Duty-free coking coal imports A blow to environment

The Hindu Business Line , Friday, March 09, 2007
Correspondent : Lyla Bavadam
The Finance Minister's statement that India will continue not to be a major contributor to greenhouse gases is contradicted by his concession to coal importers.

The hopes of environmentalists were raised when Mr. P Chidambaram, mentioned climate change in his Budget Speech but the Finance Minister's contribution to this issue was only to announce the formation of an "expert committee to study the impact of Climate Change on India and identify the measures that we may have to take in the future."

Environmental group Greenpeace has criticised the Budget as being "climate-passive". Mr G. Ananthapadmanabhan, Executive Director Greenpeace India, believes, "the finance minister missed a golden opportunity to address the issue of Climate Change decisively in the Budget. The country anticipated provisions to encourage investments in energy efficiency and renewables to fight climate change, not another committee to tell us what we already know."

Needed, a law

If the government is serious about reducing carbon emissions then what is urgently required is legislation that forces businesses and citizens to go beyond voluntary action. Mr K. Srinivas, Climate and Energy Campaigner, Greenpeace India, says that this, along with budgetary support, will go along way in reducing carbon emissions. He also says that the renewable energy sector needs a boost in terms of Budget allocation as well as follow-through programmes for existing projects.

No mention at all was made of non-conventional energy in the Budget speech. In fact, one concession is particularly worrisome to environmentalists. In the section on Indirect Taxes, Mr Chidambaram said he proposed to fully exempt from duty all coking coal irrespective of the ash content. Earlier, the import tariff structure was dependant on the quality of the coal, with high ash content coal facing higher duties.

This automatically restricted the quantity of low-grade coal that came into the country a boon for the environment. Removing the duty could see large quantities of flyash imports.

This will, in the long run, contradict the Finance Minister's confident statement that India would continue to have low levels greenhouse gas emission.

For Power Sector

Mr Chidambaram seems to have a particular interest in coking coal. In his 2005 Budget speech he had said, "Coking coal with high ash content attracts a duty of 15 per cent. I propose to bring the rate down to 5 per cent." He has now eliminated all duty.

It is believed that part of the reason for this carte blanche for coking coal imports is to try and boost the country's flagging power production.

About 70 per cent of the country's total installed capacity of electricity generation is coal-based. The bulk of the coal used is of inferior quality with high ash content. Only about 20 per cent of the total coal transported to the power plants is of superior grade with ash content 24 per cent or less with the remaining coal being of an inferior grade with ash ranging from 24 to 45 per cent, says a report by the Ministry of Environment and Forests. Much of the superior coal has so far been imported.

Costs of washing

It can be argued that the coal that comes in under the Finance Minister's new concession can be washed. While this washed coal will meet the MoEF's standards, there will be fallouts. Washing causes pollution of surface water, groundwater and land (not to mention human health costs).

Besides this, the basic process to wash the coal requires large volumes of water for cooling and huge land requirement for ash disposal. Emissions from the power plants in the form of particulate matter, toxic elements, flyash, oxides of nitrogen, sulphur and carbon have caused serious environmental and health problems.

Supply of high ash laden coal to power plants not only poses environmental problems but also causes poor plant performance and high Operations and Maintenance costs. Disposal of existing fly ash is already a problem even though it is used in the back-filling of abandoned mines, making of construction bricks and even as a component in cement.

Recognising the inefficiencies and risks of high flyash content coal the MoEF constituted in the mid-1990s a Committee headed by the Central Pollution Control Board chairman. The Committee's mandate was to suggest measures to improve the quality of coal supplied to the power plants. On its recommendation the Centre issued a Gazette Notification saying certain of the larger power plants were to use coal with ash content not exceeding 34 per cent.

The MoEF's rule was substantiated by research from the Central Fuel Research Institute, Dhanbad. A 2002 study estimated that if ash levels in coal were brought down from 40 per cent to 34 per cent, it would reduce 8 million tonnes of flyash and 23 million tonnes of emissions of carbon-dioxide (a greenhouse gas). In view of all this the Finance Minister's concession to coal imports is a step backward for the environment.

SOURCE : The Hindu Business Line, Friday, March 09, 2007

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