India’s growing focus on coal gasification amid global energy disruptions
Compared to crude oil and LNG, coal prices are relatively less volatile. How does India promote cleaner use of its vast coal reserves and enhance self-reliance through technologies like coal gasification? Don't miss infographics.
Coal gasification presents an important pathway for the cleaner use of coal. (Express File Photo by Partha Paul) — Abhinav Rai
The ongoing crisis in West Asia has reinforced the need for India to strengthen self-reliance in energy, fertilisers, and petro-chemicals, particularly by leveraging its domestic coal resources. Coal contributes to about 55 per cent of India’s commercial energy production and more than 70 per cent of total power generation. Even globally, coal still contributes to approximately 28 per cent of the global energy supply.
In this context, the growing emphasis on acquiring technologies used for coal-based energy production signals a notable shift towards value-added utilisation of India’s fifth-largest coal reserves in the world. Coal gasification is one such technology that offers a cleaner, more efficient and sustainable alternative to conventional combustion (coal burning).
India's Coal Story: Paradox, Potential & the Path to 2047
What is coal gasification?
Coal gasification is the process of converting coal into synthesis gas (also called syngas), which is a mixture of fuel-rich gases like carbon monoxide (CO), carbon dioxide (CO2), hydrogen (H2), and methane (CH4). The syngas can be used for producing Synthetic Natural Gas (SNG), energy fuel (methanol and ethanol), ammonia for fertilisers, and petro-chemicals.
Coal gasification process is based on the oxidation of coal at higher temperatures and pressures to produce syngas. There are two main types of gasification:
1) Surface gasification
2) Underground coal gasification (UCG)
Syngas can be used to produce:
1) Synthetic natural gas
2) Fuels (methanol, dimethyl ether (DME), synthetic fuels)
3) Fertilisers (ammonia, urea)
4) Petrochemicals and other industrial feedstocks.
Therefore, the technology is seen as helping strengthen self-reliance in critical energy, petro-chemicals, fertilisers, and food security, and reducing external import dependencies.
| FYI: Coal formation, types and distribution in India |
| Coal has its origin in the geological past. During the Carboniferous Period (that existed from 359 to 299 million years ago), huge forested areas were buried under sediments. Over time, under extreme heat and external pressure, wood decomposes into coal through a process called coalification. The process of coalification involves the gradual loss of water, methane, and carbon dioxide and an increase in carbon content. |
| FYI: Based on the carbon content, moisture, volatile matter, and ash, the quality of carbon is determined. Coal is generally classified into four varieties: |
| Anthracite (80-95 per cent carbon) – The best quality coal found in Jammu and Kashmir in small quantities. |
| Bituminous (40-80 per cent carbon) – The most widely used coal in India, and found in the states of Jharkhand, Odisha, West Bengal, Chhattisgarh, and Madhya Pradesh. |
| Lignite (40-55 per cent carbon) – Lower-grade ‘brown coal’ with high moisture content, causing enough smoke and little heat. Tamil Nadu has the largest lignite reserves. |
| Peat (contains less than 40 per cent of carbon) – The first stage of coalification. |
India’s coal reserves and challenges
India has estimated coal reserves of 378 billion tonnes, nearly 70 per cent of which is concentrated in Odisha, Jharkhand, and Chhattisgarh. Of this, about 199 billion tonnes of reserves are ‘proven’ reserves, which means they are economically extractable with reasonable certainty based on a detailed Preliminary Feasibility Study.
During FY 2024-25, India produced over one billion tonnes of coal, its highest ever production and the demand is expected to increase to about 1.5 billion tonnes by 2030. Despite this, India imports around 243 MT of coal annually, largely due to issues of both quality and supply-demand mismatch. Over 80 per cent of India’s imports come from Indonesia, Australia, and South Africa.
Coal India Ltd (CIL) accounts for more than 80 per cent of domestic output and is now actively planning to replace about 150 million tonnes of imported coal with expanding domestic production, quality enhancement, and other required measures.
One major limitation of Indian coal is its higher ash content (30–45 per cent), compared to the global average of 10–20 per cent, which increases the cost of gasification. In addition, about 40 per cent of India’s available coal resources are found at depths of 300 meters, and mining this deposit through conventional techniques is difficult as well as capital-intensive.
Modern technologies such as UCG are being explored. The UCG is an in-situ gasification process, which converts coal into syngas within the earth. India started its first pilot project of UCG at the Kasta coal block in Jharkhand in 2024, signalling growing interest in adopting advanced coal gasification technologies.
Policy push towards coal gasification
Despite being the second-largest coal consumer and owning the world’s fifth-largest coal reserves, India began its coal gasification mission in 2020. It has not developed or invested much in coal gasification technologies compared to countries like China.
Currently, around 90 per cent of China’s ammonia and 70 per cent of its methanol are being produced through coal gasification. It produces 70 MTPA (million tonnes per annum) ammonia (approximately 30 per cent of global output) and around 80 million tonnes of urea every year (roughly 40 per cent of global production). China is also the largest methanol producer, accounting for 54 per cent of the world’s global capacity, with more than two-thirds derived from coal.
China’s early adoption of coal gasification technology, alongside the development of large-scale related industries, reduced its import dependence in crucial energy and fertiliser sectors and played a significant role in economic growth.
But India is also gearing towards adopting such technologies. The budget for the National Coal Gasification Mission (NCGM) has been increased from Rs 300 crore (FY 2025–26) to Rs 3,525 crore in FY 2026–27. An additional 5,925 crore has been allocated for the exploration of coal and lignite over the next five years (2026-2031). In January 2024, the central government approved 8,500 crores in financial incentives for these coal/lignite gasification projects.
Coal gasification projects
Currently, Jindal Steel Limited operates India’s only gasification project (1.80 MTPA) at Angul district, Odisha. CIL is developing four coal gasification projects:
Talcher Coal-Based Ammonia–Urea Complex (Odisha).
Bharat Coal Gasification and Chemicals Limited (Odisha).
Coal Gas India Limited (West Bengal).
CIL Project at Western Coalfields Limited (Maharashtra).
Private sector projects are also planned. Moreover, the Talcher Fertiliser Plant in Odisha is India’s first urea plant based on coal gasification technology (with 12.7 LMT capacity per annum). It was first scheduled to be completed before September 2023, but it is now rescheduled for December 2027.
The government has also begun incorporating UCG in coal block allocations.
Towards accelerating deployment
India, the world’s most populous country, has limited reserves of crude oil and natural gas and remains dependent on imports. This makes the country vulnerable to price volatility, supply disruptions, and energy security risks. Despite a growing push towards renewable energy, coal-based thermal power is projected to account for around 55 per cent of electricity generation by 2030, and decline to 27 per cent by 2047.
Apart from electricity generation, coal is mainly consumed by the steel and cement sectors. Industries such as paper, textile, fertilisers, railways, defence, and other small and medium enterprises (SMEs) also use coal.
India has abundant coal reserves, and compared to crude oil and LNG, coal prices are relatively less volatile. Therefore, coal gasification presents an important pathway for the cleaner use of coal and potential integration with Carbon Capture, Utilization, and Sequestration (CCUS) technologies, aligning with India’s Net Zero goals.
While the emphasis on the UCG is a step in the right direction, it remains capital-intensive and requires sophisticated technology. To accelerate deployment, India may benefit from proven global technologies, while simultaneously investing in domestic research and development of gasification technologies tailored to the high-ash characteristics of Indian coal.
Post read questions
What is coal gasification? How does it differ from conventional coal combustion?
Explain the significance of coal gasification in enhancing India’s energy security. Why is high ash content in Indian coal a challenge for coal gasification?
Discuss the role of coal gasification in reducing India’s import dependence in energy and fertiliser sectors.
Evaluate the challenges in scaling up coal gasification in India. Suggest measures to overcome them.
How can coal gasification contribute to the vision of ‘Viksit Bharat 2047’? Highlight both opportunities and limitations.
(Abhinav Rai is a Doctoral candidate at the Department of Geography, Delhi School of Economics, University of Delhi.)
Share your thoughts and ideas on UPSC Special articles with ashiya.parveen@indianexpress.com.
Gear up for UPSC Prelims 2026—Practice smarter, revise faster, and succeed with our Special Quiz Magazine. (Click Here)
Click Here to read the UPSC Essentials magazine for April 2026. Subscribe to our UPSC newsletter and stay updated with the news cues from the past week.
Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.
Share
