The Centre is set to include a provision to promote coal gasification technologies in upcoming coal block auctions, a senior government official said, aiming to convert untapped coal reserves into usable synthetic gases and reduce environmental impact.

The provision could be introduced as early as the 14th round of commercial and captive coal mine auctions, though dates are yet to be announced. The focus will be on underground coal gasification (UCG), which has lower capital costs and reduced environmental footprint compared with conventional methods.

Coal gasification converts coal into syngas, a mixture of synthetic gases, which can produce cleaner fuels and chemicals such as hydrogen, ammonia, methanol, and ethanol. While it cannot fully replace direct coal use for industry or electricity, it offers a decarbonised alternative.

In January 2024, the Union Cabinet approved an incentive scheme for coal and lignite gasification projects, allocating Rs 8.5 billion to promote syngas production in both public and private sectors. The government aims to achieve 100 million tonnes of coal gasification by 2030, though uptake has been limited to a few central public sector undertakings, including Coal India Ltd, NLC India Ltd, BHEL, GAIL, Jindal Steel Limited, as well as private firms New Era Cleantech and Greta Energy.

High costs have slowed adoption, prompting a focus on underground coal gasification, which is cheaper than surface-level processes. UCG does not require mining, washing, or large surface gasifiers, relying only on drilling rigs, injection wells, and production wells.

During the 13th round of commercial coal mine auctions on 21 August, Minister for Coal and Mines G. Kishan Reddy highlighted that over 40 per cent of India’s coal resources, approximately 370 billion tonnes, are deep-seated and unmineable using conventional methods. “Underground coal gasification allows these untapped reserves to be converted directly into syngas, unlocking energy potential while reducing land use and surface disruption,” he said.

Eastern Coalfields Ltd (ECL) launched India’s first pilot UCG project at the Kasta coal block in Jharkhand, demonstrating in-situ conversion of coal into valuable gases. The upcoming auction rounds may for the first time allow coal miners to adopt UCG commercially, expanding opportunities for decarbonisation in hard-to-abate sectors.

To date, India has auctioned 134 coal mines, attracting Rs 41.6 billion in investment and generating over 350,000 jobs, none of which included provisions for coal gasification. The new clause is expected to transform coal utilisation, providing cleaner alternatives for industry and supporting the country’s energy transition.