harmonising Coal Policy with National Security Concerns
1.
India’s Nation Security rests on maintaining good relationship with all
countries, especially the neighboring countries in South Asia and South East
Asia.
2.
Only element in our coal programme impacting other countries is GHG
emission. India would therefore play a leading and responsible role on behalf
of the developing countries in all discussions on climate change.
3.
All neighbors like Sri Lanka, Bangladesh and Pakistan are now interested in
coal based power generation. Providing material and technical assistance
would strengthen our relationship with such countries.
4.
India can set-up Technical Institutes to train technicians and engineers in coal
related subjects from all the countries of the region.
5.
The coal trade and technical assistance could pave the way of South Asian
Power Grid, South Asia Gas Grid etc and enable the development of regional
energy market.
6.
All these measures are under consideration and implementation at some level
23
Summing Up
On the basis of available information and current knowledge of Indian
and global fuel situation. We have to conclude that coal will continue as
the primary supplier of commercial energy to India for the next 25 years.
A number of measures to realise this possibility and to enable the Coal
Industry to retain this primary role, has already been initiated under
different programmes of the Government of India and the State
Governments.
While increasing the role of coal India’s enormous increasing in energy
demand calls for the greater utilisation of renewable energy and greater
attention to the climate change implications.
India is quite capable of balancing the divergent claims of using more
coal and taking measures to mitigate climate change impacts.
Policies and Programmes have been well delineated already. If these are
implemented efficiently, energy security as well as national security
could be enhanced with coal continuing to play a crucial role in the
energy sector.
24