Coal will be central to India’s energy mix for at least another decade, and moving away from it poses a massive challenge.

For a just transition away from coal, India will require over $1 trillion or Rs 84 lakh crore over the next 30 years, according to a study by environment and climate change research think-tank iForest (International Forum for Environment, Sustainability and Technology).

The first-of-its-kind study, published last week, attempted to estimate the cost of phasing down coal mines and coal plants, along with the costs of ensuring socio-economic stability in coal-dependent regions.

Coal will be central to India’s energy mix for at least another decade, and moving away from it poses a massive challenge.

What will a ‘just’ energy transition look like?

• The term “just” here refers to an equitable and inclusive shift towards a low-carbon economy, which will keep in mind the interests of fossil-fuel dependent workers and societies.
• India is currently the second-largest producer of coal globally, with a vast number of people employed in the industry. According to a PIB press release from March this year, public sector coal-producing entities alone employ a workforce of 3,69,053 individuals. Many more individuals are employed in the private sector, thermal power plants that run on coal, transportation, logistics, etc.
• As India grows its renewable energy capacity to achieve net zero emissions — amount of greenhouse gas emitted which are offset in the atmosphere and/or with technology — by 2070, it will be important to not leave behind those who depend on coal for their livelihoods. But such a transition will not be cheap.

What are the costs associated with a just transition?

• Based on assessments of four heavily coal-dependent districts in India, and review of just transition economic plans in South Africa, Germany and Poland, the study arrived at eight broad cost components.
• These include the cost of mine closures and repurposing, retirement of coal plants and repurposing of the sites for clean energy, labour skilling for green jobs, economic diversification in the form of new businesses, community support, investments for green energy, revenue substitution for covering loss to states, and planning costs.
• Roughly 48% of the $1 trillion that the study estimates will be required to meet these costs over the next 30 years will go towards green investments for building energy infrastructure, which will have to replace coal mines and coal-fired plants.

Where will the funds for a just transition come from?

A combination of public funding, through grants and subsidies, and private investments in green energy plants and infrastructure will be required to fund the costs. India has nearly $4 billion in district mineral foundations funds, with monies collected from miners. This fund can be used as a resource, along with Corporate Social Responsibility (CSR) funds, for supporting new businesses in coal districts, and to support communities.

How have other countries approached a just transition?

• Both developed and developing countries have adopted legislation or opted for investment plans with international funding to phase-down coal use.
• South Africa’s Just Energy Transition Investment Plans (JET-IP), for instance, will see it getting financial support for phasing down coal from the UK, France, Germany, the US, the European Union, the Netherlands, and Denmark.
• A sum of $98 billion will be required over the next two decades to support South Africa’s 20-year energy transition, with $8.5 billion to be supplied in the 2023-2027 period. A bulk of this will be for green energy investments .
• The finance will be provided in the form of concessional loans, grants, and public-private partnerships.
• Germany, meanwhile, enacted laws to phase out coal power by 2038, and sanctioned an outlay of over $55 billion to close coal mines and coal-powered plants, while supporting development of coal dependent regions.

What did the study of four coal-dependent districts in India find?

• The districts identified were Korbain Chhattisgarh, Bokaro and Ramgarh in Jharkhand, and Angul in Odisha. These were studied to assess their economic dependence on coal and coal-based industries, and to estimate the costs of a just transition.
• For instance, it was found that the coal-based economy of Bokaro, with its multiple coal plants and one integrated steel plant, contributes to about 54% of the district’s domestic product. Around 1,39,000 workers were employed in coal mining, at coal plants, and in allied sectors, such as steel and cement.

A full phase-down of coal in the district, the study estimated, will begin after 2040. It will require an outlay of Rs 1.01 lakh crore over the next three decades to rehabilitate workers, repurpose mines, and start green energy production at locations where coal plants stand today.