With the increasing emphasis on transition to renewables, India is moving away from coal.
This calls for a coal commission for India, to devise the needed strategy and protect the livelihood of those in the coal belt.
What is Germany's coal commission for?
In Germany today, there is an existential tug-of-war between the coal industry and the country’s “coal commission.”
The Coal commission is formally known as the Committee on Growth, Structural Change and Employment.
It is slowly but surely setting targets for the phase-out of coal-based power generation from the country’s energy mix.
The commission, a political settlement mechanism, is made up of 28 members with voting rights.
It includes trade union leaders, industry associations, academics, and regional representatives.
The commission will determine how and when coal’s phase-out will occur.
Besides, one of its key objectives is to prevent massive structural unemployment.
Does India need a similar commission?
India is at the early stages of a major energy transition.
Within a few decades, renewable energy (RE) will become an increasing part of India’s energy mix.
But India’s thermal coal base still provides over 60% of the country’s overall generation and is still growing.
More importantly, roughly 15-20 million people in the coal belt are dependent on the coal industry for their livelihood.
The geography of India’s wind and solar resources versus coal makes it clear that RE jobs will not be coming to the coal belt in large numbers.
So there is a crucial need for a transition strategy for the coal belt, particularly in eastern India.
It is high time that India works on a commission similar to that in Germany, for devising a strategy.
What were the earlier measures?
Various central government committees have been set up over the years to look into mining and energy industries.
In the early 1970s, the Fuel Policy Committee under Sukhomoy Chakrabarty made key recommendations about the direction of Indian energy policy after the oil price shocks.
In the 1990s, the Chari Committee made recommendations about opening up India’s coal industry to private involvement.
In the 2000s, the Hoda Committee recommended changes in India’s mineral exploration environment to encourage private mining companies.
More than a decade later, these ideas are slowly being implemented.
Finally, the Integrated Energy Policy of 2006 articulated India’s energy security priorities.
It laid out a roadmap for phasing out capital subsidies and providing early support to RE.
How does the future look?
The government should consider a committee to consider the future of India’s coal industry, and the PSUs engaged in this.
Companies like Coal India face no immediate threat to either coal demand or their market power.
But in the future, both these concerns will come up.
Also, the divergence in economic performance and incomes between India’s states has intensified over the last decade.
So public spending and investment have become increasingly necessary in poorer states.
Notably, many coal-bearing states are also in the bottom third by income per capita - Jharkhand, MP, Odisha, Chhattisgarh and WB.
Public investments can go a long way in addressing the challenges of the region.
Evidently, PSUs have been fairly well and have continued to operate in eastern India for decades.
With private investment largely evading the coal belt, PSUs like Coal India have built up considerable social and political capital in these regions.
This is despite the political complexities, adverse business environment, and infrastructural constraints in the region.
What are the alternative solutions?
Indian “coal commission” can assess the feasibility of alternative mechanisms to capitalise on the potential of companies like Coal India in the coal belt.
The social and political capital that they have created can be used to lead towards other activities.
These companies could become diversified national champions as part of a new industrial policy for the coal belt.
Indian coal could be used for non-combustion purposes and the required technologies for such a transition should be adopted.
E.g. the Dankuni Coal Complex outside Calcutta
The goal of the plant was to produce piped gas for Calcutta, and various smokeless fuels and other chemical products derived from coal.
