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Sunita Narain: Greening gas and coal policy

Unavailability of natural gas and destruction of forests and water bodies due to our inability to use our coal fields optimally is having a huge impact on our health and environment

Sunita Narain  |  New Delhi 

Two monopolies. One private; the other public. One in gas; the other in coal. Both equally disastrous for the environment. I speak here of Reliance Industries Ltd and Coal India Ltd.

We know that air pollution in Indian cities is hazardous. We need urgent solutions to cut emissions from all sources so that we do not lose this critical health battle. In Delhi and its surrounding region, for instance, we know that air toxins pose a clear and present danger. Tiny particles smaller than 2.5 micrometres can go deep into the lungs and cause serous health impairment, and they are several times higher than standards in the winter. In addition, nitrogen oxide levels are rising because of the burning of diesel and coal. A new danger is lurking: ozone, which targets the lungs and is linked to high nitrogen oxide emissions.

We need to find urgent solutions. We know that one big part of the solution is to reinvent mobility and phase out diesel use in vehicles. Another part of the solution is to phase out coal use in thermal power stations in densely polluted areas and run them on relatively clean natural gas. Gas-based power stations have no particulate emissions and have much lower nitrogen oxide emissions.

This has been accepted. So, for the past few years, Delhi and its surrounding region have invested in building gas-based power plants. Delhi has shut down its coal-based Indraprastha power plant and is waiting to close the Rajghat power station. It has built Pragati, Bawana and Rithala plants. The combined installed capacity of these gas-based power plants is over 1,730 MW. In addition, the city is ready to invest in a plant of 700 MW at Bamnoli and to convert three units of the Badarpur power plant to gas.

But there is a small hitch. There is no gas to run these commissioned plants. The country, they say, has run out of gas. Oops! This is exactly what was said over a decade ago when a demand was raised for natural gas to run vehicles. Then, gas became available; there was talk about huge finds in the Krishna-Godavari basin. But now the wells have mysteriously dried up, gone kaput.

Or so it is said. According to the ministry of petroleum and natural gas, India’s gas output is expected to fall by a whopping 35 per cent this fiscal year and another 12 per cent next year. Nobody cares to explain why this will happen. But it is clear that the new monopoly player — Reliance Industries — is not playing ball. The Comptroller and Auditor General of India’s report on hydrocarbon production-sharing contracts has a damning indictment of the loss to the exchequer in the allotment of the gas field and of the manner in which the capital costs have been rigged to reduce the sharing with government. Now the widely held belief – but equally widely unspoken – is that exploration is down and gas is drying up because Reliance Industries wants prices to be hiked. It wants control over the sale and allocation of gas. Its partner in this is oil major BP, which picked up 30 per cent stake in it for $7.2 billion (Rs 30,000 crore). Clearly, this investment would not have been made if the fields were duds.

In coal the story is both similar and different. It is said that thermal power plants are running out of coal because environment and forest clearances are holding up projects. So there is a clamour to open up more forests to private players. What is worse is that Coal India, which produces 90 per cent of India’s black gold, has under its control some 200,000 hectares of mine lease area, including 55,000 hectares of forest land. Still, it produces only about 500 million tonnes annually. So it is convenient for all to not fix this supply problem, but ask for even more forests to be mined.

The environment is hurt in both ways — by the unavailability of natural gas, which would have cleaned up emissions, and by the demand to destroy more forests, water bodies and livelihoods of people, because of our inability to use the existing coal fields optimally.

The issue also hides the serious problem of pricing power at affordable levels, given the trend towards rising prices for coal and gas. In this scenario, the options are as follows: one, to maximise domestic resources and operate them at tight capital and operational costs; and two, pay for higher raw material costs in power generation by investing in reducing inefficiencies, including losses in transmission. As yet, there is little evidence that we are moving in any of these directions. The only evidence is of the big monopolies taking us for a ride, with disastrous consequences for our health and environment.  

First Published: Mon, April 09 2012. 00:32 IST