By Somit Dasgupta
There is an old English idiom, almost a cliché, that goes “one step forward, and two steps back”. This is how one can aptly describe our approach on the subject of flue gas desulphurisers (FGDs). FGDs are used to remove sulphur dioxide (SO2) from the flue gases emitted by coal/gas-based power stations. This should not be confused with decarbonisation since it has nothing to do with carbon dioxide and in fact, sulphur dioxide is not even one of the greenhouse gases (GHGs). Yes, the presence of SO2 does add to particulate matter (PM2.5) which can have an adverse effect on our health, especially the respiratory system, through environmental pollution.
In 2015, the ministry of environment, forest and climate change (MoEFCC) introduced new environmental norms for coal-based generation in India. These norms were comparable to world standards; for example, sulphur oxides (SOx) and nitrogen oxides (NOx) were limited to 100 milligrams per normal cubic meter (mg/nm3), particulate matter shouldn’t be higher than 30 mg/nm3, mercury was limited to 0.03 mg/nm3, and water was to be less than 3 cubic meters per megawatt-hour (m3/Mwh). All power stations were to install the FGDs by 2017. However, there was no progress in the matter for various reasons.
Unrealistic targets
The two-year time frame which was given for implementation was not practical, as there was hardly any domestic capacity available for the manufacture of FGDs. Besides, the entire installation process actually takes three years and hence a two-year time frame was inexplicable. Then there was the issue of the cost of FGDs, which could vary from Rs 0.5 crore per Mw to Rs 1.2 crore per Mw. The cost of retrofitting an FGD was higher when compared to planning for one at the drawing stage itself. As there was no standardised cost of FGDs, it proved to be a dilemma for regulators since what they approved would have a direct bearing on generation tariff—which would ultimately increase retail tariff. It had been estimated that on an average, the fixed cost for a generator would go up by 70 paise per unit and there would be some increase in operation expenses also—to the tune of something between 3 paise and 8 paise per unit—due to the use of limestone. The increase in operating expenses would discriminate against those generators who install FGDs since they would go down in the merit-order dispatch compared to the ones who don’t install FGDs. The regulators got around this problem by saying that the increase in operational expenses for installing FGDs would be ignored while deciding upon the merit-order dispatch. The government also indicated that installation of FGDs should be treated as “change in law” and hence, the regulators should allow this as a legitimate expense. All the factors put together ensured that only a handful of generators installed FGDs and the percentage of total coal-based capacity which has installed the equipment is in single digits even today.
A policy reversal
The initial deadline of 2017 was extended to 2022 and before the new deadline itself, the government in 2021 created three categories of generators. Category A consisted of those generators who were within 10 km of the National Capital Region and other cities with a population of more than one million. Category B included those generators who were within a 10-km radius of critically polluted areas or non-attainable cities (meaning where air quality was poor); and Category C consisted of all power stations which did not fall in either Category A or B. The extended deadline was 2022 for Category A, 2023 for Category B, and 2024 for Category C. In July 2022, the deadlines were further extended to 2024, 2025, and 2026 for the three categories respectively. Yet another extension was announced in December 2024, pushing the dates to 2027, 2028, and 2029.
This is how things stood till July 11, when the MoEFCC did a volte face. It announced that only Category A power stations have to put up FGDs necessarily. With regard to Category B stations, it would be decided on a case-to-case basis by an expert committee. Category C has been totally exempted from installing FGDs. Also exempt are those stations that are going to retire by 2030. The reasoning given was that practically no difference was observed in the SO2 emissions in those cities which had power stations with FGDs installed as against those which had power stations with no FGDs. Ironically, there is a study which opines that installation of FGDs may decrease SO2 but will increase the carbon dioxide in the atmosphere! Also the contribution of SO2 in the entire volume of particulate matter (PM 2.5) is negligible. It would be interesting to note that practically 78% of the installed coal-based capacity was in Category C that now doesn’t have to install FGDs. Only 11% was in Category A and another 11% in Category B. So, as of now, only 11% of the capacity has to install FGDs necessarily.
This turnaround is a death knell for many firms, including one Maharatna company in the public sector which has invested heavily for the manufacture of FGDs. Their market has suddenly vanished and one has no idea what is going to happen to the power stations clubbed in Categories B and C that may have already placed orders for FGDs. What will happen to all the investments made by FGD manufacturers and how they will recoup the money is a big question.
Doing a complete turnaround after 10 years of announcing a policy with a lot of fanfare is embarrassing to say the least. We all knew from the start that Indian coal is low on sulphur and hence, the production of SO2 would be minimal. So why did we decide to install FGDs lock, stock, and barrel? Instead of ordering all coal plants to install FGDs as we did in 2015, a pilot study could have been conducted to study the effects of FGD installation. In the manner that we have gone about, a lot of money has gone down the drain and one is sure to witness many red faces.
The writer is senior visiting fellow, ICRIER.
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