Why should > 34% ash non-coking coal not be transported and used in distant power plants?

Recently, Ministry of Environment, Forest and Climate Change has amended the Environmental (Protection) Rules, with the provision of doing away with the restriction of supply and use of >34% ash non-coking coal at the Power plants located >500 km away from the mines. This issue is a cause of concern not only for the non-government environmentalists but also for Coal India Limited which has already set up non-coking coal washeries as per the earlier mandate of the Environment (Protection) Rules, 1986.  Having been the coal industry for more than 40 years and an advocate of introducing washing of high ash non-coking coal, I thought to bring to the notice of the readers of this piece the events that have led to the current situation.

Background of first restrictions on use of >34% ash coal

With the introduction of Environment (Protection) Act, 1986 and the Rules framed thereunder subsequently, the need for taking measure to control pollution of air, water and land gathered importance for sustainable development. Several notifications were issued as per requirement from time to time and one such relating to usage of high ash non-coking coal in the power plants or other industries was framed as sub-rule 8 of Rule 3 of the Environmental (Protection) Rules in September 1997. In the background of this Rule was the results of the studies conducted with usage of washed non-coking coal in some of the power plants, namely Dahanu of BSES and also one of NTPC. The results had indicated that there was ample improvement in the efficiency of the boilers and other parameters of power generation amounting to increased production of power. As per my memory these tests had been done at three different power plants at different time frames. These tests indicated definite improvement in the plant efficiency, efficiency of auxiliary services and production of power, reducing its cost of production with the usage of washed thermal coal. Apart from this study, there was an issue of increased cost of transportation of the inert material (ash) in the case of unwashed coal being transported to far away plants leading to increased cost of power production. Thus, both from the point of view of economics and the environmental improvement, the notification was issued by the then Ministry of Environment and Forest in 1997, restricting the use of >34% ash non-coking coal in plants located >1000km away from the pit head or located in an urban area or an ecologically sensitive area or a critically polluted industrial area, irrespective of its distance from the pit-head, calculated on average annual basis. This Rule fixed the responsibility on the user of coal and not on the producer or supplier of coal.

Impact on the coal sector subsequent to notification of 1997

Subsequent to promulgation of this Rule, a lot of development in the field of setting up of non-coking coal washeries took place in the country. A large number of private investors set up such washeries to beneficiate non-coking coal linked to the consumers. Coal India’s subsidiaries BCCL and CCL, primarily washing coking coal also converted some of their washeries to wash non-coking coal and continued supplying the middling of coking coal washeries to power plants to help power plants to achieve their goal of <34% ash on annualized basis.

Coal India also adopted the strategy of setting up non-coking coal washeries and a plan was prepared to set up 20 coal washeries, including a few for washing coking coal in 2007 and actions started on some of them. The pace of setting up such washeries at Coal India subsidiaries remained very poor due to various factors including some road blocks at the Ministry of Environment and Forest.

Environmental Impact Assessment Guidance Manual for Coal Washeries

Ministry of Environment and Forest came up with an “Environmental Impact Assessment Guidance Manual for Coal Washeries” in May 2010 to speed up faster environmental clearance of Coal Washery projects.

Increasing concern of the Government for arresting Environmental Pollution

In 2010 Ministry of Environment and Forest came up with the concept of “Comprehensive Environmental Pollution Index (CEPI)” and declared several coalfields and coal consuming centers in the country, particularly those where power plants were functioning as critically polluted zones and prohibited any further developmental activities in such zones until some identified corrective measures were taken and compliance made. These developments indicated that the country was serious on implementing measures to minimize the environmental damage.

Restrictions on use of >34% ash coal made more stringent

Both the economic and environmental advantages of usage of lower ash coal had tempted the Ministry of Environment, Forest and Climate Change to modify its earlier sub rule-(8) of rule (3) of the Environmental (Protection) Rules, 1986 to restrict usage of >34% ash coal for power plants located >500 km away from the pitheads. The sub-rule (8) of rule (3) was substituted through a Gazette notification on January 2, 2014 with the following provisions:

"(8) With effect from the date specified hereunder, the following coal based thermal power plants shall be supplied with, and shall use, raw or blended or beneficiated coal with ash content not exceeding thirty-four per cent, on quarterly average basis, namely:

1. a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located beyond 1000 km from the pit-head or, in an urban area or an ecologically sensitive area or a critically polluted industrial area, irrespective of its distance from the pit-head, except a pit-head power plant, with immediate effect;
2.  a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located between 750 - 1000 km from the pit-head, with effect from the 1" day of January, 2015;
3. a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located between 500-749 km from the pit-head, with effect from the 5 th day of June, 2016:

Provided that in respect of a thermal power plant using Circulating Fluidized Bed Combustion or Atmosphere Fluidized Bed Combustion or Pressurized Fluidized Bed Combustion or Integrated Gasification Combined Cycle technologies or any other clean technologies as may be notified by the Central Government in the Official Gazette, the provisions of clauses (a), (b) and (c) shall not be applicable……”

In the above notification, both suppliers and users of coal are bound by these provisions. Though, it is not clear as to how this limit of 34% ash coal or the minimum distance of 500 km was arrived at, presumably these limits were kept primarily with the idea of reducing environmental pollution.

Legislative changes in coal sector subsequent to 2014 notification

Coal sector underwent a lot of developments subsequent to the notification of 2014. Captive coal blocks allotted earlier were cancelled by the Supreme Court, Coal Mines (Special Provisions) Act, 2015 came into being in October 2015 paving the way for mining by both public and private companies, the concept of commercial mining of coal blocks to be allotted through auction has been introduced and now the Government also considers commercial mining as one of the tools for Atmanirvar Bharat strategy. Recent announcement by the Finance Minister that the Government of India resolves to allocate 50 coal blocks for commercial mining is only a reiteration of its resolve to introduce private mining in coal as provided for in the Coal Mines (Special Provisions) Act, 2015. This is definitely a good initiative of the Government for increasing the domestic availability of non-coking coal and may reduce its import in the country to some extent. Further , the EPR, 1986 has now been modified with complete substitution of sub rule (8) of rule (3), freeing the producers and users of coal from the restrictions of supplying and using >34% ash coal.

Latest Gazette notification dated 21^st May 2020

The Gazette notification dated 21^st May 2020 is unique in the sense that it gives the background of the need for the changes (without any techno-economic evidence) and then finally the order by the MoEFCC.

It will be pertinent, therefore, to analyze the stands of the different Ministries in evolving the new rule. Ministry of Environment, Forest and Climate Change justifies abolition of the earlier rule based on the inputs from the related administrative Ministries of Power and Coal and the NITI Ayog, which as per the Gazette notification is as follows:

“……And whereas, the Ministry of Power has, inter alia, represented that with advancement in pollution control technologies, thermal power plants are better equipped to capture fly-ash generated in combustion process and unwashed coal can be used more efficiently and economically; thermal power plants are designed for coal with wide variety of ash content and are equipped with dry ash evacuation, handling and supply systems for ash utilization; using washed coal makes power generation costlier; fly ash generated in thermal power plants is being used in several beneficial uses like cement manufacturing, brick making, road laying, back-fill material for reclamation of mine voids and low lying areas; requirement of maintaining average ash content to 34% prompts industries to undertake import of coal, resulting in outflow of foreign exchange etc. 

And Whereas, the Ministry of Coal has, inter alia, represented that the coal mines are constantly striving to improve raw coal in terms of quality, size and extraneous material over the years which has considerably reduced wear and tear of all related equipment, coal washing process involves multiple handling and avoidable road transportation of huge quantities of coal from coal mines to washeries and then to rail sidings for onward transport to power plants; the washing process only  divides the coal into washed coal and washery rejects while the ash content of mined coal remains the same; use of low grade coal washery rejects, in the multiple small user industries, generates more pollution etc.

And Whereas, the Ministry of Coal and Ministry of Power have, therefore, represented that the mandating power plants to use washed coal requires to be revisited by reconsidering the notification dated the 2nd January, 2014 which will help ease power generation for long distance haulage of coal without adverse impact on the environment. 

And Whereas, the NITI Aayog, in its report after analyzing the issue from the perspective of washeries, Coal mining, transportation and consumption of coal at power plants has, inter alia, summed up that use of washery rejects in nearby industries generates more pollution; since washery rejects are distributed in number of smaller industries, the pollution control at numerous points is more difficult than controlling the pollution at power plant end; Ash generated in the washing process pollutes water along with coal particles and cannot be gainfully utilized; Coal washing process involves increased water use, effluent generation; Disposal of washery rejects has negative environmental impact as it has to handle and dispose huge quantity of low grade coal washery rejects, liquid effluent streams, coal storage, handling coal dust, runoff and fugitive dust; Coal washing also adversely impacts topography, water drainage pattern and quality, water bodies, surrounding air quality at large scale; Washing process increases the cost of power generation with no commensurate environmental advantages etc. 

And Whereas, NITI Aayog has, therefore, recommended that it may be prudent to determine and enforce the environmental and pollution norms, to be complied with by the power generators, rather than restricting the ash content in coal, based on distance of transportation…..”

Ministry of Environment, Forest and Climate Change, after analyzing the above inputs has substituted the sub-rule (8) of rule 3 of the EPR, 1986 with the following provisions:

“(8) Use of coal by Thermal Power Plants, without stipulations as regards ash content or distance, shall be permitted subject to following conditions: 

(1)         Setting Up Technology Solution for emission norms:

(i)    Compliance of specified emission norms for Particulate Matter, as per extant notifications and instructions of Central Pollution Control Board, issued from time to time.

(ii) In case of washeries, Middling and rejects to be utilized in FBC (Fluidized Bed Combustion) technology based thermal power plants. Washery to have linkage for middling and rejects in Fluidized Bed Combustion plants. 

(2)         Management of Ash Ponds:

(i) The thermal powers plants shall comply with conditions, as notified in the Fly Ash notification issued from time to time, without being entitled to additional capacity of fly ash pond (for existing power generation capacity) on ground of switching from washed coal to unwashed coal.

(ii)  Appropriate Technology solutions shall be applied to optimize water consumption for Ash management;

(iii)The segregation of ash may be done at the Electro-Static Precipitator stage, if required, based on site specific conditions, to ensure maximum utilization of fly ash;

(iv)Subject to 2(i) above, the thermal power plants to dispose fly ash in abandoned or working mines (to be facilitated by mine owner) with environmental safeguards. 

(3)        Transportation:

1. Coal transportation may be undertaken by covered Railway wagon (railway wagons covered by tarpaulin or other means) and/or covered conveyer beyond the mine area. However, till such time enabling Rail transport/conveyer infrastructure is not available, road transportation may be undertaken in trucks, covered by tarpaulin or other means. 
2. It shall be ensured by the thermal power plant that

a.  Rail siding facility or conveyor facility is set up at or near the power plant, for transportation by rail or conveyor; and

b.  If transportation by rail or conveyor facility is not available, ensure that the coal is transported out from the Delivery Point of the respective mine in covered trucks (by tarpaulin or other means), or any mechanized closed trucks by road. 

(4)  This shall also be deemed to be additional conditions of the relevant Environmental Clearances for respective projects for financial year 2020-21 and onwards. The existing Environmental Clearances shall stand modified so as to make the above conditions operative for relevant sectors. The Consent to Operate shall be issued by respective State Pollution Control Boards accordingly.”

Points to ponder in the new sub rule (8)

Complete substitution of sub-rule (8) with the above provisions has the following points to ponder:

1. Restriction on use of >34% ash coal in distant power plants (>500 km away from the mine) has been completely withdrawn, yet asking the power plants to meet the environmental standards as they were permitted with usage of <34% ash coal.
2. In case of washeries, Middling and rejects to be utilized in FBC (Fluidized Bed Combustion) technology based thermal power plants.
3. The thermal powers plants shall not be entitled to additional capacity of fly ash pond (for existing power generation capacity) on ground of switching from washed coal to unwashed coal.
4.  Thermal power plants to dispose fly ash in abandoned or working mines (to be facilitated by mine owner) with environmental safeguards. 
5. Coal transportation may be undertaken by covered Railway wagon (railway wagons covered by tarpaulin or other means) and/or covered conveyer beyond the mine area.

Middling is generated in coking coal washeries only for its utilization in the power plants, generally at 34% ash. The third product in such washeries is reject with ash as high as 65%. While it may not be desirable to burn the rejects and dispose it in the mined-out areas, the middling so far have been transported to the power plants and used as washed coal. Mandating use of middling in FBC plants is beyond my comprehension, while mined coal with any ash content can be transported and used in any power plant.

In case the power plants will not be allowed to create additional capacity of fly ash pond and they are mandated to transport it back to the mine for its disposal in mined out areas, the logic of transporting this additional ash to the power plant and again bring it back to the mine is also not understandable. Who is going to bear this additional cost? Also, transporting fly ash requires special vehicles and with large distances involved, the costs are going to be prohibitive.

Wagons covered with tarpaulin is a rare feature to be seen anywhere in India. While this may be desirable, its practicality is difficult to adopt. It is also an imaginary thinking that until such facility is created by Railways, coal should be transported in covered truck over long distances.

Economic and Environmental impact of using unwashed (>34% ash) coal

I have tried to make an assessment of economic and environmental impact of using unwashed coal vis-a-vis mined coal in distant power plants. First let us understand the quality of non-coal resource we have in our country.

Indian Non-coking coal resource

Total inventory of non-coking coal resource in India, estimated by Geological Survey of India, as on April 1, 2019, stands at 289.87 billion tonnes, of which 37.75 billion tonnes exist in superior grades (G1 to G6) with GCV of >5500 kcal/kg. Larger portion of 224.7 0 billion tonnes are available in inferior grades (G7 to G17) with GCV from 2201 to 5500 and about 27.42 billion tonnes in ungraded category. The following table reflects the grade-wise non-coking coal resource:

Grade	Gross Calorific Value (GCV)	Resources (million tonnes)
G1 – G3	>6401	2,733.41
G4 – G5	5801 -6400	10,213.96
G6	5501-5800	24,802.60
G7 – G8	4901 - 5500	43,348.45
G9 – G14	3101 - 4900	178,279.71
G15 – G17	2201 - 3100	3,073.68
Ungraded		27,415.95
Total		289,867.86

The above table shows that we have larger resource (178 BT) in grades G9 to G14 (more in the lower grades) and about 30 BT in G15 and below. Lower the grade, higher is the ash content.

Case study

Let us now consider three cases with ash contents of 34%, 40% and 50%. In order to determine the GCV equivalency of these ash coals, the equivalency formula developed by the erstwhile CFRI based on a wide range of samples collected from different coal fields has been used, which is as follows:

GCV = 2111 + 0.6812xUHV.

Considering an average moisture content of 5%, the equivalent GCV of such coals would generally be

For 34% ash coal - 4500 kcal/kg (G10),

For 40% ash coal - 3950 kcal/kg (G12), and

For 50% ash coal - 3400 kcal/kg (G13).

Specific coal requirement of a 500 MW power generator

A 500 MW plant with a Heat Rate of 2500 kcal/kWh and a PLF of 80% would require the following amount of coal for the three different ash types:

34% ash – 1.95 million tonnes/annum

40% ash – 2.22 million tonnes/annum; an increase of 14% in cost of transportation of coal and 6% in cost of transportation of additional ash back to the mine, compared to the base case.

50% ash – 2.58 million tonnes/annum; an increase of 32% in cost of transportation of coal and 16% in cost of transportation of additional ash to be returned to the mine, compared to the base case.

The above are the theoretical coal requirements. In actual practice the requirement would be more than the theoretical one as higher ash coals consume more heat in heating the inert matter (ash) and the same is not recovered for generating steam and is thus, considered as lost heat. Such lost heat is made up by injecting oil or additional coal in the boiler. By no stretch of imagination, the above additional minimum costs are going to be economical for the power plants and the additional costs will have to be borne by the public, the users of power.

Impact on carbon emission

Let us now consider impact of using higher ash coal on carbon emission. Coal on combustion generates carbon dioxide which is a greenhouse gas. The intension of any Government of the day in any country is to reduce generation of CO₂ by adopting cleaner coal technologies. CO₂ generation is governed by the carbon percentage in coal determined through ultimate analysis and not the fixed carbon percentage determined through proximate analysis. Actual carbon percent in coal does not reduce proportionate to the ash content as the volatile matter too plays a vital role. Thus, usage of higher ash coal means increased quantity of coal burning and consequent increased generation of CO₂ (more the ash in coal more is CO₂).

Form the above it is evident that usage of higher ash coal in distant power plants not only increases the cost of production of power but also generates disproportionately higher quantities of CO₂ for the same amount of power generation.

Cost consideration

Apart from many arguments against coal washing it has been argued in the justification note of the new rule that washing process increases the cost of power generation with no commensurate environmental advantages. It has also been argued that washed coal costs more and hence becomes uneconomical for the power plants. I wonder, if it was true, how the power plants imported more than 135 million tonnes of coal in 2018-19 for the hinterland plants. This much quantity of import for the hinterland plants cannot be justified on account of shortage of domestic coal only but to my knowledge, a larger portion of it is imported on economic considerations. Cost of imported coal is much higher compared to that of domestic washed coal. Even as on today, in the corona period, when the power coal demand is low internationally, the price of Indonesian coal (as on 25^th May 2020) is higher in terms of per million calories on FOB basis, compared to equivalent GCV Indian coal. In spite of higher cost, the consumers prefer to use imported coal primarily on economic benefit ground.

GCV NAR kcal/kg	Price ($/t)	Price (INR/t)	Price (Mcal/t)	Price/Mcal (INR)
4800	42.5	3187.5	4800	0.66
3800	29	2175	3800	0.57
3400	24	1800	3400	0.53

Compared to these, the price of washed coal is much less and cannot be considered uneconomical for the power plants. The price of CIL’s unwashed coal (basic price) varies from INR 0.19/Mcal for G17 (GCV 2201-2500 kcal/kg) grade to INR 0.48/Mcal for G2 (GCV 6701-7000 kcal/kg) grade. With additional 40%on taxes and royalties, these work out to INR 0.27/Mcal and INR 0.67/Mcal respectively as pithead cost. This indicates that domestic coals, even washed ones are cheaper compared to imported coal for the same heat value and just should not be wished away on unsubstantiated economic ground.

Source: Coal India Ltd. Website

The above chart shows how irrational is the pricing for domestic coal. There is no incentive for improving the grade from G14 to G9 (price per Mcal remaining same). There needs to be some sort of linearity in pricing coal so that there exists some incentive for grade/GCV improvement. Washing of Indian coal reduces nearly 3.5% yield for every 1% reduction in ash. Naturally, lots of rejects are generated of no value in bringing the ash content to 34%. The price of washed coal, therefore, is bound to be higher. Still when compared to imported coal it is cheaper in terms of heat value. The contention that washed coal increases cost of power generation is, thus, not substantiated. If, at all it be so, there is a need to restructure pricing of coal and not wish away the washed coal. It may be worth mentioning here that internationally, it is difficult to imagine a mine without a beneficiation/washing plant.

Conclusions

In view of the foregoing, it may be concluded that doing away with the restriction of using >34% ash coal or in other words, withdrawal of the concept of non-coking coal washing in India is not a right step. With the quality of coal resource India has, impact of this rule will have a long-term effect on both economics of power generation and its carbon footprint. Use of improved quality of coal with domestic poor grade coals will be essential for controlling the cost of power generation and this new rule may only pave way for increased import of non-coking coal in future.