Coal Gasification with Carbon Capture could be a game changer for India-Shifting Coal from an Energy Commodity to a Chemical Feedstock

A couple of years back , there were no buyers for Coal India stock. It was picked up by a few of us only to get the mouth watering dividends. Reasons : ESG concerns , most environment polluting PSU stock, poor govt policy, Future of coal is bleak …

But today, what has changed ? There seems to be a bee-line to buy this stock- all brokerage recommend this stock, MF are picking up this stock and FII’s have a holding of 7.5 % by end Sept , 2023. Parag Parikh has had this stock for the last couple of years in their portfolio. During the last one year Coal India stock has given a respectable return of 78%.

I thought of catching up the developments during the last one year and join together all bits and pieces, which makes an interesting story on Coal.

At COP28 in Dubai recently, India was conspicuously absent from a list of 118 countries signed on to a pledge to triple installed renewable energy capacity by 2030. It is in sharp contrast to India’s stand during G20 presidency.

When it comes to sign a legal document, why India is hesitant? it has an interesting story.

(1) India said, while being committed to expanding renewable energy, India would not be bound by “restrictions” on what kind of energy sources it could or could not use.

(2) India was also against the sentence which says " phase out unabated coal power - Unabated coal power refers to running coal plants without technology that stores and captures carbon.

(3) According to India’s latest communications to the United Nations, its greenhouse gas emissions increased only 4% from 2016-2019 to 2.6 billion tonnes of C02. The energy sector contributed the most to the overall emissions (75.81%), followed by the agriculture sector (13.44%), Industrial Process and Product Use (IPPU) sector (8.41%), and Waste (2.34%).

(4)India has also reiterated its right to use coal on the grounds that its historical contribution to the carbon crisis has been negligible, as below-Global-average per-capita emissions of 4%.

(5) Coal is the only Fossil fuel which is abundant in India (India is next to China in terms of coal production) and it has its rights to best utilise its resources.

So can we use coal in such a way that it is almost carbon neutral so that the other COP countries are happy at our strategy.
There is an answer to this.

Gasify coal. we have studied in our school college- what happens when steam is passed over red hot coal in restricted oxygen, a gas called Syn Gas also known as water gas
(mixture of Co & Hydrogen) is produced.

Hydrogen so produced is called Grey Hydrogen and in this process if we capture Carbon CCUS (carbon capture , utilisation & storage) and don’t let it go to atmosphere, then we call the hydrogen as blue hydrogen. we can not call it green hydrogen though, but yes, upto 80% carbon can be captured and the name is blue hydrogen.

So blue hydrogen so produced from coal can be used by the large consumers of hydrogen like the fertilizer industry , Refineries , steel industry, and to some extent reduce the burden on expensive Green hydrogen. Currently, dependence on imported natural gas which is used as feed stock to produce Grey hydrogen for the above mentioned industries would also reduce.

We can also use blue hydrogen from coal to produce electricity by Fuel cell method and we can also fuel automobiles from blue hydrogen from coal. So our train was running in coal - now automobiles would indirectly run on coal.

What else ?
Along with Blue hydrogen, CO2 captured can be used to produce a number of Green fuels like methanol , ethanol, and fertilisers like urea, DAP, Ammonia, Ammonium nitrate etc.

Each of the above products to be produced from coal has a different technology basically Gas reforming with catalysts and different temp and pressure- technology is already developed.

So what the govt has done so far ?

Set a Target of 100 million tonnes of coal gasification by 2030 and initiate actions at various plants across the country.

Currently, Steel plants use Coking Coal fot the blast furnace for producing pig iron, which is high carbon emitting process and that too Coking Coal required for steel making is mostly imported as our indigenous high ash coal not suitable for blast furnace pig iron process. But coal gasification can be done with our indigenous Coal of high ash content at steel plants which produces Syn gas/hydrogen which reduces iron ore iron oxide to Iron by DRI- direct reduction of Iron process. So it is a win-win situation. No more imported coking Coal and no imported natural gas required

Similarly, Fertiliser plants can produce hydrogen from coal Syn gas to produce NH3 , DAP.

Offer incentives- The Centre has formulated a policy wherein, a provision has been made for a 50% rebate in revenue share for all future commercial coal block auctions for the fossil fuel used for gasification. This will be subject to the condition that the quantity used for gasification is at least 10% of the total production. Apart from this GST reimbursement being planned.

Adani group seem to have prepared and submitted a project report to govt on coal gasification in India which I got it from a govt website- link given below.in a Adobe link

What is the progress on various coal gasification projects across the country link is given at the end of this post.

The other thing with coal India is that they have vast open lands and abandoned coal mines / already mined coal mines which are being put to use for solar wind farms and pumped energy storage systems.

If China can make best use of their Coal reserve , why not india ? yes, sure, may be going forward more incentives would come towards Coal gasification and we may see more action.

For now , what are the stock to watch ??
Coal India, All steel makers , NTPC, All Gas oil AMC , Adani , all thermal power producers, all fertiliser plants.

Technology solution providers like BHEL, L&T, Thermax , Siemens , ABB.

Whether , Green hydrogen, Solar , Wind, Hydro, bio gas incentive will take a hit ? These are different stories with separate and unique objectives of carbon reduction in different categories …and there is a lot of space for each catagory … hence all will coexist together

Discl: This is for educational and information… not a buy / sell recommendation of any stocks discussed above

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While these are good initiatives, these rarely see light of day…

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We will be forced to act. Market forces will ensure that these projects kick start sooner than later.

China has opened the largest ethanol plant based on coal gasification.

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This Govt walks the talk.

(1) Among steel plants, JSPL ( Jindal steel) is the first company to start it’s operation on Coal gasification- world’s largest.
So they no more depend upon 8mported Natural gas for its Hydrogen requirement for its DRI ( direct reduction of iron oxide ) nor they need imported coking coal for their blast furnace operation for pig iron making.

.(2) In fertiliser plant, Talcher , odisha has the largest coal gasification plant about to be completed to commence operation by October 2024.
So this fertiliser plant will not depend upon imported Natural gas for its Hydrogen requirement for Ammonia DAP production.

(3) The above 2 plants from each catagory - largest consumer of hydrogen will serve as demonstration model for others to follow.

(4) The Govt definitely has a road map " mission energy" for coal gasification to produce Hydrogen, methanol , ethanol and other chemicals as per the attachment below given at the end of this post which I believe will take place. The govt is determined for atma nirbhar Bharat instead of 90% import bill towards energy for other fossil fuels like petrol diesel natural gas

(5) You may like to see the steps involved in coal gasification in attachment no 3 below. of Talcher fertiliser website.

We don’t have a choice.

https://www.aninews.in/news/national/general-news/union-coal-secretary-cil-chairman-visit-worlds-largest-coal-gasification-plant-of-jindal-steel20221230221426/

https://tflonline.co.in/ourProject.html

https://www.reuters.com/markets/commodities/coal-india-partners-invest-372-mln-fertiliser-jv-boost-output-sources-2023-10-17/

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This is how we get good opportunities in the market. When the whole world is clamoring for green energy, fossil fuel companies are at throw away prices.

Whether anybody like it or not, India needs coal. Just see how to the narratives changed and changing to coal.

India is growing at 6%, so needs more energy.
Indian does not have any alternatives.
Wind and hydro have limitations and can’t scale up.
Only sensible energy solutions is nuclear energy. (If world pressures about emissions, India can ask for nuclear technology and raw material at COP28)

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Om…“methanol” again !..who is investing in it ?..any name which has lined up or floated an idea to manufacture it ?

Niti Aayog is aiming to set up 15,000 tonnes per day coal to methanol gasification unit in a bid to cut crude oil imports

First pilot project of Methanol to Coal was developed by BHEL a year back.

Thereafter, NLC Coal to methanol plant is under commissioning to be completed by 2027.

Dankuni Coal Complex is coming up on build-own-operate model and produce 6.76 lakh tonne of methanol a year, and it is expected to be complete by January 2025

BPCL’s new petcoke gasification project will manufacture many value-added petrochemicals like acetic acid, ethanol, methanol, alcohols and hydrogen

There other couple of ongoing projects on coal to methanol too.
you may like to go through the road map " mission energy" at the end of this post

India imports coking coal for blast furnace operation in steel plants.

Indian Coal has highest ash content up to 45% and hence not suitable for steel plants. Our lignite is the worst of all. Bituminous coal found in eastern part of India is better than lignite found in south- but both are not suitable. We don’t have anthracite coal and we have very little coking coal
However, Nature has been very kind to us to make available Bituminous and lignite in abundance.
Now the answer is gasification of high ash Indian coal to produce Syn gas which can be readily used in stead of imported coking coal/ blast furnace route ( blast furnace using coking coal produce very high Carbon emissions)
.
Since Syn gas/ hydrogen is used for direct reduction of iron oxide. so no need for imported natural gas as a source of hydrogen. No need for coking coal imports.

Which means that indigenous coal gasification is the answer to curb import of coal and natural gas imports

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IMHO Praj industries may be pitched in the list of stocks to watch as in their latest annual report they have covered topic of biohydrogen, blue hydrogen, green hydrogen, capex of 100Cr planned through their new subsidiary Praj GenX Limited. AR attached for RR…
PRAJ-AR.pdf (3.8 MB)

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Praj is a Biotechnology company with its own Ethanol story 1G, 2G, Biogas and other verticals and they have almost monopoly business.

2G ethanol is going to be a independent story.
so also Biogas which will replace CNG, LNG. it is possible to get hydrogen from biogas.

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Our Coal reserve can fuel us for next 350 years

I was bit skeptical when the Coal minister said in an ETNow TV interview that India has sufficient Coal reserve which would meet our energy needs for the next 350.years.

Then , I did a little bit of research and found out that he is right.
As per GSI data which is also available in a wiki India has a coal reserve of 352.13 billion metric tons (proven) as of April 2021 & lignite reserve of 46 billion metric tonnes. pl refer wiki given below and the Minister interview in ETnow.

During 2022-23 , our coal consumption was approx 900 million metric tonnes and during 2023-24, it may be estimated at 1000 million metric tonnes approx, which is 1 billion metric tonnes.

So the minister is right. He further said that we cannot just ignore our resources and allow it to become mud. He went on to say that why India should import coal when we have so much of reserve ? Import needs to be stopped- Atma Nirbhar Bharat.

Then what about petrol / diesel /crude oil reserve of the world…well, the crude reserve is going to last for only 47 years more. Pl refer link of “world meter” below. 47 years . .most of us will definitely survive to see the change - no diesel …no petrol. No wonder , the Arabian nations have started realising this and they are nowadays leading on renewable/ green hydrogen initiatives to secure Arab nations future- Dubai has hosted COP28 last month .

So the way forward is to use coal sustainably, create an ecosystem so that we can Gasify Coal, use CCUS and get whatever we want …Grey hydrogen, Blue hydrogen , urea , DAP, methanol , ethanol…

A lot of work is happening on gasification of coal with carbon capture. A lot of start ups are coming up.
IIT’s are getting involved.
UK & India have signed a collaboration to research and co-operate with each other in this area. please refer Adobe link below for details of the collaboration.
BHEL, Thermax are already at the top of it and others like ABB, Siemens , L&T , Reliance are likely to join sooner or later.

So, We would be the export hub for Renewable like Solar Wind , hydro after converting in to Green hydrogen , ammonia and
for our energy needs Gasify Coal with CCUS to
(1) fuel our power plants (2) use Blue hydrogen from coal for converting into urea , DAP in fertiliser plants (3) methanol, ethanol from coal for fueling automobiles (4) blue hydrogen as feed stock to Oil refineries.

Things are not going to happen tomorrow or day after, but the direction before India is clear …we don’t have a choice.

So, Coal is here to stay …we cannot write off…coal will give us everything we need for our energy needs in a sustainable manner.

IC engines are not going to die so soon… piston connecting rod crankshaft are going to be there …so all auto companies and ancillaries with respect to IC engines will not die so soon.
even after petrol diesel is over, Along with EV , IC engines will coexist to run on renewables like ethanol, methanol, Bio diesel , CBG, LBG , Hydrogen green and blue.

Coal in India - Wikipedia)%20of%20the%20resource

World Oil Statistics - Worldometer).

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Om…thanks…nice information.i’d think export hub for hydrogen is less probable as such only future holds reality …there r many articles on it…but in short "water & sun, key ingredients for green hydrogen is local deposits for all hence can always be produced locally "
However value additions like engineering,EPC, ammonia,methanol,urea, ethanol …i.e. anything through hydrogenation & tecnology could become export strength.
Reliace already has erected hy gas filler at jamnagar.thermax is working on EV ship.

you may be right -Sun light &;wind, rain are local ingredients to produce renewables and India is lucky to have plenty of them. that way we have blessings of nature l.

But there are nations …for example many European nations hardly see the light of the day…even if there is light , it is if very short duration. Japan has sun light , but not much open space to put up solar plants. So many nations are willing to buy green hydrogen from India

And hydrogen can be liquified and transported like LNG in cryogenic tanks. technology already available everywhere in the world including India - Inox is already making. Hydrogen can also be exported as Ammonia ( hydrogen carrier ) and Ammonia is a liquid at room temp. Ammnia can be used as a fuel as good as hydrogen

Australia has already started exporting hydrogen to Japan by ship.
India is gearing up 3 ports for handling hydrogen exports.

Japan’s Hydrogen Rush in Australia – The Diplomat.

India developing port infrastructure for green hydrogen exports - India Shipping News.

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Nuclear could be a good option for grid to be 90~100% green.
the article is mostly about invention on thorium and higher efficiency and lower spent wastage.
Based on what i know on nuclear, again a limited deposit based, could only be a good option for green grid, provided it offers a smaller sized as well as shorter start-up cycle nuclear plants.someday smaller&shorter startup cycled nuclear plants may become reality.
But, the most cleaner grid is solar+hydrogen.The battery banks/storage have found its place in existing so called greener grid but that is according to me cant be considered 100% green.

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India-needs-Coal-just-as-west-needs-Oil-and-Gas

. As against the global per capita average of 4.7 tonnes of CO2 emissions, India’s is only 2 tonnes. This is a far cry from 14.9 tonnes for the United States and 11.4 tonnes for Russia

Just because West is polluting the mother earth , should India aiso pollute ???

Definitely not ! Now technology is available to reduce CO2 emissions from Coal by 90%.
So we can still use our Coal reserves to our best interest without polluting mother earth and we still continue to maintain our per capita CO2 emissions.

Coal mining in India has been metamorphosed as far as the policy framework is concerned.

(1) From an earlier restrictive model prior to 2014, we have moved on to granting coal mining blocks pursuant to a competitive bidding process, and from prescribing specific end-use to permitting commercial sale of coal.

(2) The auction-based regime introduced in 2014 allowed private sector participation, however it was limited to captive usage in own end use plants.

(3) Now, the sector has been opened up for commercial coal mining by private players in 2020 and first ever successful auction of commercial mining was launched by the Hon’ble Prime Minister on 18.06.2020 and concluded with allocation of 19 coal mines.

(4) Since then, this is the Eighth round of commercial coal mines auction very recently during which 39 coal mines have been offered, the. The round was launched on November 15, 2023 by Coal Minister Pralhad Joshi.

The pre-bid meeting for the round was held on December 12 and more than 50 bidders had participated in it.
https://www.business-standard.com/india-news/eighth-round-of-commercial-coal-mines-auction-received-great-response-govt-124010500917_1.html

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Thermax to commercialize Coal gasification

After BHEL, Thermax in pvt sector is to commercialize Indian Coal gasification. Though gasification and carbon capture of Indian Coal with High ash content poses technological challenge. Hopefully , many other companies would come forward and utilise our coal reserve which could last for more than 300 years

https://www.financialexpress.com/business/industry-thermax-aims-to-commercialise-coal-gasification-tech-3348170/

Coal India in to power generation

https://www.business-standard.com/companies/news/coal-india-s-venture-into-power-generation-gets-cabinet-approval-124011800877_1.html

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Cabinet nod to Coal Gasification-Rs 6000 Crore incentive to start with and 50% rebate on revenue share.

It is a Good news that the Govt walks the talk. Coal gasification is the way forward for utilising our reserves that would last 350 years, substantial reduction on carbon foot print depending upon how much carbon capture technology is deployed and reducing Coking coal imports.

Methane from Coal-24000 Crore JV Projects to produce Syn Gas from Coal (Coal Gasification). JV Among CIL-GAIL- BHEL

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Abandoned Coal mines due to poor quality of Coal- Revival possible by Coal gasification

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