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Energy Security and Better Use of Coal, Shri R V Shahi, Former Secretary, Ministry of Power

I had been invited to speak in an International Conference on India and Energy organised by Centre of Geopolitics of Energy and Raw Materials of the Dauphine University, Paris at Paris, on 18-19 June, 2009.

The main theme on which I was expected to speak was on coal and its role in India's power development programme and in the energy security for India.

The Presentation Covered:

  • Energy, Development & Energy Security

  • India's Integrated Energy Policy

  • Role of Coal

  • Clean Coal Technologies

  • National Action Plan on Climate Change

I outline the presentation I made:

Energy, Development & Energy Security

  • As we all know, energy is the most important determinant and index of development and of quality of life of any nation or society.

  • 17% of world population lives in India, but its share of commercial energy consumption is 3.7%, and per capita commercial energy consumption is one fifth of world average, less than 5% (one twentieth) of U.S.A. and less than 30% of even China.

  • Per Capita Electricity Consumption in India is about 650 Kwhr which is less than one third of World Average.

  • Energy Security has become a global concern and challenge both for developed and developing countries and of course for underdeveloped countries.

  • Developed countries with their modern lifestyles that any disruption, dislocation or partial unavailability of energy is not only immediately.

  • Of late, energy security has come into sharper focus in the context of the challenges posed by global warming and the concerns emanating from consequences of Climate Change. (4th Report of IPCC).

  • We must create consensus on the fact that unless the rich nations change their life styles, reduce their consumptions or adopt totally different methods of production or do both, their present levels of emissions are unsustainable.

  • Problems for developing countries are more inasmuchas they have to fulfill the legitimate aspirations of their people to have a reasonable level of living for which they have to inevitably increase the base of energy production, which normally may run counter to the expectations of developed world to contain energy production and thereby carbon emissions.

  • In India more than 50% of its rural population does not have even access to electricity connectivity. And, those in the rural areas who have access face disruptions in supplies for days together.

  • Almost 30% of people living below poverty line have to depend on forest wood and cow dung for cooking their food.

  • Energy Security, therefore, has to have different connotations in contexts of varying situations in different countries.

  • The World Energy Assessment (UNDP 1999) report defines Energy Security as "The continuous availability of energy in varied forms in sufficient quantities at reasonable prices".

  • This is obviously a highly demanding definition. In present scenario, it is unlikely that in any country this type of an expectation can be fully met.

India's Integrated Energy Policy

The Expert Committee, Set up by Indian Government in 2004, came to the following conclusion in the I.E.P. (2006).

"We are energy secured when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected."

This definition was evolved after considerable deliberations in the Committee as conditions in India are entirely different.

  • By "effective demand" we meant that a demand which should be supported by the ability to pay.

  • Lifeline energy is a concept which we introduced in the Electricity Policy ss(2005) suggesting that a minimum of 1 Unit of electricity a day should be available to below poverty line (BPL) families at affordable price.

  • India is at such a stage of its developmental programmes and the energy consumption levels with which it has been able to provide only a less than moderate lifestyle to its people, that energy security for India would require harnessing all forms of energy. It can ill afford choosing select technologies and fuels and leave other options. By 2032, the target is more than 800 GW as compared to 150 GW as at present. Hence, it has to depend on all options.

In last five years, we have achieved a good level of GDP growth. In the year 2006-07, electricity generation grew at 7.3% and we had the highest GDP growth of 9.7%. There is a high degree of correlation. With efficient energy consumption the correlation could be even 0.7%.

India: GDP

Year

GDP Growth Rate (%)

2004-05

7.5

2005-06

9.5

2006-07

9.7

2007-08

9.0

2008-09

6.8

*Average of last 5 years: 8.5%

Even during the current global slowdown, India was able to achieve a growth of 6.8% while almost all countries had negative growth.

GDP Forecast
(As per the Economist, May 23, 2009)

% Change one year ago

Country

2009

2010

USA

-2.9

+1.4

Japan

-6.4

+0.6

China

+6.5

+7.3

Britain

-3.7

+0.3

Canada

-2.3

+1.6

Euro Area

-3.7

+0.3

France

-2.9

+0.3

Germany

-5.2

+0.3

Italy

-4.0

+0.1

GDP Forecast
(As per the Economist, May 23, 2009)

Country

2009

2010

Russia

-3.0

+2.0

Switzerland

-2.4

+0.2

Australia

-0.7

1.6

Hong Kong

-5.8

+0.6

India

+5.0

+6.4

Singapore

-8.8

+0.9

South Korea

-5.9

+0.3

Brazil

-1.5

+2.7

Mexico

-4.4

+1.2

Saudi Arabia

-1.0

+3.3

South Africa

-1.8

+3.1

For the year 2009-10, most of the forecasts would lead one to conclude that India will grow at 6.5% to 7.0%.

What gives us reasons to be confident is the necessity for infrastructure development and more importantly the commitment of the present Government to do so.

  • GDP Growth to be Primarily Driven by Infrastructure Spending.

  • Infrastructure Spending in XI Plan (2007-12).

To Double - US $ 500 Billion.

  • Over 40% - US $ 200 Billion for Power Sector.

In India, first signs of recovery, though slow, are already visible :

  • Economy is further picking up.

  • Positive mood is reflected by Stock Market

    • In last three months Sensex up 90%.

    • 10 Top Shares up 248 to 148%.

As per the Integrated Energy Policy, the objectives of Energy Security are as follows:

  • Energy initiatives to enhance Energy Security would include the following:

    • Diversification of supply sources (both domestic and import) - all fuels, all technologies, alternative new energy sources.

    • Reduction of Import - Dependence on outside sources has increased considerably over last 25 years with consequential risks and pressures on energy security. We need to minimize it.

    • Maintenance of Strategic Reserves - We are not very well placed as compared to global practices and therefore exposed to greater risks in times of fluctuations in global energy markets. The situation needs to improve.

    • Procuring oil and gas reserves abroad by securing equity position will enhance energy security.

    • Reducing Demands and energy needs through comprehensive measures on Demand Side Management (DSM).

The energy demands have been analysed under various assumptions and scenarios by the Planning Commission. The actual position as in 2006-07 and projections for 2031-32 are as follows:

Sectors

2006-07

(Million Tonnes of Oil Equivalent MOTE)

%

2031-32

%

Mid Point %

Coal

209

39

632-1022

41-54

47

Oil

133

25

350-486

23-29

26

Non-Comml.

147

27

185-225

10-12

11

Gas

35

7

104-197

6-11

8

Nuclear

5

1

76-98

4-6

5

Hydro

10

1.8

13-35

0.7-2

1.5

Renewables

1

0.1

2-87

0.1-5.6

3

Total

540

100.0

1536-1887

It may be seen that on account of huge expansions needed, even though we give priority to hydro and other renewable as also nuclear, dominance of coal appears inevitable.

This Chart is indicative of shift toward nuclear and renewable. This is in overall energy mix. But, only for power gas and renewable may retain their present proportions, nuclear may go to 6-7%, hydro may slightly go down even though we fully use its potentials.

Sources of Electricity Generation - One Possible Scenario

Year

Electricity Generation at Bus Bar (BkWh)

Hydro
(BkWh)

Nuclear
(BkWh)

Renewables
(BkWh)

Thermal Energy
(BkWh)

8%

9%

8%

9%

2003-04

592

592

74

17

3

498

498

2006-07

711

724

87

39

8

577

590

2011-12

1026

1091

139

64

11

812

877

2016-17

1425

1577

204

118

14

1089

1241

2021-22

1981

2280

270

172

18

1521

1820

2026-27

2680

3201

335

274

21

2050

2571

2031-32

3628

4493

401

375

24

2828

3693

*includes secondary oil consumption for coal based generation

India: Power Sector Profile Installed Capacity (As on 31.03.09)

Sectors

MW

Coal

77,377

Gas

15,149

Nuclear

4,120

Diesel

1,200

Hydro

36,878

Renewables

15,149

Total

1,49,873

Capacity Addition Target during XI Plan (2007-12)

Sectors

MW

Coal

51,329

Lignite

2,280

Gas

7,293

Nuclear

3,380

Hydro

15,507

Total

79,790*

*includes about 13,000 MW already commissioned.
In addition there is a target for about 10,000 MW from other renewables viz. wind, bio-mass, solar etc.

These are the targets. We may not get all these by 2012 and slip by an year or two, but this pattern will be realised ultimately if not by 2012 may be by 2013 or 2014.

The comparison may need to be made keeping in view the fact that hydro, and other renewable do not deliver the same Plant Load Factor. Roughly 100 MW of these would mean 30/40 MW of coal based capacity

Role of Coal

  • Coal has continued to be the most predominant source of commercial energy. It would perhaps continue to be the most dominant source of energy for generation of power as also in many other production processes.

Coal Resources

Type-wise Coal Resources as on 01.04.2007

Coal Type

Category

Total (in Bt)

Resource %

Proved (in Bt)

Indicated (in Bt)

Inferred (in Bt)

Prime Coking

4.61

0.70

-

5.31

2.07

Medium Coking

11.85

11.60

1.88

25.33

9.84

Semi Coking

0.48

10.03

0.22

1.71

0.66

Total Coking

16.95

13.30

2.10

32.35

12.57

Non Coking

81.64

106.77

35.67

224.08

87.05

Tertiary

0.47

1.06

0.37

0.94

0.37

Total

99.06

120.18

38.14

257.38

100

% Share

38.49

46.69

14.82

100

*As per Indian Standard Procedure (ISP)

Many experts believe that our stocks would not last for more than 40 to 50 years.

  • Even if it is established that our coal reserves can last for a long period of time, it would be desirable that the coal consumption profile of the country is so configured that the longevity of use of domestic coal is enhanced. A suitable blend of domestic coal and coal purchased from outside can enhance energy security.

  • The Scheme of Ultra Mega Power Project of 4,000 MW capacity each was conceived on this basis - Pit head stations on domestic coal and coastal plants on imported coal

  • One of the most effective ways of enhancing energy security, in so far as the role of this dominant fuel is concerned, would be to acquire coal mines abroad. This had been decided in the Energy Coordination Committee presided over by the Prime Minister in 22005 and both public and private companies are working on this.

  • The issue of energy security in the context of coal also needs to be viewed from the technological developments in the power sector. In India, more than 75% of coal is consumed by power sector.

  • More than 60% of heat contained in coal is lost when it is transformed into power. Even with the super critical technology, it has not been possible to have the thermo dynamic efficiency of coal based power generation process more than 41-42%.

  • Global networking and integration of research organizations and activities so that a more meaningful break though is achieved in the technology of electricity generation by conversion of coal into electricity, is necessary.

Clean Coal Technologies

  • Recognising that Coal may continue to dominate the sector profile, India is committed to Clean Coal Technologies.

  • Super Critical Technology leads to :

    • Increase in overall plant efficiency.

    • Decrease in turbine heat rate.

    • Decrease in coal consumption per MW.

    • Decrease in CO2/SO2/NOX emissions per MW.

  • In the case of two such power plants of NTPC, overall plant efficiency improvement - 2.1%, decrease in SOX/NOX emissions - 2%, decrease in coal consumption per MW - 4.3%.

  • Coal Beneficiation (About 100 MT non-coking coal being washed).

  • Integrated Gasification Combined Cycle Technology

  1. Coal is gasified in a gasifier, raw gas is cleaned up, clean gas is used in Combined Cycle Power Plant.

  2. Advantages

  • Very low SOX, NOX and CO2 emissions.

  • Removal of mercury and other hazardous air pollutants from the syngas by absorption on a carbon bed.

  • Water consumption is 70% lower than conventional coal plants.

  1. Presently NTPC is pursuing alongwith BHEL to IGCC two Projects of 100 MW each.

  • Coal Bed Methane (CBM) has a potential and it could lead to a more efficient use of coal for electricity generation as also for other industrial purposes. Energy security concerns could get addressed more effectively if this technology is evolved suited to characteristics of domestic coal.

  • Recent initiatives in this regard are encouraging. Commercial Production from the first group is likely soon.

    • CBM I - 7 Blocks offered and awarded.

    • CBM-II - 8 Blocks have been awarded.

    • CBM-III- 10 Blocks have been awarded.

  • Flue Gas Desulphurization

    • Indian coal - high Ash (35-40%) but low Sulphur (<0.3%).

    • Presently six power plants including three already in operation are having the FGD Plants (Approx 3,200 M.W.). They use imported/blended coal.

  • Carbon Capture and Storage (CCS)

    • A technology that captures carbondioxide, compresses and liquefies it and finally transports it by pipeline or in tankers to safe and permanent storage in geological formations.

    • India was a signatory to the CSLF charter (June, 2003) alongwith 15 other nations.

    • This technology is yet to become cost effective.

  • Zero Emission Futuregen

    • An initiative of the Government of U.S.A.

    • India was the first partner country to have signed the Framework Protocol Agreement with U.S.A. in April, 2006 and made an equity contribution.

  • The small beginning for opening the coal sector through captive coal mining route is, no doubt, a step in the right direction.

  • A fuller reform towards opening the sector to private sector investment to create the required competition with the public sector coal companies will be a sine-qua-non for the coal sector to deliver.

National Action Plan on Climate Change

  • The Prime Minister of India launched the National Action Plan on Climate Change on June 30, 2008. Several groups of experts have worked in formulating this document which has now been proposed for a wider discussion and debate.

  • The report rightly emphasizes that the threat of climate change emanates from accumulated green house gas emissions generated through long term and intensive industrial growth and high consumption life styles in developed countries.

  • The per capita carbondioxide emissions, in terms of metric tonnes, is as high as over 20 in case of the U.S.A., 9.40 (European Union), 9.87 (Japan), 11.71 (Russia). Even the global average is 4.25 tonnes while in India it is marginally above 1 tonne.

  • However, it cannot be India's case that since we are so favourably placed, we should not be doing things which we need to and ought to do to address the rising trend of CO2 emissions. Therefore, the National Action Plan has correctly laid down the following guiding principles:

    • Inclusive and sustainable development strategy, which should be sensitive to climate change, for protecting the poor and vulnerable sections of society.

    • Cost effective strategies in respect of Demand Side Management (DSM).

    • Deployment of appropriate technologies for adaptation and mitigation of green house gases emissions at an accelerated pace.

    • Development of innovative market structure and mechanism to promote sustainable development.

    • Strategies for effective implementation of various programmes through involvement and participation of society and local government institutions as well as through public private partnership.

    • Facilitating International cooperation for research, development and promotion of new technologies.

  • The Action Plan stipulates a Mission mode for adaptation in relation to and mitigation of climate change concerns. The Action Plan provides for:

  1. National Solar Mission.

  2. National Mission for Enhanced Energy Efficiency.

  3. National Mission on Sustainable Habitat.

  4. National Water Mission.

  5. National Mission for Sustaining the Himalayan Eco Systems.

  6. National Mission for Green India.

  7. National Mission for Sustainable Agriculture.

  8. National Mission on Strategic Knowledge for Climate Change.

The presentation was followed by expert comments on the presentation and questions - answers. These are outlined below :

  1. When India has so much of coal reserves, is it the right strategy to depend on imports? As already brought out in the presentation, the idea is to consume the limited domestic coal for a much longer time. It cannot be a correct approach to consume the entire reserve and do not leave for the future generations.

  2. Recent discoveries indicate that India has a lot of gas reserves and also gas and LNG can be imported. Can this substitute partly the coal based power generation? Yes it can and it is doing so. But, let us recognise that in the long run, when overall capacity grows upto 800 GW in next 25 years (may be somewhat longer), overall gas based generation may not be more than 10%, which is the proportion even now.

  3. We often hear and media also reports about the coal shortages which existing power plants face resulting in loss of electricity generation. How is this problem being handled? It is true that domestic coal production falls short of the requirement. At present this is less than 5-7% of the need. In coming years it may be higher. Importing 5 to 10% of coal to meet the shortfalls is considered adequate. For this, of course, port facilities and further transportation will need to be augmented.

  4. Policy of captive mines gets into complicated procedure when in implementation and, therefore, results are getting delayed; what is being done. We need to realise that in 2005 the decision to liberalise captive coal mine block allotment was a major step. This has gone through the initial teething problems. The best option is to open up coal sector fully. Captive Blocks Policy is the second best option. After the initial transition problems are addressed, this will definitely yield good results.

  5. Don't you think that reform of the coal sector is over due, and not much is being done? I do agree that full benefits of power sector reforms and restructuring will be available only when coal sector is restructured. The Legislative Bill has been pending in Parliament for last about nine years. In the previous Government, this could not be done because of the influence of the Left Group. We may expect positive movement this time when the new Government has come in position. Already there are talks about Coal India getting into equity capital market through IPO.

  6. What is needed in terms of pricing policy for coal? In our view Regulator for coal has been over due. We have monopoly in coal industry. In every energy segment, we have huge shortages. Even though market mechanism may be the ideal goal, during transition period till mature markets develop - and it may be 5 to 10 years down the line - Regulatory institutions are essential. This approach has also been highlighted in the Integrated Energy Policy.

  7. Is bio-mass not a relevant source of energy particularly for rural areas? The answer is "Yes", it is. All efforts are being made to make it further cost effective as also to address the issues and challenges for arranging adequate fuels. Decentralised Distributed Generation (DDG), with a number of options of technologies, does hold a good promise for managing rural energy issues in coming years.