New Delhi: In a landmark move to advance clean coal technologies, the Government of India is set to launch the first-ever auction of coal blocks earmarked for Underground Coal Gasification (UCG). The announcement was made during a roadshow hosted by the Ministry of Coal on Friday, aimed at promoting coal gasification as a cleaner alternative to conventional coal use.
“Very soon we will be putting up coal blocks with potential for underground coal gasification up for auction,” said Additional Coal Secretary Rupinder Brar, highlighting the government’s intent to integrate UCG into India’s commercial coal mining ecosystem.
These blocks will be offered under the Commercial Coal Mine Auction regime, marking a significant policy shift towards enabling in-situ gasification of deep-seated coal reserves.
UCG: A Cleaner Way to Tap Deep Coal Reserves
With nearly 43% of India’s coal reserves located at depths greater than 300 meters, UCG presents a viable method to convert otherwise unmineable coal into syngas, which can be processed into hydrogen, methanol, ethanol, synthetic diesel, SAF (Sustainable Aviation Fuel), and petrochemical feedstocks.
UCG involves the controlled combustion of coal seams underground using oxidants like air or oxygen, eliminating the need for traditional mining. The government is targeting gasification of 100 million tonnes of coal by 2030, positioning UCG as a cornerstone of its energy strategy.
Inter-Ministerial Committee to Oversee UCG Guidelines
To facilitate this transformation, an inter-ministerial committee has been established to draft mining guidelines and integrate UCG into the auction process. The committee comprises experts from the Coal Ministry, DGH, DGMS, Central Ground Water Board, CMPDIL, and the Coal Controller Organisation (CCO).
Coal Gasification Incentive Scheme: Rs 2,500 Cr RfP to be Issued
In parallel, the Ministry of Coal will issue a Request for Proposal (RfP) next week to allocate the remaining Rs 2,500 crore under its Rs 8,500 crore coal gasification incentive scheme. The scheme, launched in 2023, has already allocated around Rs 6,000 crore across three project categories:
Category I (PSU/JVs):
- Bharat Coal Gasification and Chemicals Ltd (CIL-BHEL JV) – Rs 1,350 crore for Lakhanpur, Odisha
- CIL-GAIL JV – Rs 1,350 crore for Sonepur Bazari, West Bengal
Category II (Private and PSU Projects):
- New Era Cleantech Solution Pvt Ltd
- Jindal Steel and Power Ltd (JSPL)
- Greta Energy Ltd
Category III (Demonstration Projects):
- New Era Cleantech’s coal-to-ethanol project in Chandrapur, Maharashtra – Rs 100 crore
Challenges Remain, But Opportunities Expand
While underground coal gasification remains technologically complex and capital-intensive, the government believes the auction of UCG-designated blocks will unlock private sector innovation and investments in large-scale gasification technologies.
Though India has yet to commission a commercial-scale UCG plant, the recent pilot project at Kasta coal block in Jharkhand—executed by Eastern Coalfields Ltd (ECL) in collaboration with Canada’s Ergo Exergy Technologies Inc (EETI)—is a key step in demonstrating UCG’s feasibility.
