Coal Insights, March 2021

FROM THE CHIEF EDITOR Chief Editor Dr Mahul Brahma, Tel: +91 85840 08241, E-mail: mahul.brahma@mjunction.in Editor Arindam Bandyopadhyay, Tel: +91 91633 48016 Email: arindam.bandyopadhyay@mjunction.in Associate Editor Sumit Kumar Maitra, Tel +91 85840 08181, Email: Sumit.Maitra@mjunction.in Editorial Board Alok Srivastava, General Manager, MMTC Ltd Amitabh Panda, Group Director (Shipping & Logistics Operations), Tata Steel Group Anil Razdan, Energy Consultant, Formerly of the IAS, Former Secretary Power & Sp. Secretary Petroleum & Natural Gas, India Anirudha Gupta, Mining & Metals professional and former Director, P&H Joy Mining Equipment India Ltd Ashok Jain, Managing Director, Saumya Mining Ltd Deepak Bhattacharyya, Chief - Horizon 1 businesses, mjunction services ltd Ganesan Natarajan, Former Whole Time Director, Ennore Coke K C Gandhi, Joint President (Material), Shree Cement Ltd Lawrence Metzroth, Vice President – Analysis & Strategy, Arch Coal Inc Sandeep Kumar, Managing Director, Tata Metaliks Ltd Senior Correspondent Ritwik Sinha, Tel + 85840 08234, Email: ritwik.sinha@mjunction.in Balaka Ghosh Chatterjee, Tel + 85840 08190, Email: Balaka.Chatterjee@mjunction.in Analyst Sanjoy Bag, Tel +91 85840 08215, Email: sanjoy.bag@mjunction.in Business Lead Soumitra Bose, Tel: +91 92310 00232, Email: soumitra.bose@mjunction.in Advertising Soudipto Malakar, Tel: +91 91633 48243, Email: soudipto.malakar@mjunction.in Sumit Jalan, Tel: +91 83369 25981, Email: sumit.jalan@mjunction.in Subscription Niladri Kar, Tel: +91 83369 96510, Email: niladri.kar@mjunction.in Email: publication.vspl@mjunction.in Toll free number 1800 41 920 001, press 6 for publication.

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Dear Reader, From the fringes, renewable energy has now found its place in the mainstream. It’s no more an option or a choice but a major and a growing component of our energy basket.

India’s rising power demand has largely been fueled by coal-fired generation.

But India has started moving towards clean energy transition since 2015, when it pledged to reduce the emission intensity of its gross domestic product by 33-35 percent over 2005 levels by 2030.

We may build our Atmanirbhar narrative around coal and bring down its imports and save precious foreign exchanges. Yet, we have made some specific commitment to the international community in terms of achieving renewable energy capacities and those have to be honoured.

India is aspiring for a leadership role in the renewable sector.

It incubated the International Solar Alliance back in 2015, and the appointment of Ajay Mathur as its Director General earlier this month gave a shot in the arm to the organisation.

And the pact with the International Energy Agency will lead to strategic partnership in areas like clean energy transitions and will help cement India’s leading role in the global emission control initiative.

But before such global aspirations are fulfilled, India needs to keep pace with the renewable energy adoption.

Year 2020 was a setback in terms of capacity addition and we have to make up with the deadline for solar capacity addition of 100 GW by 2022 is just one-and-half year’s time is left.

In terms of adoption of rooftop solar facilities we are way behind our targets.

Constraints around land allocation, grid availability, recurring financial instability of DISCOMs, tender design and PPA sanctity may lead to India missing its targets, Global Wind Energy Council has pointed out in its recent report.

Financially strained power distribution companies are slow in signing PPAs while many states have created uncertainty by not honouring some of the PPAs. And with over 90 GW installed capacity at the end of 2020, renewable energy accounts for approximately 24 percent of India’s total installed capacity.

Opportunities are huge going forward as the 2030 target of 450 GW set by the government has turned India into a fourth most attractive renewable energy market in the world.

So far, the sector has grown through government support, cheap imports of materials from China and low cost funds from multilaterial agencies.

Foreign capital is now getting attracted which is welcome as the country needs an estimated $500 billion to meet the 450 GW target.

Our current issue takes a look at all these aspects, the key challenges and opportunities.

Happy reading!

Dr Mahul Brahma Doctor of Letters, PhD

Articles are invited from industry partners for publication in Coal Insights. The selection of articles is subject to scrutiny by the editorial desk and its decision will be final and binding. The copyright of the published articles will be held by the publication.

Coal Insights, March 2021

3

CONTENTS 18 Seaborne thermal coal offers remain volatile in March 19 Seaborne coking coal offers fall in March 20 India’s January coal imports up 7% on year 21 CIL’s coal production marginally down till February 22 SCCL’s coal production down 24% till February 25 India’s methane emissions from coal mines rising: Report 26 India gets new Central power utility 27 FY21 power capacity addition lowest in 12 years 29 Power demand to rebound in FY22 31 India launches auctions for 2nd tranche of commercial mines 32 Power capacity addition at 810 MW in January 34 India’s cement production down 6% in January 35 February sponge iron production down 6% 37 Anglo American to demerge, list thermal coal biz 39 New South Wales flooding to impact coal shipments 40 US coal production estimated at 581 MMst in 2021 41 Traffic handled by major ports down 7% till February 42 Railways’ coal handling down 10% in April-February 45 Coal India approves 32 mining projects of 193 mtpa capacity 46 Corporate update 48 Government update

6 | COVER STORY

Renewable Energy: Finding its place under the Sun A comprehensive look at the state of Renewable Energy in India.

17 | COVER INTERVIEW “Solar tariff below `2 is not viable.

Rates will settle in the next 6-8 months” Solar energy expert Dr SP Gon Chaudhuri talks about factors affecting the sector.

23 | FEATURE Steel sector looks beyond coking coal Hydrogen may emerge a viable alternative.

36 | INTERNATIONAL

China to cap annual coal output at 4.1 billion tons by 2025 Number of mines will shrink to 4,000 from 4,700 now.

43 | INTERVIEW

“We believe and support the #VocalForLocal initiative” Tony Van Herbruggen, GM, Power Technique, Atlas Copco, talks about the localisation drive.

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: Kolkata

2. Periodicity of publication : Monthly

FORM IV (See Rule 8)

Whether citizen of India

Address

3. Printer’s Name

Whether citizen of India

: Amit Surana : Yes

4. Publisher’s Name

Whether citizen of India

Address

: Amit Surana : Yes : Tata Centre, 43 J L Nehru Road, Kolkata 700071

5. Editor’s Name

: Arindam Bandyopadhyay

6.

: Yes : Tata Centre, 43 J L Nehru Road, Kolkata 700071

Names and addresses of : mjunction services ltd individuals who own the Tata Centre, 43 J L Nehru Road, Kolkata 700071 newspaper and partners or shareholders holding more than one per cent of the total capital

I, Amit Surana, hereby declare that the particulars given above are true to the best of my knowledge and belief.

Sd/ Amit Surana Dated: March 2020 Publisher

4 Coal Insights, March 2021

COVER STORY

Renewable Energy: Finding its place under the Sun Sumit Maitra

6 Coal Insights, March 2021

COVER STORY

A

s part of the global community aware of its responsibility towards a cleaner climate and sticking to commitments on emission reduction, India has laid a strong emphasis on renewable energy generation with the target of achieving 175 GW of installed capacity by 2022 and 450 GW by 2030 wherein solar power will have the lion's share.

With active participation of the private sector and enabling regulatory and policy support created by the government, there is significant pipeline for renewables. Intense competition among project developers have ensured that tariffs – in solar and wind – touch the levels from where it can give meaningful competition to conventional energy particularly thermal.

There are some areas of weakness though including poor financial health of the Discoms and the lack of manufacturing base for Photo voltaic cells, storage facilities and other components needed to set up a renewable energy facility and distribute or store that power.

The Atmanirbhar initiative of the government aims to fill that gap by promoting domestic manufacturing and reducing dependence on imports particularly from China.

In solar capacity, India could add only 3.2 GW in 2020 as the market slumped due to Covid-related disruptions.

However, in the last auction held for solar energy procurement conducted by Gujarat Urja Vikas Nigam, there was encouraging response from bidders not only the private

sector but also from public sector represented

by Coal India and NTPC. Aiming global leadership in renewable energy

The country has also taken leadership role in the renewable sector with the launch of the International Solar Alliance (ISA).

Also, earlier in January, India entered into an agreement with International Energy Agency which will lead to strategic partnership to be jointly decided by the International Energy Agency (IEA) members and India and work on the Clean Energy Transitions Programme (CETP), such as energy security, clean and sustainable energy and energy efficiency among other areas.

Inaugurated in 2015 by Narendra Modi, Prime Minister of India and Francois Hollande, the then President of France, with the support of the international community at COP21, the UN Climate meet in Paris, ISA now has more than 80 member countries and is working towards the mission to unlock $1 trillion of investment in solar by 2030 while reducing the cost of the technology and its financing.

It is promoting the use of solar energy in agriculture, health, transport and power generation. The member countries drive changes by enacting policies and regulations, sharing best practices, agreeing common standards and mobilizing investments.

ISA has identified and designed new solar projects, supported governments to make their energy legislation and policies solar friendly, pooled demand for solar technology

Renewable energy generation

Source: CEA (prov)

“Implementation plans can never succeed without large scale affordable financial support. Given the devastating effect of the Covid-19 pandemic on the economy of many countries globally this will be a challenge.”

International Solar Alliance from different countries and cut down costs, improved access to finance by reducing the risks and making the sector more attractive to private investment and increased access to solar training, data and insights for solar engineers and energy policymakers.

Resource mobilisation for ISA is crucial and figures high on its list of priorities.

The newly appointed Director General, Ajay Mathur, plans to deepen and broaden the fund-raising activities.

“Implementation plans can never succeed

Wind and solar power generation

Source: CEA (prov)

Coal Insights, March 2021

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COVER STORY

“Solar tariff below `2 is not viable. Rates will settle in the next 6-8 months” RE sector in India has grown so far through government support, cheap imports of materials and low cost of capital. Will these factors continue to contribute towards the growth of the sector in coming days in terms of generation and storage?

The Atmanirbhar Bharat initiative encourages adoption of our own resources and manufacturing component within the country. While we reduce our imports from countries like China, there could be rise in project costs in the short term.

D

r Santi Pada Gon Chaudhuri is considered to be a pioneer and an expert in solar energy. With over 35 years of experience in the field of Renewable Energy, Dr Chaudhuri is a specialist in photovoltaic system engineering and design and has executed a large number of solar PV projects around India and abroad including designing and setting up India’s first off-grid solar power plant with mini grid. In 2016, he founded the International Solar Innovation Council that aims to catalyze global innovations for global population. He is currently associated with a number of projects and advises the private sector in executing their renewable energy strategy. Sumit Maitra of Coal Insights spoke to him on issues facing the sector.

16 Coal Insights, March 2021

Solar tariff has fallen below `2 per unit.

While it may be viable for NTPC which had put in the bid, the rate is reportedly not viable for many private sector players. What is your view?

The tariff of `1.99 is not very realistic and viable and it will go up from there.

Depending upon the location of a project, cost of generation would be about `3-4 per unit as per our calculations. We will find out the real cost structure in next six to eight months’ time and real pricing of solar power will emerge.

Government has raised duties on imports of materials needed for renewable energy. Will this drive up project costs?

There will be impact of the revised import

FEATURE

Steel sector looks beyond coking coal Hydrogen may emerge a viable alternative Coal Insights Bureau

T

he steelmaking industry is heavily dependent on coal based routes (directly and indirectly). CO2 emission from the steel industry projected to jump to 840 million tons (mt) over the next 3 decades from 242 mt now as India’s demand for steel quadruples to 490 mt.

“Going forward, low emission primary steelmaking technologies will be required to ensure the steel sector can reduce emissions to meet carbon mitigation goals of the country,” says Souvik Bhattacharjya, Associate Director, Centre for Resource Efficiency and Governance, TERI. As the steel demand set to increase, new primary steel making capacities are required alongside ambitious steel scrap policies for the secondary steelmaking industry to contribute.

Substantial R&D is currently being undertaken in recent years, focussing on carbon reduction technology which aims to save more than 80 percent of the CO2 emissions versus conventional technologies.

Hydrogen has been actively pursued as the clean fuel for the reduction process in

iron making. “The cost of steel production through hydrogen based direct reduction route will become competitive to BF-BOF route if hydrogen can be produced at $2.5$3.5/kg,” he said.

The projections for cost of hydrogen production from renewable route i.e. Green hydrogen will become less than Grey hydrogen (from fossil route) after 2030.

The Green hydrogen cost will be $2.3/ kg by 2030 making the business and environmental case for H2 based steel production, the TERI official said.

“Demand for hydrogen will rise sharply from 2030, speeding up after 2040 as, as the costs start to make sense based on locations,” he said.

Demand for green hydrogen could rise to around 9 mt by 2050 in a low carbon scenario, supported by strong government policies.

Smaller-scale demonstration projects will be needed during the 2020s to shore up the technical case for H2-DR in the Indian context.

“The suite of policy support would be required to accelerate transition. The steel companies need to tap the National hydrogen Mission in scaling up hydrogen

production. Choice of the technologies for H2 production: short, medium and long term,” he said.

Speaking at the 3rd Global Renewable Energy Investment Meeting and Expo in November, Prime Minister Narendra Modi had highlighted the importance of niche renewable technologies like hydrogen in the renewable energy mix.

Pursuant to that, launch of the National hydrogen Energy Mission was announced in the Budget 2021-22.

The National hydrogen Energy Mission aims to lay down the Government of India’s vision, intent and direction for hydrogen energy, strategies and approaches for realizing the vision.

“There is need for transition towards lower energy and zero carbon as per COP21 and develop world class products and reduce imports. Investments in R&D activity and innovation could help the steel industry to lower its future capital requirements and operating costs, while also increasing yields and reducing resource and energy use. These investments would ultimately help the industry become more efficient and economically viable,” Dr Mukesh Kumar, Director, Steel Research and Technology Mission of India said while addressing the recently held Indian Steel Markets Conference 2021 organised by mjunction services.

India’s steel demand is expected to grow to 230 mt by 2030-31 and the country needs production capacity of 300 mt.

Around 400 mt of iron ore, 160 mt of coking coal, 90 mt of limestone and 125 mt of non-coking coal would be required every year to produce that quantity.

“The cost of steel production through Hydrogen based direct reduction route will become competitive to BF-BOF route if Hydrogen can be produced at $2.5-$3.5/kg.”

Souvik Bhattacharjya, Associate Director, Centre for Resource Efficiency and Governance, TERI Coal Insights, March 2021

23

FEATURE

Coal block auction 2nd tranche launched

The launch of 2nd tranche of auction for commercial mining of coal in New Delhi on March 25

Coal Insights Bureau

T

he Coal ministry launched the 2nd tranche of auction for commercial coal mining offering 67 mines for sale of coal on March 25. The technical bids would be opened on May 28 and auction would be held on June 28.

This is the highest number of mines on offer in a particular tranche of auction since commencement of the auction regime in 2014.

Union Coal Minister Pralhad Joshi launched the auction process in a programme held in New Delhi.

Amitabh Kant, CEO, NITI Aayog and Anil Kumar Jain, Secretary, Ministry of Coal were also present on the occasion.

Out of the total 67 mines offered by the Ministry of Coal, 23 mines are under CM(SP) Act and 44 under MMDR Act. The coal mines on offer are a mix of mines with small and large reserves, coking and non-coking mines and fully and partially explored mines spread across 6 states of Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Maharashtra and Andhra Pradesh.

“We are making coal the driver of economic activities in the country. There are huge opportunities that the Indian coal sector is offering. Therefore, I invite investors to come and be a part of vastly untapped coal reserves in the country. Grow your businesses and take India along on the growth course,” Joshi said while launching the auction process.

“Commercial coal mining will bring in new investments, create huge employment opportunities and boost socio-economic development in coal-bearing states. A market-based coal economy will help the nation become Aatmanirbhar in coal.” Joshi added.

The Coal Minister also said looking at the past success, the government is moving towards adopting a ‘Rolling Auction’ mechanism for conducting future auctions.

Coal is the first mineral resource where rolling auction mechanism is being implemented in which a pool of coal blocks will always remain available for auctions.

“With rolling auctions, we will upload a comprehensive list of mines along with key technical data and bidders can submit their

preferences for the mines to be included in the next tranche of auction. This would be a continuous process and would result in expediting the auction setup. Moreover, it will also help bidders in planning better and would further enhance transparency in the system.” said Joshi.

Joshi also said that along with promoting commercial coal mining, the government is also looking at reforming the existing e-auction mechanism of Coal India and considering clubbing different e-auction windows of CIL into one. This will help in moving towards ‘One Price for One Coal Grade’.

Selling coal at market-determined prices through one e-auction window would help in simplifying the system and promoting transparency.

“Start of commercial coal mining is the most revolutionary and progressive measure taken in the coal sector of the country. It will bring the leading miners with latest technologies and cost competitiveness in the Indian coal sector. Indian coal sector will witness huge improvements in productivity and modernisation.” Amitabh Kant, CEO, NITI Aayog said in his address.

“In this tranche of auction, special emphasis has been given on protection of the environment. Coal blocks have been selected in those areas where forest cover is low, coal quality is good, mines are close to the infrastructure facilities and resettlement & rehabilitation has to be done at the minimum.

More coking coal mines have been offered so that India’s import of coking coal can also be reduced,” Anil Kumar Jain, Secretary, Ministry of Coal said while speaking in the function.

Notably, 19 mines were successfully auctioned in the first-ever tranche of commercial coal mining auctions held last year with the premium quoted by the successful bidders ranging from 9.5 percent to 66.75 percent.

The agreements between the Ministry of Coal and the successful bidders were signed in January this year. States will fetch around `7,000 crore of revenues from these auctions considering production at peak rated capacity of 51 million tons per annum.

Coal Insights, March 2021

31

INTERNATIONAL

China to cap coal output at 4.1 bt a year by 2025

Coal Insights Bureau

C

hina’s annual coal output will be capped at 4.1 billion tons (bt) by 2025, after it climbed 1.4 percent year-on-year to 3.9 bt in 2020, said a report issued by the China National Coal Association. The number of coal mines will shrink to about 4,000 by the end of 2025 from about 4,700 at the end of 2020, and of the total, more than 1,000 will be equipped with smart mining technology, the report said.

Annual coal consumption will be kept to around 4.2 bt at the end of 2025, it said.

Mergers and acquisitions will be encouraged amid efforts to eliminate backward coal production capacity in the next five years and 10 super large coal enterprises will be established each with an annual output of 100 million tons (mt), it said.

The coal sector has been tackling overcapacity in the past five years. By the end of last year, about 5,500 coal mines had been closed and about 1 bt of annual coal output capacity had been eliminated, it said.

36 Coal Insights, March 2021

On the other hand, China has built some 1,200 large and modern coal mines, each with an annual output capacity above 1.2 mt, which contribute about 80 percent of the country’s total coal output.

Towards carbon-neutral future

Almost half a year after Chinese President Xi Jinping’s pledge to make the country carbonneutral before 2060, the roadmap to achieve the goal is getting clearer as authorities and industries scale up their green efforts.

China aims to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060, Xi had announced in September.

Since then, vigorous policies have been rolled out on top of the already hefty input in green development.

At a meeting of the Central Committee for Financial and Economic Affairs recently, Xi called for incorporating the peaking of carbon emissions and carbon neutrality into the overall layout of building an ecological civilisation.

“Peaking carbon emissions and achieving

carbon neutrality is a tough battle, it is also a major test of the party’s capabilities in governing the country,” the meeting stressed.

While China’s economic rise over the past decades was largely powered by coal, the country, now among the world’s biggest investors in green energy, is increasing pace to shift to other renewables including wind and solar.

Starting in February, China implemented a set of interim rules for the management of carbon-emissions trading designed to drive down the emissions of big power users.

Under the scheme, firms that exceed the emission caps can buy emission quotas from others with a lower carbon footprint.

A total of 2,225 power firms are included in the project. More fields, such as the steel and aluminum production sectors, will be included in future carbon trading.

The share of clean energy consumption in the country has risen from 19.1 percent in 2016 to 24.3 percent in 2020, data by the National Bureau of Statistics showed.

While addressing the Climate Ambition Summit in December year, Xi announced that by 2030, China aims to lower its carbon dioxide emissions per unit of GDP by over 65 percent from the 2005 level and increase the share of non-fossil fuels in primary energy consumption to around 25 percent.

To move toward the goal, energy consumption per unit of GDP and carbon dioxide emissions per unit of GDP in 2021 will be reduced by 13.5 percent and 18 percent, respectively, according to this year’s government work report, which also promised to draw up an action plan for peaking carbon emissions before 2030.

While expanding the use of green energy, bringing down carbon emissions to net zero, which means achieving a balance between emitting carbon and absorbing carbon, will require the development of new technologies to capture and store emissions.

The recent meeting called for efforts to push forward major breakthroughs in green and low-carbon technologies and accelerate the promotion and application of such technologies for reducing pollution and carbon emissions.

54 Coal Insights, March 2021

Tear along the dotted line

Tear along the dotted line