The Government of India (GoI) has recently announced a capital subsidy of 15% of the project cost, accumulating to Rs. 8,500 crore, for promoting coal gasification projects, with the aim of achieving the National Coal Gasification Mission’s (NCGM) target to gasify 100 million tonne per annum (mtpa) of domestic coal by CY2030. Gasification of coal produces syngas, which is a combination of carbon monoxide (CO, 59% ), brown hydrogen (H2, 30%), and carbon dioxide (CO2, 11%). Circulation of carbon and hydrogen in syngas can produce various gaseous/liquid fuels, chemicals, and fertilisers. As per Government estimates, NCGM carries an investment potential of over Rs. 4 lakh crore and can substitute a chunk of the country’s import of natural gas, ammonia, urea, and methanol.

Coal gasification however is a highly capital-intensive process. After factoring in the GoI’s capital subsidy scheme, the levelised cost of unabated brown hydrogen is slated to decline by around 7% to US$ 1.3-1.5/kg H2, helping increase its cost-competitiveness. Therefore, the Cabinet Committee on Economic Affairs recently approved Coal India Limited’s two new projects for cumulatively gasifying 2.7 mtpa domestic coal to produce synthetic natural gas and ammonium nitrate in West Bengal and Odisha for a total investment outlay of Rs. 24,835 crore.

Commenting on the industry trends, Ritabrata Ghosh, Vice-President & Sector Head, Corporate Sector Ratings, ICRA said: “In countries like China, with abundant coal resources, a majority of the hydrogen requirement in fertiliser, methanol, and petrochemical sectors are being met from coal gasification. Brown hydrogen from coal/ lignite accounted for around 21% of the global hydrogen production in CY2022, with more than 80% of the operating coal gasification units globally being in China alone. Our estimates suggest that if India can replicate the Chinese model and meet the NCGM’s stated target of gasifying 100 mtpa coal by CY2030, then this source can potentially supply 80-85% of the domestic hydrogen demand from refining, industrial, transportation and power sectors in the next one decade.”

The green-house gas footprint of brown hydrogen is double that of grey hydrogen produced from natural gas. Therefore, negative emission technologies like CCS/CCUS remain important in reducing coal’s environmental impact.