Carbon capture and coal gasification can be a game changer for India

Carbon capture and coal gasification can be a game changer for India
India today emits more than three billion tonnes of carbon dioxide (CO2) and is the fourth-largest greenhouse gas emitter after the China, US and the EU. Although on per capita basis, India’s emissions are still below the global average. India will continue see the biggest increase in fossil fuel CO2 emissions. This is partly due to rapid economic growth, industrialisation, and efforts to bring electricity in rural communities. While renewables will certainly replace a part of the current energy mix, the country will be largely dependent on coal and fossil fuels for industry and electricity in the foreseeable future. Along with renewables, the solution to a green and economically vibrant India, thus, lies in exploiting clean coal technologies based on gasification and carbon capture.

India has about 300 billion tonnes of proven and unproven reserves, the majority of which is low-rank high ash coal. By enriching and exploiting Indian coal endowments through gasification and carbon capture a clean coal-based economy for power, chemicals, fuels, steel, oil, and fertilisers can enable a $50 billion direct increase in the gross domestic product (GDP) while creating employment for over half-a-million people, reducing imports by over $30 billion and cutting the current account deficit by 50 per cent.

Along with gasification of coal, carbon capture, use and storage (CCUS) is one of the cornerstones of enabling a clean coal-based economy. The CCUS technology along with coal gasification, when implemented with policy support, offers multiple benefits by engendering a carbon-neutral industrial ecosystem while reducing our extreme dependence on crude oil imports. Simply put, CCUS is the process of capturing waste CO2 from emissions produced from the use of fossil fuels in power generation or industrial processes and then compressing and converting it into liquid form, which is then piped and stored underground — or used for commercial activities. CCUS yields two major benefits: First, it can take out more than 90 per cent of the CO2 from emission streams; and second, it can offer a range of economic goods and revenue streams in the energy and core sectors. Although. CCUS is believed to be a more recent development, we need to understand that carbon capture is not rocket science and — for many decades now — similar technology has been used in the chemical processing industry.

Our analysis show that with the right policy initiatives and market design, hyper-scale coal gasification, based on low-grade Indian coal, along with CCUS can enable large-scale carbon-neutral industries such as methanol, ammonia/fertiliser, olefins, steel, and power while enhancing India’s oil production from its depleting oilfields. The methanol can be used for producing methanol-based chemicals and olefins for plastics and as a substitute for petrol, diesel and LPG. Close to 15 per cent of the petrol used today in vehicles can be substituted by methanol. Additionally, 20 per cent of imported diesel and cooking gas can be substituted by domestically produced methanol. Over 15 per cent of plastics/olefins feedstock based on imported crude oil heavy distillates can be replaced by coal gasification-based methanol saving over $5 billion in imported naphtha. Similarly, India as a nation has a plan of producing 300 million tonnes per annum (mtpa) of steel by 2030. It is envisioned that most of this production will happen through the energy and carbon-emission intensive blast furnace route using imported coking coal. However, a significant portion of such steel making, estimated at about 50 mtpa of capacity, can be through the gas-based direct reduction route based on coal gasification and CCUS. This will reduce coking coal imports by over $6 billion while cutting carbon emissions by over 50 per cent.Captured CO2 based Enhanced Oil Recovery (EOR) can increase India’s oil production by up to 30 per cent resulting in $4 billion worth of excess production from the ageing oilfields.

That said, gasification with CCUS needs to be engineered and applied in a way which preserves the economics, growth, quality, and scale of operation of the industrial economy. First, we need to understand the techno-economic appropriateness of different kinds of carbon capture for industries. There are two types of carbon capture – post-combustion and pre-combustion. Post-combustion carbon capture, which captures carbon dioxide from the exit gas stack of power plants, for example, is more expensive because of the diluted concentration of CO2 in the stream. However, the flip side is that given many implementations and the scale, that will likely drop to less than $25 per tonne over time. At the same time, if the captured CO2 could be sold as products, like for EOR, costs to the tune of $15 per tonne to 40 per tonne of CO2 can be recovered. On the other hand, pre-combustion carbon capture in gasification-based systems can be at very economic cost points of about $30 per tonne today. However, in either case, any carbon capture mechanism will initially require policy support in terms of carbon credit and financing mechanism. This is where policy supports in terms of carbon capture and investment credits like the ‘45Q’ in the US come in. Policy support kick-starts a mechanism to increase adoption and drive down the cost of capture, speeds up the markets for carbon trade and more than offsets the deficits through taxes collected on the incremental value created in the economy.
These are not improbable expectations or assumptions. China embarked on industrial scale gasification about 10 years ago. Today, China is the world’s largest methanol producer, and almost all of it is produced through the coal gasification route. Methanol accounts for close to 10 per cent of Chinese fuel consumption and 30 per cent of feedstock for plastics today. Similarly, South Africa is the world’s largest coal gasification-based economy and a variety of commodities ranging from coal-based gasoline to coal-based chemicals are produced by Sasol in South Africa. Emirates Steel in Abu Dhabi captures 800,000 tonnes of CO2 per year and sells it to ADNOC for EOR.The world’s largest commercial scale carbon capture is NRG Energy’s Petra Nova power plant near Houston, Texas, which can capture up to 1.6 million tonnes of CO2 per year. The captured CO2 is used for EOR in the nearby oilfields and in CO2 sale revenues for project’s oil recovery pay. Closer at home, a smaller-scale carbon capture and use plant running at Tuticorin Alkali and Chemicals captures 60,000 tonnes of CO2 per year and uses it for manufacturing baking soda.

Policy enabled successful commercial implementation of gasification and CCUS at scale can thus, be a game changer for India.