With steel, chemicals & fertilisers, ceramics, glass, and various other industries reeling under inadequate gas availability, experts have called for fast-tracking coal gasification projects to boost domestic availability of the material that is both a fuel and feedstock for multiple industries.
India has the world’s fourth-largest coal deposits, which serve as a significant lever for managing global energy supply shocks like the present one.
The Indian government has set a target of 100 million tonnes of coal gasification capacity by 2030, aiming to reduce the country’s reliance on imports of natural gas and other critical items such as methanol and ammonia, and curb emissions. It approved an outlay of Rs 8,500 crore in 2024 as a financial incentive to promote coal/lignite gasification projects for both government PSUs and the private sector.
However, progress toward the goal has been slow, primarily due to technological and economic constraints, with major projects still in the planning or pilot stages. “Only a handful of commercial-scale projects are moving forward,” experts said, adding that the high ash content of Indian coal is a major hindrance, as it is not suitable for many available global gasification technologies.
Overcoming Technical Hurdles
Former SAIL CMD Anil Chaudhary said, “Coal gasification is technically mature but globally ‘unpopular’ because, relative to modern low-carbon options, it combines high capex, high water use and high lifecycle emissions in a policy environment that is moving away from coal. These limitations need to be addressed through technology adaptations, policy incentives and operational optimisations, including integrated CCUS, to make this technology viable.”
In the gasification process, coal is converted into syngas, a gaseous mixture of hydrogen, carbon monoxide, carbon dioxide, and methane. Syngas is used in heavy industries that require heat treatment. The coal gasification process has a lower environmental impact than coal combustion. During gasification, the emitted carbon dioxide is fully recycled into the process, and the hydrogen sulphide is typically used to produce sulphur.
China is the global leader, operating more than 9,000 gasifiers using around 400 million tonnes of coal a year. This large-scale coal utilisation has helped the country cushion its industrial sector, particularly the chemicals and fertilisers sectors, from external supply shocks to a significant extent. Dakota Gasification Company in the US uses 18,000 tonnes of lignite daily to produce syngas.
Jindal Steel operates a coal gasification unit at its Angul facility in Odisha. To overcome the challenge of natural gas unavailability, the company set up a coal gasification plant at its Angul facility in 2014, which uses high-ash coal to produce syngas for its steel plant.
Though the investment was high, it was offset by the system’s improved energy efficiency compared to the conventional steel production model, reduced long-term environmental impact, and waste utilisation. All seven by-products from the Syngas plant are either recycled for internal use or sold to external parties.
Similarly, a fertiliser unit by Talcher Fertiliser is coming up that will use gas from the coal gasification unit as a feedstock. Some other PSUs, including CIL, GAIL and NTPC, are also joining in the fray.
Strategic Resource Optimisation
Metal and mining expert Hridaya Mohan said, “Coal gasification offers India a pragmatic pathway to use its vast coal reserves more efficiently while reducing the emissions intensity of heavy industries like steel and chemicals. For a country where imported natural gas and coking coal add to strategic vulnerabilities, gasification can convert domestic coal into syngas, methanol and hydrogen—creating both industrial value and greater energy security.”
M N Dastur’s Gaurav Verma said, “Coal gasification is not about prolonging coal utilisation — it is about strategic resource optimisation and safeguarding against vulnerability of import dependence. For coal gasification in India, timing is strategic, not procedural. Geopolitical uncertainty and energy market disruptions necessitate converting domestic coal into syngas, chemicals and various fuels that can enhance industrial resilience and resource security.”
“The future of coal in India lies not in burning it, but in converting it into gases, chemicals and cleaner fuels that strengthen industrial resilience and national energy security in geopolitical instability,” said Mohit Kapoor, advisor to AIIFA Sustainable Steel Manufacturers Association.
“For India to reach 100 MT of coal gasification, it would need roughly 15–20 large gasification complexes. Each project can cost ₹10,000–25,000 crore, depending on scale. So the project pipeline must expand rapidly between 2026 and 2030. This would be possible only if large integrated projects in steel, fertiliser and chemicals are executed simultaneously,” Mohan said.