India’s rising coal use: Balancing energy demand and sustainability goals

Posted on 16 Mar 2025

Synopsis

India’s coal sector is booming, with record production and reduced imports driving economic growth and energy security. However, as the nation aims for a $5 trillion economy, balancing coal’s dominance in the energy mix with ambitious renewable energy and sustainability goals remains a challenge. Initiatives like coal gasification, afforestation, and modern mining practices aim to mitigate environmental impacts. With global pressure to decarbonise, India advocates for a just energy transition while prioritizing domestic energy needs. The future of coal hinges on innovation, policy reforms and a sustainable approach to ensure economic growth aligns with climate commitments.

Image courtesy: AI and PIB

As India strides towards becoming a $5 trillion economy, its coal sector is undergoing a transformation. With record production levels, reduced import dependency, and ambitious clean energy goals, the country is redefining its energy narrative. But can coal and sustainability coexist?

The coal conundrum

India’s energy landscape is a study in contrasts. On one hand, the country is a global leader in renewable energy adoption, with ambitious targets for solar and wind power. On the other, coal remains the backbone of its energy mix, accounting for 55% of the national energy supply and over 74% of power generation. This duality underscores a critical challenge: how to meet the energy demands of a rapidly growing economy while transitioning to a sustainable future.

Recent data from the Ministry of Coal highlights the sector’s remarkable growth. In the fiscal year 2023-24, India’s coal production reached an all-time high of 997.82 million tonnes (MT), a significant jump from 609.18 MT in 2014-15. This growth has been accompanied by a reduction in coal imports, saving the country billions of dollars and enhancing energy security. Yet, as global climate commitments tighten, the role of coal in India’s energy strategy is under scrutiny.

This article delves into India’s coal boom, exploring its economic, environmental and social dimensions. This will also examine the policies driving this growth, the challenges of balancing energy security with sustainability and the innovative technologies reshaping the sector.

The economic engine: Coal’s role in India’s growth

India’s coal sector is not just an energy provider; it’s a critical driver of economic growth. The sector contributes significantly to industrial expansion, accounting for 50% of Indian Railways’ freight revenue and providing direct employment to nearly 4.78 lakh individuals. In December 2024, the coal sector registered a growth rate of 5.3%, the highest among the eight core industries, underscoring its pivotal role in the economy.

The government’s focus on increasing domestic coal production has yielded impressive results. Between April and November 2024, coal imports declined by 5.35%, saving approximately $3.91 billion. This reduction in import dependency has been achieved through a combination of policy initiatives, including the ‘Mission Coking Coal’ launched in 2022, which aims to increase domestic coking coal production to 140 MT by 2030.

Private sector participation has also surged, with coal production from private sources increasing from 58 MT in 2018-19 to 184 MT in 2023-24. This growth has been facilitated by the introduction of commercial coal mine auctions in 2020, which have attracted significant investment and modernised the sector.

The sustainability challenge: Can coal go green?

While the economic benefits of coal are undeniable, its environmental impact cannot be ignored. Coal combustion is a major source of greenhouse gas emissions, contributing to climate change and air pollution. In a country where air quality is a pressing concern, the environmental cost of coal is a significant challenge.

However, the Indian government is taking steps to mitigate these impacts. One of the most promising initiatives is coal gasification, a process that converts coal into synthetic gas, which can be used for power generation, fertiliser production, and other industrial applications. The Cabinet’s approval of a ₹8,500 crore ($1.02) scheme to promote coal gasification projects in January 2024 marks a significant step towards cleaner coal utilisation.

The scheme aims to achieve 100 MT of coal gasification by 2030, reducing carbon emissions and enhancing energy security. Projects under this initiative, such as those by Bharat Coal Gasification and Chemicals Limited and the CIL-GAIL Consortium, are expected to play a crucial role in this transition.

In addition to technological innovations, the coal sector is embracing sustainability through large-scale afforestation efforts. In 2024 alone, over 54.06 lakh saplings were planted across 2,372 hectares, with initiatives like the ‘Ek Ped Maa Ke Naam’ (A Tree in Mother’s Name) campaign further boosting these efforts.

The global context: India’s coal strategy in a decarbonising world

India’s coal strategy is unfolding against the backdrop of a global energy transition. Countries around the world are committing to net-zero emissions targets, and international pressure to phase out coal is mounting. However, India’s situation is unique. With a per capita energy consumption significantly lower than the global average, the country faces the dual challenge of meeting its energy needs and reducing emissions.

India has consistently argued for a just and equitable energy transition, emphasising the need for developed nations to take greater responsibility for historical emissions. At the same time, the country is making significant strides in renewable energy, with targets to achieve 500 GW of renewable capacity by 2030.

The question, then, is not whether India should abandon coal, but how it can manage its coal resources responsibly while accelerating the transition to renewables. This balancing act is at the heart of India’s energy strategy.

The road ahead: Policies and innovations shaping the future

The Ministry of Coal’s initiatives reflect a forward-looking approach to the sector’s challenges. The introduction of the National Coal Mine Safety Report Portal and the Mine Closure Portal ensures responsible and transparent mining practices. The establishment of a Coal Trading Exchange is another step towards modernising the sector and creating a competitive market.

The ‘First Mile Connectivity’ (FMC) initiative, which aims to improve coal transportation efficiency, has already commissioned 39 projects with a total capacity of 386 MTPA. Similarly, the Rail-Sea-Rail (RSR) mode has doubled coal movement from 28 MT in FY 2022 to 54 MT in FY 2024, enhancing supply chain resilience.

These efforts are complemented by financial incentives for coal gasification and the promotion of commercial mining. The recent vesting orders for seven coal mines under commercial coal mine auctions, with a cumulative production capacity of 246.60 MTPA, highlight the sector’s potential for growth and innovation.

Coal in a changing world

India’s coal sector is at a crossroads. While coal remains indispensable for meeting the country’s energy needs, the imperative to reduce emissions and transition to cleaner energy sources is undeniable. The government’s initiatives, from coal gasification to afforestation, reflect a commitment to balancing these competing priorities.

As India moves towards its goal of becoming a developed nation by 2047, the coal sector will continue to play a crucial role. However, its future will depend on its ability to adapt to the demands of a decarbonising world. By embracing innovation, sustainability, and responsible practices, India can redefine the role of coal in its energy narrative, ensuring a secure and sustainable future for all.

Kindly follow us for updates on:

LinkedIn