India Pushes Coal Gasification To Cut Fuel Imports And Strengthen Energy Security

India is accelerating its coal gasification ambitions as part of a broader strategy to strengthen energy security and reduce dependence on imported fuels and chemicals. The Union Cabinet has approved a ₹37,500 crore support scheme for coal and lignite gasification projects, a move expected to attract investments worth nearly ₹3 lakh crore.

The policy push comes at a time when global energy markets remain under pressure due to geopolitical tensions in the Middle East, especially around the Iran conflict, which has raised concerns over rising fuel prices and supply disruptions.

What Is Coal Gasification?

Coal gasification is a process that converts coal into synthetic gas, or “syngas,” instead of directly burning it. In this method, crushed coal is heated under high pressure using controlled amounts of oxygen and steam.

The resulting syngas mainly contains carbon monoxide and hydrogen, which can then be used to produce several important industrial products such as:

• Methanol
• Ammonia
• Urea
• Synthetic Natural Gas (SNG)
• Hydrogen
• Liquid fuels and chemicals

The process allows coal to replace imported natural gas and petrochemical feedstock in several industries.

Why India Is Focusing On Coal Gasification

India currently spends heavily on importing products such as LNG, methanol, ammonia and fertiliser-related chemicals. In FY25 alone, the country’s import bill for these products stood at nearly ₹2.77 lakh crore.

Key areas of import dependence include:

• LNG: Around 50% import dependence
• Urea: Around 20%
• Ammonia: Nearly 100%
• Methanol: 80-90%

The government sees coal gasification as a way to utilise India’s vast domestic coal reserves while reducing exposure to volatile international energy markets.

India possesses around 401 billion tonnes of coal reserves and 47 billion tonnes of lignite reserves. Coal continues to account for over 55 per cent of the country’s primary commercial energy demand and nearly 72 per cent of power generation.

India’s Coal Gasification Roadmap

India has set a target of achieving 100 million tonnes per annum (MTPA) of coal gasification capacity by 2030.

Several policy initiatives have already been launched to support this vision:

• 2018: Talcher coal gasification fertiliser project announced
• 2020: Incentives introduced in commercial coal mining auctions
• 2021: Coal-based hydrogen roadmap unveiled
• January 2024: ₹8,500 crore support package for eight projects
• May 2026: ₹37,500 crore expansion scheme approved

The Ministry of Coal had also launched India’s first underground coal gasification pilot project in Jharkhand in 2024 to explore the use of deep-seated coal reserves that are difficult to mine conventionally.

Global Examples And Private Sector Interest

Countries such as China have successfully used coal gasification to reduce dependence on imported fuels. China now produces over 70 per cent of its methanol and more than 90 per cent of its ammonia through coal gasification technologies.

In India, Adani Group is reportedly developing a ₹70,000 crore coal gasification project in Nagpur that will produce syngas, hydrogen and ammonia.

Is Coal Gasification Environment Friendly?

Although coal gasification still relies on coal, experts say it is cleaner and more efficient compared to direct coal burning. The technology also makes carbon capture easier during the syngas production stage.

At the same time, India continues to rapidly expand renewable energy. According to energy sector data, around 95 per cent of the new power capacity added in FY26 came from renewable sources, including large hydro projects.

The government has clarified that coal gasification is being positioned primarily as an import substitution strategy for fuels and industrial chemicals rather than a replacement for renewable energy expansion.

India Also Exploring Geothermal Energy

Alongside coal gasification, India is exploring geothermal energy as another long-term energy solution. Recent studies indicate the country has significant geothermal potential for industrial heating, cooling and electricity generation.

States including Gujarat, Uttar Pradesh, West Bengal, Telangana, Maharashtra and Andhra Pradesh are being identified for future geothermal projects as India broadens its energy diversification plans.