Coal Gasification and the National Coal Gasification Mission

Coal gasification is a way of turning solid coal into a gas instead of burning it. Coal is heated to a very high temperature with a small, controlled amount of oxygen and steam. It does not catch fire fully. Instead, it breaks down into a fuel gas called syngas (synthesis gas), which is mainly carbon monoxide (CO) and hydrogen (H₂). This syngas can then be made into fertiliser, methanol, fuels, hydrogen and even steel.

Why does India want it?

India has huge amounts of coal but very little natural gas and oil. So India imports large amounts of things that are made from gas, such as LNG (liquefied natural gas), ammonia, urea and methanol. As per official estimates, India imports over 50% of its LNG, almost all of its ammonia, about 20% of its urea and around 80–90% of its methanol.

If India can make these from its own coal, it saves foreign money, protects itself from global price shocks and supports Atmanirbhar Bharat (self-reliant India). Think of it like a family that grows a lot of wheat but buys bread from the market every day. Gasification is like building your own small bakery to turn your wheat into bread.

How does gasification work, step by step?

1. Preparation: Coal is crushed into small pieces or powder.
2. Gasification: Inside a closed tank called a gasifier, the coal reacts with controlled oxygen (or air) and steam at about 1,000–1,600°C and high pressure (around 20–70 bar). Because oxygen is limited, this is called partial oxidation, not full burning.
3. Cleaning: The raw gas has dust, tar, sulphur and other impurities. These are removed.
4. Adjusting the gas: In a step called the water-gas shift reaction, carbon monoxide reacts with steam to make more hydrogen and carbon dioxide (CO + H₂O → CO₂ + H₂). This lets the plant change the hydrogen level to suit the final product.
5. Making products: The clean syngas is turned into the final product in a separate unit.

What can syngas be turned into?

• Ammonia and urea: Hydrogen from syngas is combined with nitrogen to make ammonia, which is then made into urea fertiliser.
• Methanol and DME: Methanol is a basic chemical used to make plastics, paints and fuel blends. DME (dimethyl ether) can be blended with LPG.
• Synthetic Natural Gas (SNG): In a step called methanation, syngas is turned into methane, which works like natural gas.
• Liquid fuels: Through the Fischer-Tropsch process, syngas can be made into diesel-like fuels.
• Steel (DRI): Syngas can remove oxygen from iron ore to make direct reduced iron (DRI), cutting the use of imported coking coal and natural gas.
• Hydrogen: Pure hydrogen can be separated for refineries and industry.

Types of gasification

• Surface coal gasification: Coal is mined and gasified in a plant above ground. This is what the main government schemes support.
• Underground coal gasification (UCG): Coal is gasified while still deep underground, by sending oxygen and steam down a well and taking the gas out through another well. It is useful for coal that is too deep to mine. The Union Cabinet approved a policy framework for UCG in coal and lignite areas in December 2015.

Gasifiers also come in three main designs: fixed (moving) bed, fluidised bed and entrained flow. Indian coal has a lot of ash (about 30–45%). Many foreign gasifiers are built for low-ash coal, so fluidised-bed designs, including home-grown ones, suit Indian coal better.

Where did it come from?

Coal gasification is old. In the 1800s, "town gas" made from coal lit the streets of European cities. During the Second World War, Germany made liquid fuels from coal using the Fischer-Tropsch process. South Africa's company Sasol built large coal-to-liquids plants from the 1950s. China today runs the world's biggest coal-to-chemicals industry. In India, the steel plant of Jindal Steel at Angul, Odisha, has used coal-gas to make DRI at commercial scale since 2014.

India's policy steps, in order

• 2015: Policy framework for underground coal gasification.
• 2020: The method for auctioning coal blocks for commercial mining (approved in June 2020) gave a 20% rebate on the revenue share to miners who use coal for gasification. This was later raised to a 50% rebate, if at least 10% of the mine's coal goes to gasification.
• 2021: The Ministry of Coal set out the National Coal Gasification Mission (NCGM) with a target of gasifying 100 MT of coal by 2030.
• 24 January 2024: The Union Cabinet approved a ₹8,500 crore incentive scheme for coal and lignite gasification, split into three categories:
• Category I (₹4,050 crore): government PSUs; up to ₹1,350 crore or 15% of project cost (whichever is lower) for up to three projects
• Category II (₹3,850 crore): private firms and PSUs; up to ₹1,000 crore or 15% of capital cost per project, with at least one project chosen through tariff-based bidding
• Category III (₹600 crore): demonstration projects using Indian technology and small plants; up to ₹100 crore or 15% of capital cost
• 13 May 2026: The Union Cabinet approved a much bigger ₹37,500 crore Scheme for Promotion of Surface Coal/Lignite Gasification Projects.

The ₹37,500 crore scheme (2026): key parts

• Aims to support gasification of about 75 MT of coal and lignite, towards the 100 MT mission target.
• Financial help of up to 20% of the cost of plant and machinery, paid in four parts linked to project progress.
• Caps: up to ₹5,000 crore per project; up to ₹9,000 crore per product (except urea and SNG); up to ₹12,000 crore per company group.
• Beneficiaries are chosen through competitive and transparent bidding. The scheme is technology-neutral but encourages Indian technology.
• Coal linkage (an assured coal supply deal) of up to 30 years for gasification projects.
• Expected: about ₹2.5–3 lakh crore of investment and about 50,000 direct and indirect jobs.

Indian examples

• Talcher Fertilizers Ltd (Odisha): A joint venture of GAIL, Coal India Limited (CIL), Rashtriya Chemicals and Fertilizers (RCF) and Fertilizer Corporation of India. It is building a coal-gasification-based ammonia and urea plant at Talcher.
• Jindal Steel, Angul (Odisha): Uses syngas from coal to make DRI for steel.
• UCG pilot: Eastern Coalfields Limited started India's first underground coal gasification pilot at the Kasta coal block in Jamtara district, Jharkhand.

Commonly confused concepts

• Gasification vs combustion: In combustion (burning), coal gets plenty of oxygen and turns into heat, CO₂ and ash. In gasification, oxygen is limited, so coal turns into a useful fuel gas (syngas).
• Syngas vs natural gas vs SNG: Natural gas is mainly methane dug out of the earth. Syngas is mainly CO and hydrogen made from coal. SNG is methane made from syngas, so it behaves like natural gas.
• Coal gasification vs coal liquefaction: Gasification makes gas. Liquefaction makes liquid fuels, either directly from coal or by first making syngas and then using the Fischer-Tropsch process.
• Surface vs underground gasification: Surface needs mining first; UCG happens in the coal seam itself.
• Grey, blue and green hydrogen: Hydrogen from fossil fuels (like coal-syngas) is "grey". If its CO₂ is captured, it is "blue". Hydrogen from water using renewable electricity is "green".

Issues, criticism and the way forward

• High cost and long build time: Plants cost thousands of crores and take years to build. Lenders want assured buyers before they lend.
• High-ash Indian coal: Many proven foreign gasifiers do not work well with it, so new or adapted technology is needed.
• Carbon emissions: Making chemicals from coal still releases a lot of CO₂, though it comes out as a concentrated stream that is easier to capture. This matters for India's net zero by 2070 goal.
• Water use and waste: Gasification needs a lot of water, often in dry mining regions, and leaves slag that must be safely handled.
• Price risk: If global gas or methanol prices fall, coal-based products may cost more than imports.
• Way forward (suggested by experts and the report): faster approvals, long-term purchase contracts, research on high-ash gasifiers such as pressurised fluidised-bed gasification, linking plants with carbon capture, utilisation and storage (CCUS), and using renewable power inside plants.

Concepts to Know

• Syngas: A fuel gas made mostly of carbon monoxide and hydrogen. It is a "building block" for many chemicals and fuels.
• Offtaker (assured buyer): A company that agrees in advance, usually for many years, to buy what a plant produces.
• DRI (Direct Reduced Iron): Iron made by removing oxygen from iron ore using a gas, without melting it. It is also called sponge iron.
• Revenue share: In commercial coal auctions, the share of the coal's value that the miner pays the state. Bidders compete by offering a higher share.
• CCUS (Carbon Capture, Utilisation and Storage): Technology to catch CO₂ from a plant and either use it or store it deep underground.
• Coal linkage: A long-term arrangement that gives a plant an assured supply of coal from a coal company.