All talk, no walk, China shock
Like us, it is not endowed with significant oil and gas, and imports much more. Yet, unlike us, it is not in a state of panic.
We know that China gets the bulk of its crude oil and some gas from Russia through overland pipelines. is that enough? Here, we are nervous about our fertilizer situation as we move towards kharif sowing. But, China is quiet. Not only about our needs but also about our export commitments. We are also dependent on fertilizer imports from China. There are bitter memories of the fertilizer crisis after the Eastern Ladakh-Galwan crisis. However, the Chinese have not yet imposed force majeure on their fertilizer exports. The answer came when I researched beyond my normal domain. It was a shocking reality check. Both the Chinese success and our general progress are shocking. All talk, little result.
Here are some brutal facts. China has few gas fields, but still has enough gas. This is because China has patiently invested capital, skills and technology in coal gasification. It now produces more than half of global production.
Estimated story: India had started talking about the idea along with China, but produces no more than 3-5 per cent of China’s 80 million metric tonnes per annum (MMTPA) production. China uses 340 million metric tonnes per year (MMTPA) of coal for this gasification, of which about 1.4 per cent is consumed in India. In 2007, the United Progressive Alliance government talked big on coal-bed methane and set up a small pilot plant in Raniganj. Since then the idea has mostly been shelved. In any case, coal got a bad name under UPA. In a flurry of Covid-induced reforms in 2020, the Modi government unveiled an ultra-ambitious National Coal Gasification Mission.
I use the description ultra-ambitious consciously because the plan had set a target of 100 MMPA in coal gasification by 2030, involving an investment of ₹4 trillion. At 100 million tonnes per year, our coal gas production – also called synthetic gas or syngas – will be 25 percent more than China’s. It made an incredible title.
We are in the sixth phase of this 10-year plan, and the total production, whether from some legacy activity or post-2020 initiatives, is about 5 MMTPA in a good year. Of this, 1.8 MMTPA also comes from Jindal Steel and Power (JSPL) plant located in Angul, Odisha. It uses an innovative modern process and is mostly for internal consumption.
Then, as the Coal Ministry and NITI Aayog websites tell us, seven coal gasification projects with an investment of ₹64,000 crore have been approved. Almost all of them, mostly in the public sector in joint ventures with Coal India Limited, are wandering in, or circling, the regulatory orbit. I read about the underground coal gasification project of Eastern Coalfields (a subsidiary of Coal India) at Kasta in Jamtara district of Jharkhand. Its production should have started by now. It is caught in a dispute between the coal and environment ministries. The Environment Ministry says the project should be 300 meters deep. The Coal Ministry wants 150-160 metres. The result, a typical Indian story. Dog’s breakfast in the name of government distribution.
To make us feel even more rotten, I need to highlight that we limit our coal extraction to opencast mining. All our underground coal has not been exploited while the Chinese are going three kilometers underground. Two good readings on the Coal Ministry website come from private sector groups, Adani and Jindal. They remind us that India has the fifth largest reserves of coal in the world. They explain technical processes with flow-charts, list needed improvements and resources. Of course, they invoke strategic benefits, including the favorite of the season: energy self-sufficiency. It’s all very neat.
Unlike China, we do not lack foresight. But unlike China, we will not move from words to deeds. As crude oil prices fall, our interest wanes. And we are not alone. Indonesia, with the seventh-largest coal reserves and high-quality coal, is also lagging behind. It is also moving towards gasification. The Chinese are not easily distracted. They knew early on that oil shocks would be a part of life, especially with the United States using sanctions as leverage. He decided to invest whatever he had and kept investing continuously regardless of the ups and downs of the market. He did not lose his way or interest during the hydrocarbon downcycle. He saw energy independence through coal as a national strategic objective and achieved it. We are, as always, stuck in political-bureaucratic-regulatory analysis-paralysis. The strange problem with the Indian “system” is that although these are long-term projects, whenever prices fall, someone in some “building” will knock on their cost-effectiveness. This destroys the enthusiasm of the private sector.
Why were the Chinese successful? He saw it as a strategic project and remained focused on it. It has protected China from these energy shocks, and India is nursing its wounded pride.
We know that coal is an unpopular fuel. But that’s all India has. And while coal-to-chemicals is also a polluting activity, it is much less so than burning it in power plants. In any case, most of our electricity generation is moving toward renewable energy, and nuclear power is poised for a comeback. On January 20, 2029, Donald Trump will be gone and climate change will be back on the global agenda. Coal will become bad again. Now is the time to employ our big stores in a less polluting and more profitable way. It also brings strategic security. Ultimately, although burning coal for electricity may be bad, converting it into gas is much less bad. And sulfur, an important by-product, is in great demand in industry as well as in fertilizers. Again, this is a chemical for which we are dependent on imports.
Consumers, especially the middle class, have political power and hence we become focused on the availability or prices of fuel, LPG, diesel, petrol. Lack of fertilizer is an even bigger threat because it affects our food security. The only thing is that our TV channels will not remain indifferent in favor of farmers. Kharif season is coming. Even before the war, surplus producing states were rationing (mostly imported) urea and diammonium phosphate (DAP).
The production of these fertilizers requires large quantities of gas and ammonia. In fact, 30 percent of the natural gas that India produces or imports goes to fertilizer plants. And now, for shock therapy, let me tell you the story of China. China produces more than 90 percent of its ammonia from coal gasification. Ammonia is essential for DAP. India imports most of it and the shortage is so severe that to prevent riots or looting by desperate farmers, many states hoard supplies in their police stations, allocating to farmers on the basis of land holdings and Aadhaar-based registration. Now hold your breath. China uses syngas (synthetic gas) derived from coal to produce 40 percent of the world’s urea. It produces 54 percent of the world’s total methanol, about 70 percent of which comes from coal. And where do we stand? Among the large agricultural producers, we are most dependent on imports for our fertilizers. They can even flip that lever whenever the Chinese get irritated or want to put us in our place.
We regularly celebrate food self-sufficiency. The reality underneath is a national disgrace that we hide. Our catastrophic dependence on fertilizer imports is also a ship-to-mouth existence by another name. This war in the Gulf has brought home these weaknesses. This is a call to action. how to do it? China has shown us the way.
By special arrangement with ThePrint
