The global coal production stood at around 8.5 billion tonnes (bt) in 2023-24, with China leading the production at over 4,700 million tonnes (mt), followed by India at 997 mt. The percentage of coal in the energy mix has been gradually dropping for both countries; however, China’s rate has been steeper compared to India’s.
Coal remains the dominant source of energy in India and accounts for about 55 per cent of the country’s total energy mix. Approximately 73 per cent of the country’s electricity is generated by coal, serving as a vital input in the production of steel, fertiliser, cement, paper, etc. The key role played by coal in ensuring energy security is expected to continue due to its affordability and availability. Further, the reliance on oil and gas imports for energy generation in the rapidly evolving geopolitical scenario does not bode well for the nation. Thus, coal is expected to remain the primary driver of the Indian economy in the foreseeable future.
Demand and supply trends
The growing economy and rapid urbanisation are driving energy demand in India, with the country being the third largest energy consumer in the world. Its peak electricity demand crossed the mark of 250 GW in 2024. Rising energy demands have also led to an increase in coal consumption, which has risen significantly from 739 mt in 2013-14 to 1,237 mt in 2023-24.
India’s coal consumption during 2023-24 stood at 1.24 bt and domestic coal production during the same period stood at 973 mt, indicating a gap of 264 mt, which was covered by imports. This is concerning, as even with massive coal reserves, the country remains dependent on imports. As of January 2025, coal production in India stood at 831 mt.
Challenges and potential solutions
Land acquisition and forest clearances
A major challenge faced with regard to land acquisition is the timely possession of government and tenancy land. The process is complex, often leading to delays due to the need for multiple documents. Similarly, diversion of forest land is a time-consuming and complex process, since it requires proposals to move through many levels, typically taking three to five years. To address these issues, streamlining procedures for land-related proposals is essential. Engaging retired revenue cadre personnel as advisers and forming liaison teams to coordinate with district and state authorities can further enhance efficiency. Additionally, the Ministry of Environment, Forest and Climate Change should issue guidelines to state governments to create a land bank of non-forest land to expedite clearances and implement wildlife management plans for coalfields to minimise redundancy.
Coal evacuation
Currently, roads remain the primary mode for coal evacuation, accounting for 40 per cent of coal despatches. However, roads are not considered the preferred means for coal evacuation because it is not suitable for mass production, lead to more pollution, leverage manual/semi-mechanised loading, etc. Hence, the implementation of first-mile connectivity (FMC) projects, which connect mines to railheads, is crucial. For instance, Central Coalfields Limited (CCL) has initiated FMC projects in mines producing over 2 mt annually. This includes 102 projects with a total capacity of 1,040 mt per year at an estimated cost of Rs 300 billion. Rail-sea-rail coal transportation has also seen significant growth, nearly doubling from 28 mt in 2021-22 to 54 mt in 2023-24, indicating a shift towards more sustainable evacuation methods.
Sustainable development initiatives
With the global stance against coal and its branding as a dirty fuel, the call for its phase-out dominates at climate change forums. However, there is a need for India to enhance its production and use to meet its energy demands in order to sustain a robust growth rate. Thus, integrating sustainability in the coal mining sector, adopting stringent pollution control measures, and enhancing the push on carbon capture, among other initiatives, are essential for reducing its carbon footprint.
Various initiatives have been deployed to support sustainable development in the sector. Greening initiatives such as bio-reclamation and plantations have been carried out on 10,376 hectares of land by coal public sector units (PSUs) over the past five to six years. This has helped create a carbon sink equivalent to 0.5 mt of carbon dioxide. Further, as of September 2024, 4.6 million saplings have been planted in 2,050 hectares of land, against the target of 2,600 hectares in 2024-25. Coal PSUs aim to plant saplings in an additional 15,350 hectares of land by 2029-30. This includes the deployment of innovative methods such as the Miyawaki technique of plantation, planting seed balls and leveraging drone technology.
In August 2024, the Ministry of Coal (MoC) released guidelines for rejuvenating around 500 traditional waterbodies in and around coal and lignite mining areas through corporate social responsibility activities. A total of 61 waterbodies have been identified for rejuvenation so far, including 54 for Coal India Limited (CIL). Additionally, eco-parks and mine tourism sites are being developed on de-coaled land. At present, 16 parks have been completed, and there are plans to develop 40 new eco-parks by 2028-29.
The efficient utilisation of mine water from active or abandoned pits and gainful utilisation of overburden have also gathered pace in the past few years. Four overburden processing and five manufactured sand (M-sand) plants are operational as of now, with six more plants under construction. M-sand can be utilised as an alternative to river sand, and can be used in underground stowing and construction. As of September 2024, 1.3 mt of M-sand and 2 mt of overburden have been produced and utilised for civil works in the roads and railway sector, generating Rs 25.6 million in revenues.
Strategies to meet the rising demand
Going forward, coal demand is expected to increase until 2035, reaching a peak of about 2 bt. After 2035, demand is expected to remain stable until around 2040, and decline after 2040. Thus, domestic coal production needs to be ramped up in the coming years, not only to meet the rising demand but also to reduce imports. In line with this, CIL and Singareni Collieries Company Limited have set timelines for exploration, geological and preliminary report preparation, obtaining clearances, land acquisition and the operationalisation of coal blocks. Further, for captive/commercial mining, 193 blocks (with peak rated capacity greater than 700 mt) have been allocated and 68 blocks have received opening permissions. The production from captive/commercial miners is expected to exceed 170 mt for 2024-25. Meanwhile, for commercial mines alone, 113 mines have been auctioned, 14 mines have received opening permission and 9 are under production.
The MoC has launched multiple initiatives to help achieve production targets. Regular review meetings are held at the ministry level with all stakeholders, including state government officials, to resolve the issues faced by coal companies. A single-window portal has been made operational by the MoC to expedite problem resolution. Further, a project management unit has been established at the ministry level to assist coal companies in obtaining statutory clearances at the earliest.
Future priorities
The sector plans to implement underground coal gasification (UCG) and coal bed methane (CBM) extraction projects to promote the sustainable use of coal. CIL has already launched its first pilot project in Jharkhand for UCG, while a CBM block is under exploration, with production expected to start by 2026-27. A financial incentive scheme of Rs 85 billion has also been approved under the National Coal Gasification Mission, which aims to achieve 100 mt of coal gasification by 2030. Further, CIL is pursuing diversification through the acquisition of critical mineral assets. So far, six sites have been finalised and the development process is under way.
CIL aims to achieve net zero status by installing 3,000 MW of solar capacity to offset its thermal energy consumption, with plans to install an additional 2,000 MW of renewable energy by 2028-29 to support the country’s sustainability goals.
Based on remarks and presentation by a representative from CCL at a recent Indian Infrastructure conference
