REPORT ON COAL

SUBMITTED BY:ABHAY AGARWAL MBA E.T (II SEM.) R590209002

TABLE OF CONTENTS:1. Executive Summary 2. Coal Mining In India: the Past 3. Coal choice for Indian Energy 4. Coal Reserves in India 5. Inventory of Coal Resources of India 6. Types of Coal & Challenges 7. Uses of coal 8. Coal Production in India 9. List of Countries by Coal Production 10. Demand & Supply 11. Current State & Forecast of Coal Demand 12. Changes in Coal Consumption by Sectors Coal Consumption in Electricity Coal Consumption in Iron & Steel Sector Coal Consumption in Cement Industry 13. Forecast on Coal Demand By Planning Commission By Ministry Of Coal 14. Coal Distribution & Marketing 15. Import Of Coal 16. Major Coal Importers 17. Major Coal Exporters 18. Foreign Colloboration 19. Coal Consumer Councils 20. Environmental Effects 21. Economic Aspects 22. Functions Of Ministry Of Coal 23. Public Sector Companies 24. Coal As A Trading Commodity 25. Coal Trading Basics Introduction Background Price Volatility Brokers Standardized Contracts Trading Instruments Benefits Of Trading Pragnosis Of Coal

26. Coal Trading Association 27. Coal Value Chain 28. Coal Prices in 2010 29. SWOT Analysis 30. Cost Benefit Analysis 31. Challenges Of Coal Industry 32. Conclusion

EXECUTIVE SUMMARY:Electricity production in India is projected to expand dramatically in the near term to energize new industrial development, while also easing the energy shortages throughout the country. Much of the new growth in electricity production will be fueled by domestic coal resources; however, there is worldwide concern about increased coal use, as greater carbon dioxide (CO2) emissions from coal combustion will exacerbate climate change. At the same time, there are now a number of different existing and emerging technological options for coal conversion and greenhouse gas (GHG) reduction worldwide that could potentially be useful for the Indian coal-power sector. This paper, part of a series of Pew Center White Papers exploring strategies for reducing CO2 emissions from coal-powered electricity, reviews coal utilization in India and examines current and emerging coal power technologies with near- and long-term potential for reducing greenhouse gas emissions from coal power generation. According to the Ministry of Coal, India is currently the third largest producer of coal in the world, with a production of about 407 million tons (MT) of hard coal and 30 MT of lignite in 200506. India has significant coal resources, but there is considerable uncertainty about the coal reserve estimates for the country. Without improvements in coal technology and economics, the existing power plants and the new plants added in the next 1015 years could consume most of Indias extractable coal over the course of the plants estimated 40- to 50-year lifespans. Indian coal demand, driven primarily by the coal power sector, already has been outstripping supply; over the past few years, many power plants have restricted generation or have partially shut down because of coal supply shortages. Hence, heavy investments in the coal sector, particularly in underground mining, will be needed to increase the pace of domestic coal production. Coal imports are also projected to increase significantly over the next 20 to 25 years, with important implications for the Indian coal industry, as well as for the national and financial security of the country. The demand for coal in Indias power plants has rapidly increased since the 1970s, with power plants in 200506 absorbing about 80% of the coal produced in the country. Other

key coal consumers are the steel and cement industries. A large fraction of Indias coal is transported using railways, and the future development of coal is linked to greater investments in coal transport infrastructure. The demand for coal in India is expected to increase rapidly in the future, dominated mainly by the power sector. It is projected that about 47 gigawatts (GW) of new coal-based power plants will be installed during the 20072012 period; total consumption of coal in the power sector is expected to be about 550 MT by 2012. Nearly all Indian coal power plants rely on one technology for converting coal to electricity: steam-based subcritical pulverized coal (PC). While the unit size and efficiency of Indian coal power plants have improved over the years, the basic technology has remained the same for nearly three decades. Bharat Heavy Electricals Limited (BHEL) is the main manufacturer of power plants in India; the companys technology is used in about 70% of power plant units, accounting for more than 50 GW of installed coal-based capacity in the country. The current standard is the BHEL 500 MW subcritical PC unit with assisted circulation boilers and turbo-driven boiler-feed-pumps. Currently, more than 25 of these units are in operation with an average designed gross-efficiency of 38% and net operating efficiency of 33%. Although the efficiency of coal-based power plants in India has improved in recent years, the average net efficiency of the entire fleet of coal power plants in the country is only 29%. The poor efficiency in India is blamed on a variety of technical and institutional factors such as poor quality of coal, bad grid conditions, low plant load factor (PLF), degradation due to age, lack of proper operation and maintenance at power plants, ineffective regulations, and lack of incentives for efficiency improvements. Studies have indicated that there is ample scope to improve the efficiency of existing power plants by at least 1 2 percentage points. Key environmental concerns in the coal-power sector in India include air pollution (primarily from flue gas emissions of particulates, sulfur oxides, nitrous oxides, and other hazardous chemicals); water pollution; and degradation of land used for fly ash storage. Furthermore, the poor quality of Indian coal, with its high ash content and low calorific values, has led to increased particulate pollution and ash disposal problems. Regulations that limit pollution from power plants are focused mainly on particulate matter emissions and ambient air quality standards for sulfur oxides (SOx) and nitrogen

oxides (NOx), although the enforcement of these regulations has been weak. The demand for electricity is so great that plants that violate the norms are not shut down, despite legal obligations to do so. With the projected increase in installed capacity, a key challenge for the government is to effectively enforce and tighten its existing regulations. Indias CO2 emissions have been increasing at an average annual rate of 5.5% from 1990 to 2000, with coal accounting for about 70% of total fossil-fuel emissions. Although India is now the fourth largest emitter of CO2 emissions worldwide, its total emissions are still about one-fifth and one-third of emissions from the United States and China, respectively; measured on a per capita basis, Indias carbon emissions are almost onetwentieth those of the U.S. and less than half those of China. Options to reduce CO2 emissions from coalbased power plants include: a) increasing efficiency of energy conversion by increasing the efficiency of existing power plants and switching to new, higher-efficiency technologies; b) using less carbon-intensive fuels or mixtures of fuels (such as coal-biomass mixtures); and c) capturing and storing CO2 from power plants. Many advanced power-generation technologies are under consideration for the Indian power sector, including supercritical PC, circulating fluidized-bed combustion, and integrated gasification combined cycle (IGCC). There is already one plant based on supercritical PC technology under construction in India, and many more are being planned, although a large fraction of the new plants continue to be based on subcritical PC technology. Gasification of Indian coal is not practical with standard entrained flow gasifiers because of the high ash content and high ash-fusion temperature of most Indian coals. Consequently, the less advanced fluidizedbed gasifier technology is being considered for use with Indian coal. Carbon capture with amine scrubbers in Indian power plants would require low pollutant levels in flue gas in order to be technologically and economically viable, as pollutants would bind with the amine and reduce its absorptive capacity. Carbon capture using scrubbers also would result in lower capacity and efficiency, and high generation costs. As a result, India would need higher-efficiency power plants as a precursor to any possible retrofitting for carbon capture. There is, however, plenty of projected geological storage capacity, although detailed geological assessments of specific storage sites needs

to be done. Early demonstration of storage also could be combined with CO2-based enhanced oil and gas recovery. Finally, it is far from clear what the appropriate technology choices might be for India, as all of the current and emerging technologies worldwide have their strengths and limitations. Therefore, it is critical not only to consider and implement technologies that meet the near-term needs of the country but also to set the coal-based power sector on a path that would allow it to better respond to future challenges, including the challenge of reducing GHG emissions. It will be necessary for India to undertake a systematic analysis of the various technical options best suited to the countrys unique characteristics, and an analysis of the best approaches for deployment.

COAL MINING IN INDIA: THE PAST

COAL MINING IN INDIA: THE PAST

India has a long history of commercial coal mining covering nearly 220 years starting from 1774 by M/s Sumner and Heatly of East India Company in the Raniganj Coalfield along the Western bank of river Damodar. However, for about a century the growth of Indian coal mining remained sluggish for want of demand but the introduction of steam locomotives in 1853 gave a fillip to it. Within a short span, production rose to an annual average of 1 million tonne (mt) and India could produce 6.12 mts. per year by 1900 and 18 mts per year by 1920. The production got a sudden boost from the First World War but went through a slump in the early thirties. The production reached a level of 29 mts. by 1942 and 30 mts. by 1946. With the advent of Independence, the country embarked upon the 5-year development plans. At the beginning of the 1st Plan, annual production went upto 33 mts. During the 1st Plan period itself, the need for increasing coal production efficiently by systematic and scientific development of the coal industry was being felt. Setting up of the National Coal Development Corporation (NCDC), a Government of India Undertaking in 1956 with the collieries owned by the railways as its nucleus was the first major step towards planned development of Indian Coal Industry. Along with the Singareni Collieries Company Ltd. (SCCL) which was already in operation since 1945 and which became a Government company under the control of Government of Andhra Pradesh in 1956, India thus had two Government coal companies in the fifties. SCCL is now a joint undertaking of Government of Andhra Pradesh and Government of India sharing its equity in 51:49 ratio.

NATIONALISATION OF COAL MINES

Nationalisation of Coal Mines

Right from its genesis, the commercial coal mining in modern times in India has been dictated by the needs of the domestic consumption. On account of the growing needs of the steel industry, a thrust had to be given on systematic exploitation of coking coal reserves in Jharia Coalfield. Adequate capital investment to meet the burgeoning energy needs of the country was not forthcoming from the private coal mine owners. Unscientific mining practices adopted by some of them and poor working conditions of labour in some of the private coal mines became matters of concern for the Government. On account of these reasons, the Central Government took a decision to nationalise the private coal mines. The nationalisation was done in two phases, the first with the coking coal mines in 1971-72 and then with the non-coking coal mines in 1973. In October, 1971, the Coking Coal Mines (Emergency Provisions) Act, 1971 provided for taking over in public interest of the management of coking coal mines and coke oven plants pending nationalisation. Another enactment, namely the Coal Mines (Taking Over of Management) Act, 1973, extended the right of the Government of India to take over the management of the coking and noncoking coal mines in seven States including the coking coal mines taken over in 1971. This was followed by the nationalisation of all these mines on 1.5.1973 with the enactment of the Coal Mines (Nationalisation) Act, 1973 which now is the piece of Central legislation determining the eligibility of coal mining in India.

COAL CHOICE FOR INDIAN ENERGY

COAL CHOICE FOR INDIAN ENERGY:COAL is the most important and abundant fossil fuel in India. It accounts for 55% of the country's energy need. The country's industrial heritage was built upon indigenous coal. Commercial primary energy consumption in India has grown by about 700% in the last four decades. The current per capita commercial primary energy consumption in India is about 350 kgoe/year which is well below that of developed countries. Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise around 450 kgoe/year in 2010. Considering the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India 's energy scenario. With hard coal reserves around 246 billion tonnes, of which 92 billion tonnes are proven, Indian coal offers a unique ecofriendly fuel source to domestic energy market for the next century and beyond. Hard coal deposit spread over 27 major coalfields, are mainly confined to eastern and south central parts of the the country. The lignite reserves stand at a level around 36 billion tonnes, of which 90 % occur in the southern State of Tamil Nadu.

COAL RESERVES IN INDIA

Coal Reserves In India:-

India has some of the largest reserves of coal in the world (approx. 267 billion tonnes). The energy derived from coal in India is about twice that of energy derived from oil, whereas worldwide, energy derived from coal is about 30% less than energy derived from oil. The top producing states are:

Orissa - Talcher in Anugul district Chattisgarh Jharkhand

Other notable coal-mining areas include:

Singareni collieries in Khammam district, Andhra Pradesh Jharia mines in Dhanbad district, Jharkhand Orissa Chandrapur district, Maharashtra Raniganj in Bardhaman district, West Bengal Neyveli lignite mines in Cuddalore district, Tamil Nadu

Coal Reserves In India Through Map :-

INVENTORY OF COAL RESOURCES OF INDIA

As a result of exploration carried out up to the depth of 1200m by the GSI, CMPDI and MECL etc, a cumulative total of 267.21 Billion tonnes of Geological Resources of Coal have so far been estimated in the country as on 1.4.2009. The state-wise distribution of coal resources and its categorisation are as follows: (in Million Tonnes) State Geological Resources of Coal Proved Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Jharkhand Madhya Pradesh Maharashtra Meghalaya Nagaland Orissa Sikkim Uttar Pradesh West Bengal Total 9194 31 348 0 10910 39480 8041 5255 89 9 19944 0 866 11653 105820 Indicated 6748 40 36 0 29192 30894 10295 2907 17 0 31484 58 196 11603 123470 Inferred 2985 19 3 160 4381 6338 2645 1992 471 13 13799 43 0 5071 37920 Total 18927 90 387 160 44483 76712 20981 10154 577 22 65227 101 1062 28327 267210

Categorisation of Resources: The coal resources of India are available in sedimentary rocks of older Gondwana

Formations of peninsular India and younger Tertiary formations of north-eastern/ northern hilly region. Based on the results of Regional/ Promotional Exploration, where the boreholes are normally placed 1-2 Km apart, the resources are classified into Indicated or Inferred category. Subsequent Detailed Exploration in selected blocks, where boreholes are less than 400 meters apart, upgrades the resources into more reliable Proved category. The Formation-wise and Category-wise coal resources of India as on 1.4.2009 are given below: (in Million Tonnes) Formation Gondwana Coals Tertiary Coals Total Proved 105343 477 105820 Indicated 123380 90 123470 Inferred 37414 506* 37920* Total 266137 1073 267210

* Includes 456 Mt of Inferred resources established through mapping in NE region.

The Type and Category-wise coal resources of India as on 1.4.2010 are given in table below: (in Million Tonnes) Type of Coal (A) Coking :-Prime Coking -Medium Coking -Semi-Coking Sub-Total Coking (B) Non-Coking:(C) Tertiary Coal Grand Total 4614 12449 482 17545 87798 477 105820 699 12064 1003 13766 109614 90 123470 0 1880 222 2102 35312 506 37920 5313 26393 1707 33413 232724 1073 267210 Proved Indicated Inferred Total

Status of Coal Resources in India during Last Five Years: As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and SCCL etc, the estimation of coal resources of India has reached to 267.21 Bt. The estimates of coal resources in the country during last 5 years are given below:
(in Million Tonnes)

As on

Geological Resources of Coal Proved Indicated 116174 117090 119769 118992 120177 124216 123470 Inferred 37888 37797 37666 38260 38144 38490 37920 Total 245693 247847 253301 255172 257381 264535 267210

1.1.2004 1.1.2005 1.1.2006 1.1.2007 1.4.2007 1.4.2008 1.4.2009

91631 92960 95866 97920 99060 101829 105820

Types of Coal & Characteristics

Types of Coal & Characteristics:As geological processes apply pressure to dead biotic material over time, under suitable conditions it is transformed successively into following types:

Peat, considered to be a precursor of coal, has industrial importance as a fuel in some regions, for example, Ireland and Finland. In its dehydrated form, peat is a highly effective absorbent for fuel and oil spills on land and water

Lignite, also referred to as brown coal, is the lowest rank of coal and used almost exclusively as fuel for electric power generation. Jet is a compact form of lignite that is sometimes polished and has been used as an ornamental stone since the Iron Age

Sub-bituminous coal, whose properties range from those of lignite to those of bituminous coal are used primarily as fuel for steam-electric power generation. Additionally, it is an important source of light aromatic hydrocarbons for the chemical synthesis industry.

Bituminous coal, dense mineral, black but sometimes dark brown, often with well-defined bands of bright and dull material, used primarily as fuel in steamelectric power generation, with substantial quantities also used for heat and power applications in manufacturing and to make coke

Steam coal is a grade between bituminous coal and anthracite, once widely used as a fuel for steam locomotives. In this specialized use it is sometimes known as sea-coal in the U.S.[2] Small steam coal (dry small steam nuts or DSSN) was used as a fuel for domestic water heating

Anthracite, the highest rank; a harder, glossy, black coal used primarily for residential and commercial space heating. It may be divided further into metamorphically altered bituminous coal and petrified oil, as from the deposits in Pennsylvania

Graphite, technically the highest rank, but difficult to ignite and is not so commonly used as fuel: it is mostly used in pencils and, when powdered, as a lubricant.

The classification of coal is generally based on the content of volatiles. However, the exact classification varies between countries. According to the German classification, coal is classified as follows:

Name

Volatile %

Carbon %

Hydrogen %

Oxygen %

Heat content kJ/kg

Braunkohle (Lignite) Flammkohle (Flame coal) Gasflammkohl e (Gas flame coal) Gaskohle (Gas coal) Fettkohle (Fat coal) Esskohle (Forge coal) Magerkohle (Non bakingcoal) Anthrazit (Anthracite)

45-65

60-75

6.0-5.8

34-17

<28470

40-45

75-82

6.0-5.8

>9.8

<32870

35-40

82-85

5.8-5.6

9.8-7.3

<33910

28-35

85-87.5

5.6-5.0

7.3-4.5

<34960

19-28

87.5-89.5

5.0-4.5

4.5-3.2

<35380

14-19

89.5-90.5

4.5-4.0

3.2-2.8

<35380

10-14

90.5-91.5

4.0-3.75

2.8-3.5

35380

7-12

>91.5

<3.75

<2.5

<35300

Uses Of Coal

Uses Of Coal:For many centuries, coal was burned in small stoves to produce heat in homes and factories. Today, the most important use of coal, both directly and indirectly, is still as a fuel. The largest single consumer of coal as a fuel is the electrical power industry. The combustion of coal in power generating plants is used to make steam which, in turn, operates turbines and generators. For a period of more than 40 years, beginning in 1940, the amount of coal used in the United States for this purpose doubled in every decade.

Coal is no longer widely used to heat homes and buildings, as was the case a half century ago, but it is still used in industries such as paper production, cement and ceramic manufacture, iron and steel production, and chemical manufacture for heating and for steam generation.

Another use for coal is in the manufacture of coke. Coke is nearly pure carbon produced when soft coal is heated in the absence of air. In most cases, one ton of coal will produce 0.7 ton of coke in this process. Coke is of value in industry because it has a heat value higher than any form of natural coal. It is widely used in steel making and in certain chemical processes.

Coal Production In India

Coal Production In India:Coal produced in the country (excluding Meghalaya) during the year 2007-08 (April 2007 to December, 2007) has been 309.517 million tonnes (MT) (provisional) as compared to the production of 295.148 million tonnes (MT) achieved during the corresponding period of the previous year showing a growth of 4.87 %. Company-wise details are given below:

(In million tonnes) Company Target 2007-08

Actual Production (April 2007 to Dec. 2008) (Prov.) 257.754 29.962 21.801 309.517

Projected Production (Jan. March 2008)

Actual Production (2006-07)

CIL SCCL OTHERS TOTAL

384.40 40.508 36.85 461.758

123.27 10.546 15.049 148.865

360.913 37.707 32.212 430.832

(figures excluding Meghalaya)

MAJOR COAL PRODUCTION COUNTRIES

List of countries by coal production:This is a list of countries by coal production in 2007 based on Statistical Review of World Energy 2008 published in 2008 by BP ranks countries with coal production larger than 3 millions tonnes.

DEMAND & SUPPLY

DEMAND AND SUPPLY:-

1.6 During the year 2007-08 (April-December, 2007), coal off take from CIL was 271.473 MT (Provisional) against the target of 277.951 MT ensuring 97.67% supply against target. Out of this coal off take for power sector was 203.586 MT against the target of 200.621 MT ensuring 101.48% supply against target. Similarly during AprilDecember, 2007, coal off take from SCCL was 31.11 MT (Provisional) against target of 28.49 MT ensuring supply of 109% against target. Out of this coal off take to power sector was 22.27 MT (Provisional) against the target of 20.78 MT ensuring 107% supply against target.

Current State and Forecast of Coal Demand:Current State of Coal Consumption:Coal consumption in the electricity sector in FY2004 was 305.3 million tons, or 75.5% of the total. It is followed by 32.1 million tons (7.9%) in the iron and steel sector, and 18.1 million tons (4.5%) in the cement sector, and these three sectors in total account for 88% of the total. Consumption in other sectors (fertilizer, ceramic industry other than cement, textile, chemicals, paper, etc.) was 49.2 million tons, or 12.1% of the total. When comparing coal consumption in FY1984 and FY2004, consumption decreased in other sectors only. This is largely because coal consumption by railway decreased to zero during this period. On the other hand, coal consumption for the electricity sector over the same period increased by 247.7 million tons, iron and steel sector by 7.1 million tons and cement sector by 10.8 million tons. In particular, coal consumption in the electricity is nearly five times larger than 20 years ago. Increase in coal consumption in India is largely due to increased consumption for electricity.

Change in Coal Consumption by Sectors (excluding lignite)

Unit: million tons)

COAL CONSUMPTION IN THE ELECTRICITY

Coal Consumption in the Electricity:-

The comparison of the change in electric power generation in India (excluding private power generation) and coal consumption in the electricity sector. Electric power generation in FY2004 was 587.4 TWh. By power source, coal fired power generation was 424.1 TWh (composition ratio: 72.2%). Diesel fired power generation was 2.5 TWh (0.4%), and gas fired power generation was 59.5 TWh (composition ratio: 10.1%). Thermal power generation in total accounted for 486.1 TWh (composition ratio: 82.7%), while hydraulic power generation accounted for 84.5 TWh (composition ratio: 14.4%) and nuclear power generation for 16.8 TWh (composition ratio: 2.9%). Thermal power generation is the major source of power generation in India, and coal fired power generation holds the largest share among them. Therefore, the role of coal in India is quite important. The growth rate of electric power generation by power source for the ten-year period from FY1984 to FY1994 were as follows: 10.2% for thermal power, 4.4% for hydraulic power, 3.3% for nuclear power, and 8.4% for total electric power generation. Therefore, growth in thermal power is notable. Similarly, the growth rate for the ten-year period from FY1994 to FY2004 were: 6.4% for thermal power, 0.2% for hydraulic power, 11.5% for nuclear power, and 5.3% for electric power generation in total. While the growth of thermal power is still strong, nuclear power had the highest growth rate for the period. Based on available materials, there is no breakdown of thermal power generation in FY2002 and before. In Table 3-2, coal fired power generation during this period is estimated. First, coal consumption per 1kWh (coal consumption rate) was calculated from electric power generation and coal consumption during FY2003-FY2004. Then, based on this rate, coal consumption rate 7 in 2002 and before is assumed at 680g/kWh, and electric power generation is calculated from coal consumption for each fiscal year. This estimation is based on the premise that there are no changes in power generation efficiency and calorific value of coal. As a result, it was confirmed that the share of electric power generation by coal fired power generation was the largest in the past as well.

The coal consumption rate in Japan is at the level of 340g/kWh. Compared to this figure, coal consumption in India is extremely inefficient. The major reason for this is considered to be the calorific value of coal. While the calorific value of coal used in Japan for power generation is 6,000kcal/kg or more, in India, it is around 3,800kcal/kg, even for hard coal, and that of lignite remains at the level of around 2,700kcal/kg. In FY2004, 92% of coal consumption was hard coal, and the remaining 8% was lignite.

COAL CONSUMPTION IN THE IRON AND STEEL SECTOR

Coal Consumption in the Iron and Steel Sector:Table 3-3 compares the changes in pig iron production and coal consumption in the iron and steel sector shown in Table 3-1. Please note that the figure of coal imports here shows imports of coking coal for each fiscal year, and that domestic coal consumption was calculated by subtracting this import figure from coal consumption shown in table 3-1. From FY1994 to FY2004, pig iron production expanded at an average annual growth rate of 3.5%, from 17.8 million tons to 25.1 million tons. On the other hand, coal consumption decreased from 38.6 million tons in FY1994 to 32.1 million tons in FY2004, a decrease by 6.5 million tons. In Table 3-3, coal consumption is divided by pig iron production to obtain coal consumption per 1 ton of pig iron (coal consumption rate). Up to FY1998, when domestic coal accounted for more than 70% of the total coal consumption, the coal consumption rate was more than 1.6tons/ton. On the other hand, in FY1999 and after, when the share of domestic coal decreased to less than 70%, the rate becomes less than 1.6 tons/ton. Ash content in domestic coal is high even for coking coal (see Table 4-3), and an increase in the use of domestic coal will lead to a jump in the amount of coal consumption necessary for pig iron production. In contrast, increase in the use of import coal can relatively reduce the coal consumption even if pig iron production is increased, as can be seen in FY2002-FY2004.

COAL CONSUMPTION IN THE CEMENT SECTOR

Coal Consumption in the Cement Sector:-

Table 3-4 compares the changes in cement production and coal consumption in the cement sector shown in Table 3-1. Cement production became 2.1 times larger from 62.3 million tons in FY1994 to 133.6 million tons in FY2004, showing a average annual growth rate of 7.9%. Compared to this, growth of calorific consumption is relatively small. The main reason for this is improvement in coal quality due to increases of imported coal, and this tendency can be found notably in FY1997-FY1999.

FORECAST ON COAL DEMAND BY THE PLANNING COMMISSION

Forecast on Coal Demand by the Planning Commission

According to the initial forecast announced by the Planning Commission of India in the Tenth Five-Year Plan, coal demand is estimated as follows: 460.5 million tons of hard coal and 57.8 million tons of lignite, and 518.3 million tons in total for FY2006; 620.0 million tons of hard coal and 81.5 million tons of lignite, and 701.5 million tons in total in FY2011. Afterwards, the working group on the Planning Commission upwardly revised the figures, and the forecast as of 2005 shows that the demand for hard coal in FY2006 will be 473.0 million tons and that in FY2011 will be 676.0 million tons. Also, in the draft of report by the Expert Committee on Integrated Energy Policy by the Planning Commission, forecast on coal demand shown in Table 3-5 is included, which is cited from Coal Vision 2025 prepared by The Energy and Resources Institute (TERI). This forecast on coal demand is based on two scenarios. One in which the GDP growth rate is 7%, and one in which it is 8%. With a GDP growth rate of 7%, it is forecast that coal demand will increase from 445.7 million tons in FY2005 and to 1,147.1 million tons by FY2024, and with a GDP growth rate of 8%, to 1,272.0 million tons by FY2024. Average annual growth rate of coal demand is 5.1% in the case of 7% GDP growth rate, and is 5.7% in the case of the 8% scenario. By sectors, the growth rate is the highest for cement, followed by power captive (IPP) and iron and steel. As

for the share of each sector in total coal demand, cement will increase by 5 points in the said period, but the shares of all other sectors will slightly decline.

FORECAST ON COAL DEMAND BY THE MINISTRY OF COAL

Forecast on Coal Demand by the Ministry of Coal:The Annual Plan 2005-06 published annually by the Ministry of Coal shows the forecast for coal demand by FY2011. This shows that coal demand will increase from 445.7 million tons in FY2005 to 676.0 million tons by FY2011, an increase by 230.0 million tons. Most of the increase is due to the increase of demand in the power captive (IPP) sector. Coal demand in the power utilities sector will show an average annual growth of 9.1% from FY2005, and the share of the power sector of total coal demand will increase from 74.2% in FY2005 to 80.3% in FY2011. The average annual growth rates for iron and steel (coke) and cement during the same period will be around 3-4%, and it is forecast that shares for both sectors will decrease.

COAL DISTRIBUTION AND MARKETING

COAL DISTRIBUTION AND MARKETING:The Marketing Division of CIL coordinates marketing activities for all its subsidiaries. CIL has set up Regional Sales Offices and Sub-Sales Offices at selected places in the country to cater to the needs of the consuming sectors in various regions. Linkage Committees Two types of linkage committees function for deciding the long term and short term availability of coal and distribution to the consumers belonging to Cement, Power & Steel including Sponge Iron Units. (i) (ii) Standing Linkage Committee (Long - term) Standing Linkage Committee (Short - term)

Standing Linkage Committee (Long-term):Standing Linkage Committee (Long-term) for Power, Cement and Sponge Iron considers requirement of coal of consumers at the planning stage and links the requirement in the long-term perspective from a rational source after examining factors like quantity and quality required, time frame, location of the consuming plants, transport logistics, development plan for the coal mine etc. The Long-term linkage Committee is presently being Chaired by Special Secretary, Ministry of Coal and has representatives from Ministry of Power, Ministry of Steel, Ministry of Commerce & Industry, Ministry of Railways, Department of Shipping, Central Electricity Authority, Coal India Limited, CMPDIL and Singareni Collieries Company Limited (SCCL). In addition to above there is another committee known as Standing Linkage Committee(Short-term), an inter Ministerial Committee consisting of the representatives of Ministry of Power, Central Electricity Authority, Railways, Department of Industrial Policy and Promotion and coal companies. This Committee allocates coal to consumers of Power and Cement Sector on quarterly basis taking into account coal

production and logistic involved therein. The short-term linkages to power and cement industries are granted once every quarter. SLC also takes care of mid term deviations. Coal India Limited, Kolkata, decides allocation to Sponge Iron Units. Linkages of coal to thermal power stations are allocated by Standing Linkage Committee (ST) on quarterly basis keeping in view the recommendation made by the Central Electricity Authority (CEA). The CEA recommendations are based on the power

generation programme, ground stock with individual power houses etc. Factors for deciding the linkages are power generation programme, availability of coal and carrying capacity of Railways as well as feasibility of movement by other modes. New Coal distribution Policy has introduced the concept of Letter of Assurance (LOA) , which provides for assured supply of coal to developers, provided they meet stipulated milestones. Once the milestones as stipulated in the LoA are met by the

developers, LoA holders would be entitled to enter into Fuel Supply Agreements (FSAs) with the coal companies for long-term supply of coal. The quantity of coal to be supplied along with other commercial terms and conditions are covered in the FSA itself.

IMPORT OF COAL

IMPORT OF COAL:As per the present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their needs based on their commercial prudence. Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel manufacturing units mainly to bridge the gap between the requirement and indigenous availability and to improve the quality. Coast based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders are importing non-coking coal. Coke is imported mainly by Pig-Iron manufacturers and Iron & Steel sector consumers using mini-blast furnace. Details of import of coal and products during the last five years is as under (in million tonnes) :

Coal

2003-04

2004-05

2005-06

2006-07

2007-08

Coking Coal Non-coking Coal Coke Total Import

12.99 8.69 1.89 23.57

16.93 12.03 2.84 31.80

16.89 21.70 2.62 41.21

22.00 23.00 3.80 48.80

22.02 27.76 4.24 54.02

Major coal importers:Imports of Coal by Country and year (million short tons)

MAJOR COAL EXPORTERS

Major coal exporters:Exports of Coal by Country and year (million short tons)

FOREIGN COLLOBORATION

FOREIGN COLLABORATION:To meet country's growing demand for coal, foreign collaboration with the

advanced coal producing countries are considered for: Bringing in new technologies both in underground and opencast sectors for efficient

management in the coal industry and skill development and training etc. Seeking bilateral funds for import of equipment, which are not manufactured in the country. Bringing foreign financial assistance to meet the investment requirement.

Keeping these objectives in view, Joint Working Group on coal had been set up with France, Germany, Russia, Canada, Australia and China. Department of Coal is also the nodal Department for the Joint Commission with Poland. The priority areas, inter-alia, include of high productive

acquisition of modern underground mining technology, introduction

opencast mining technology, working underground in difficult geological conditions, fire control and mine safety. Training of Indian personnel as well as assimilation of the

technology are an important consideration. With the liberalization of the economy, greater thrust is being given to get the foreign investments /assistance on the basis of cost competitiveness. The latest policy pursued by CIL is to encourage technology up gradation through Global Tender. Bilateral co-operation, although limited, continues to play an important role for search of new technologies and process improvement. Global tender approach has been used towards introduction of high productivity Continuous Miners at SECL and WCL. Bilateral cooperation mode has been adopted for the introduction of PSLW mining at 3 mines in SECL.

COAL CONSUMERS COUNCILS

COAL CONSUMERS COUNCILS:For redressal of consumer's grievances and monitoring of complaints received from the consumers, one Regional Coal Consumers Council has been set up for each coal company. An Apex body viz. National Coal Consumers Council has also been set up at the Headquarters of Coal India Limited. In case the complainant does not receive a reply within a month or the complainant is not satisfied with the reply of Coal Company, he may prefer a complaint to the National Coal Consumers Council. These Councils have been reconstituted during the year 200809 with the introduction of many new members . The meetings of these councils are also being held regularly.

ENVIRONMENTAL EFFECTS

Environmental effects:There are a number of adverse environmental effects of coal mining and burning, specially in power stations including:

Generation of hundreds of millions of tons of waste products, including fly ash, bottom ash, flue gas desulfurization sludge, that contain mercury, uranium, thorium, arsenic, and other heavy metals

Acid rain from high sulfur coal Interference with groundwater and water table levels Contamination of land and waterways and destruction of homes from fly ash spills such as Kingston Fossil Plant coal fly ash slurry spill

Impact of water use on flows of rivers and consequential impact on other landuses

Dust nuisance Subsidence above tunnels, sometimes damaging infrastructure Coal-fired power plants without effective fly ash capture are one of the largest sources of human-caused background radiation exposure

Coal-fired power plants shorten nearly 24,000 lives a year in the United States, including 2,800 from lung cancer[36]

Coal-fired power plants emit mercury, selenium, and arsenic which are harmful to human health and the environment[37]

Release of carbon dioxide, a greenhouse gas, which causes climate change and global warming according to the IPCC. Coal is the largest contributor to the human-made increase of CO2 in the air.

ECONOMIC ASPECTS

Economic Aspects:Coal liquefaction is one of the backstop technologies that could potentially limit escalation of oil prices and mitigate the effects of transportation energy shortage that will occur under peak oil. This is contingent on liquefaction production capacity becoming large enough to satiate the very large and growing demand for petroleum. Estimates of the cost of producing liquid fuels from coal suggest that domestic U.S. production of fuel from coal becomes cost-competitive with oil priced at around $35 per barrel,[39] (breakeven cost). With oil prices as low as around $40 per barrel in the U.S. as of December 2008, liquid coal lost some of its economic allure in the U.S., but will probably be revitalized, similar to oil sand projects, with an oil price around $70 per barrel. In China, due to an increasing need for liquid energy in the transportation sector, coal liquefaction projects were given high priority even during periods of oil prices below $40 per barrel.[40] This is probably because China prefers not to be dependent on foreign oil, instead utilizing its enormous domestic coal reserves. As oil prices were increasing during the first half of 2009, the coal liquefaction projects in China were again boosted, and these projects are profitable with an oil barrel price of $40.[41] Among commercially mature technologies, advantages for indirect coal liquefaction over direct coal liquefaction are reported by Williams and Larson (2003). Intensive research and project developments have been implemented from 2001. The World CTL Award is granted to personalities having brought eminent contribution to the understanding and development of coal liquefaction. The 2009 presentation ceremony was in Washington, D.C. (USA) at the World CTL 2009 Conference (2527 March 2009).

ALLOCATION OF COAL BLOCKS

ALLOCATION OF COAL BLOCKS:Till December, 2007, Ministry of Coal has allocated 172 Coal Blocks with geological reserves of coal of 38.05 billion tonnes to eligible companies. Sector-wise allocation of coal blocks is as below:Sector / End Use I Power (a) Captive Dispensation 31 (b) Govt. dispensation 20 Sub-total II Commercial Mining III Iron and Steel Total B. Private Companies (a) Power (b) Iron and Steel (c) Small and Isolated (d) Cement (c) Ultra Mega Power Project Sub-total Grant total 20 47 2 3 7 79 172 2702.21 6703.27 9.34 232.34 2607.24 12254.40 38048.672 20 51 39 3 93 7896.07 10476.07 18372.14 5929.83 1492.30 25794.27 No of blocks Geological Reserves (MT)

During the year, 2007-08 (April-December, 2007), 45 coal blocks with total geological reserves of 11386 MT were allocated to Public Sector and Private Companies of which 21 blocks with total geological reserves of 8641.53 MT were allocated to Public Sector and Private Companies engaged in power sector.

EXPERT COMMITTEE:-

Government had set up an Expert Committee under the Chairmanship of Shri T.L. Shanker for suggesting a road map for the coal sector in India. The Committee has recently submitted its final report (Part-II). The important findings and recommendations contained in Report (Part-II) of the Expert Committee cover following areas:-

Enhance exploration efforts to establish new coal reserves; Augment production to match the projected demand in medium and long terms; Make fuel supply and transport agreements mandatory for major consumers like power; Streamline procedures for environmental, forestry and mining approvals both at Central and State levels in a time bound manner to realize the projected production with strict monitoring mechanism; Introduce exploration-cum-mining leases for coal in line with new exploration licensing policy of oil sector; Adopt clean coal technologies at the stage of production and consumption to address the issue or emissions; Enhance the delegated powers of PSU Coal Company Boards to facilitate them to take decisions involving higher investment levels; Revisit the Forest Conservation Act, 1980 for diversion of forest land for non-forest purposes including re-categorisation of forest lands to identify go and no-go areas; Proper mine closure and restoration of mined out areas; Instituting a regulatory mechanism for coal sector;

 Restructuring of CIL; Review of human resource management in coal sector; Improve the productivity of man and machinery with focus on technology upgradation; Promotion of underground mining; Switch over to Gross Calorific Value (GCV) based pricing and grading of coal; Promote coal washing; Rationalize railway tariff; Greater emphasis on research and development; Promotion of cutting edge technologies like Underground Coal Gasification (UCG), Coal Bed Methane (CBM), Coal Mine Methane (CMM), Coal to Liquid (CTL), etc.

FUNCTIONS OF MINISTRY OF COAL:The Ministry of Coal is responsible for development and exploitation of Coal and Lignite reserves in India. The subjects allocated to the Ministry under the Government of India (Allocation of Business) Rules, 1961, as amended from time to time are as follows:

(i) Exploration and development of coking and non-coking coal and lignite deposits in India. (ii) All matters relating to production, supply, distribution and prices of coal. (iii) Development and operation of coal washeries other than those for which the Department of Steel is responsible. (iv) Low Temperature carbonisation of coal and production of synthetic oil from coal. (v) Administration of the Coal Mines (Conservation and Development) Act, 1974 (28 of 1974). (vi) The Coal Mines Provident Fund Organisation. (vii) Administration of the Coal Mines Provident Fund and Miscellaneous Provision Act, 1948 (46 of 1948). (viii) Rules under the Mines Act, 1952 (32 of 1952) for the levy and collection of duty of excise on coke and coal produced and despatched from mines and administration of rescue fund. (ix) Administration of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (20 of 1957). (x) Administration of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957) and other Union Laws in so far the said Act and Laws relate to coal and lignite and sand for stowing, business incidental to such administration including questions concerning various States.

PUBLIC SECTOR COMPANIES

PUBLIC SECTOR/JOINT SECTOR COMPANIES:The Ministry of Coal has under its administrative control Coal India Limited (CIL) a public sector undertaking with eight subsidiary companies, namely:-

(a) Bharat Coking Coal Limited (BCCL) (b) Central Coalfields Limited (CCL) (c) Eastern Coalfields Limited (ECL) (d) Western Coalfields Limited (WCL) (e) South Eastern Coalfields Limited (SECL) (f) Northern Coalfields Limited (NCL) (g) Mahanadi Coalfields Limited (MCL) (h) Central Mine Planning and Design Institute Limited (CMPDIL)

Coal as a Traded Commodity:-

The price of coal increased from around $30.00 per short ton in 2000 to around $150.00 per short ton as of September 2008. As of October 2008, the price per short ton had declined to $111.50. In North America, Central Appalachian coal futures contracts are currently traded on the New York Mercantile Exchange (trading symbol QL). The trading unit is 1,550 short tons (1,410 t) per contract, and is quoted in U.S. dollars and cents per ton. Since coal is the principal fuel for generating electricity in the United States, coal futures contracts provide coal producers and the electric power industry an important tool for hedging and risk management. In addition to the NYMEX contract, the IntercontinentalExchange (ICE) has European (Rotterdam) and South African (Richards Bay) coal futures available for trading. The trading unit for these contracts is 5,000 tonnes (5,500 short tons), and are also quoted in U.S. dollars and cents per ton.

COAL TRADING BASICS

INTRODUCTION:-

BACKGROUND:-

PRICE VOLATILITY:-

BROKERS:-

STANDARDIZED CONTRACTS:-

TRADING INSTRUMENTS:-

BENEFITS OF TRADING:-

PROGNOSIS OF COAL TRADING:-

COAL TRADING ASSOCIATION:-

The Coal Trading Association (CTA) is the only trade association dedicated exclusively to the needs of traders, trading managers, brokers, risk managers, sales managers and purchasing managers in the coal trading industry. CTA was established in 1999 to promote coal trading capability and liquidity in the US. CTA develops and maintains industry standards for coal trading activity with the goal of achieving a disciplined, liquid and efficient coal trading industry. To achieve this goal, CTA develops policies, exchanges information among members and other interested professional and technical groups, and offers training programs to improve the knowledge, skills and practice tools of its members.

COAL VALUE CHAIN

Coal Value Chain:-

COAL PRICES IN 2010

Coal Prices In 2010:-

Coal prices are indeed destined to go higher as they follow the rise of coal currencies such as Australian Dollar (AUD), South African Rand (ZAR) and Columbian Peso (COP). Strong emerging market demand is also pushing up prices although it may be limited by abundant stocks on coal producing countries. The BofA Merrill Lynch Global Report on energy pointed out that many oil currencies including UAE Dirhams (AED) and Saudi Arabian Riyal (SAR) are pegged to the US dollar, but coal exporters tend to keep a free float therefore currencies linked to coal have outperformed both their emerging market and G10 peers. The report notes that near upside gains in steam coal will be limited to US dollar weakness.

Mirroring forex, prompt API-2 thermal coal prices have jumped 9% in the past month reaching $73/mt slightly ahead of crude oil and petroleum productswhile calendar prices for 2010 have recovered to a six-week high of over $84/mt. With coal inventories swelling to record highs around the globe, any nearterm upside pressure on front-month coal prices above $80/mt is likely to be limited to further USD weakness. Although BofA Merrill Lynch Global report said that steam coal forwards to flatten significantly over the next six months as the recovery takes hold, excess supply will still dampen any upside pressure on near-dated spreads in the short-run.

The outlook for thermal coal markets should improve significantly and high inventories will be burned down next year as coal is set to regain market share relative to natural gas. Chinese and Indian demand for coal is already growing strongly. With a demand recovery coming in the rest of Asia, South Africa and the Atlantic Basin, the market is likely to tighten pretty quickly in 2010.

SWOT ANALYSIS

STRENGTH:-

1.The government offers a wide range of concessions to investors in India, engaged in mining activity. The main concessions include, inter alia: * Mining in specified backward districts is eligible for a complete tax holiday for a period of 5 years from commencement of production and a 30 percent tax holiday for 5 years thereafter.

* Environment protection equipment, pollution control equipment, energy saving equipment and certain other equipment eligible for 100 percent depreciation.

* One tenth of the expenditure on prospecting or extracting or production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income.

* Export profits from specified minerals and ores are eligible for certain concessions under the Income tax Act.

* Minerals in their finished form exempt from excise duty.

* Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron, unwrought aluminium.

* Capital goods imported for mining under EPCG scheme qualify for concessional customs duty subject to certain export obligation.

2. World's largest producer of mica; third largest producer of coal and lignite & barytes; ranks among the top producers of iron ore, bauxite, manganese ore and aluminium.

3. Labours easily available

4. Low labour and conversion costs

5. Large quantity of high quality reserves

6. Exports iron-ore to China and Japan on a large scale 7. Strategic location : Proximity to the developed European markets and fast-developing Asian markets for export of Steel, Aluminium

WEAKNESS:1.

Coal mining in India is associated with poor employee productivity. The output per miner per annum in India varies from 150 to 2,650 tonnes compared to an average of around 12,000 tonnes in the U.S. and Australia; and

2.

Historically, opencast mining has been favored over underground mining. This has led to land degradation, environmental pollution and reduced quality of coal as it tends to get mixed with other matter;

3.

India has still not been able to develop a comprehensive solution to deal with the fly ash generated at coal power stations through use of Indian coal. Clean coal technologies, such as Integrated Gasification Combined Cycle, where the coal is converted to gas, are available, but these are expensive and need modification to suit Indian coal specifications.

4. 5. 6. 7. 8. 9. 10. 11.

Poor infrastructure facilities Mining technology is outdated Low innovation capabilities Labor force is highly un-skilled and inexperienced High rate of accidents Lack of R&D programs and training and development Most of the Indian mining companies do not have access to Indian capital market There is a lack of respect for the mining industry and it suffers from the incorrect perception that ore deposits are depleted.

12.

There is limited access to capital, and mines are increasingly more costly to find, acquire, develop and produce.

13. 14.

There are long lead times on production decisions. The Indian mining industry suffers from an out-dated, unattractive approach to mining education that is partly to blame for insufficient human resources.

15.

Improvement in operational efficiency of the mining companies - Mining companies are in need of an organizational transformation to gradually align its operating costs to international standards. Mining costs of Indian companies are at least 35 percent higher than those of leading coal exporting countries such as Australia, Indonesia, and South Africa. To match productivity, they will need to invest in new technologies, improve processes in planning and execution of projects, and institutionalize a comprehensive risk management framework.

16.

Mining operations are not environment friendly. Least importance is given to environment concerns.

17.

High rate of illegal mining

OPPORTUNITY: India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited. Besides coal, oil and gas reserves, the mineral inventory in India includes 13,000 deposits/ prospects of 61 non-fuel minerals. Expenditure outlay on mining is a meager sum when compared to other competing emerging mining markets and the investment gap is most likely to be covered by the private sector. India welcomes joint ventures between foreign and domestic partners to mobilise finances and technology and secure access to global markets. Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, nickel, cobalt, molybdenum, lithium, tin, tungsten, silver, platinum group of metals and other rare metals, chromite and manganese ore, and fertiliser minerals. The main opportunities in the mining sector (excluding coal and industrial minerals) are in the development and production of surplus commodities such as iron ore and bauxite, mica, potash, few low-grade ores, mining of small gold deposits, development of placer gold resources located on the frontal belt of the Himalayas, mining known deposits of economic and marginal categories such as base metals in Bihar and Rajasthan and exploitation of laterite for nickels in Orissa, molybdenum in Tamil Nadu and tin in Haryana. Considerable potential exists for setting up manufacturing units for value added products. There exists considerable opportunities for future discoveries of sub-surface deposits with the application of modern techniques. Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the reserves of the country are beyond this depth Strengthening of logistics in coal distribution - In India, the logistics infrastructure such as ports and railways are overburdened and costly and act as bottlenecks in development of free market. Privatization of ports may bring the needed efficiencies and capacities. In addition, capacity addition by the Indian Railways is necessary to increase freight capacity from the coal producing regions to demand centers in the northern and central parts of the country. On the Indian rail network, freight trains get a lower priority than passenger trains, a problem that promotes delays and inefficiency. Special freight corridors would raise speeds, cut costs, and increase the system's reliability.

Focusing on technology for future - India's numerous technology research institutes are working on energy related R&D. However, there is a possibility that they are operating in a fragmented fashion. The Government may get improved recoveries on its investment by concentrating on few important technology areas. To start with focus may be applied for tighter emission standards and development of inexpensive clean-coal technologies viz. extraction of methane from coal deposits.

Estimated 82 billion tonnes of reserves of various metals yet to be tapped While India has 7.5% of the world's total bauxite deposits, aluminium production capacity is only 3% of world capacity, indicating the scope and need for new capacities

THREATS: Foreign Investment in the Mining Sector During 1999, the Government had cleared 7 more proposals of leading international mining companies for prospecting and exploration in the mineral sector to the tune of US$ 62.5 million. 65 licenses have been issued till date for prospecting an area of around 90,142 sqkms in the states of Rajasthan, Maharashtra, Gujarat, Bihar, Haryana and Madhya Pradesh. Prospecting licenses have been granted in favour of Indian subsidiaries of well-known mining companies. These include BHP Minerals, CRA Exploration supported by Rio Tinto (RTZ-CRA), Phelps Dodge of USA, Metmin Finance and Holding supported by Metdist Group of Companies UK, Meridien Minerals of Canada, RBW Mineral Industries supported by White Tiger Resources of Australia, etc. Large integrated international metal manufacturers including POSCO, Mittal Steel and Alcan have announced plans for expansion in India Mining companies and equipment suppliers are under the constant threat of being taken over by foreign companies. A heavy tax burden discourages further investment. Politicians undervalue the industry's contributions to the economy. Stricter environment rules restricting mining activities

CHALLENGES

CHALLENGES OF COAL INDUSTRY:Coal is the other fossil fuel, promising to supersede oil as petroleum supplies dwindle and solar and other alternatives plug part of the future energy gap. But coal comes with a potentially hefty environmental price. According to the Intergovernmental Panel on Climate Change, the increased use of coal and the resultant release of carbon dioxide and methane both greenhouse gases have contributed significantly to global warning and climate change. So, how do we reconcile our need for coal as a viable and domestically plentiful alternative to oil with our equally important need to use it in a sustainable way that minimizes environmental harm?

Measuring Carbon Content :One example of the potentially significant environmental impact of Committee D05s work is revised standard D5373, Test Methods for Instrumental Determination of Carbon, Hydrogen and Nitrogen in Laboratory Samples of Coal, published in February 2008. The standard could affect the analysis of coal worldwide and subsequent carbon dioxide emissions if universally embraced. According to D05 chair John Riley, Ph.D., professor emeritus, Western Kentucky University, Bowling Green, Ky., D5373 is the best standard in the world and a huge improvement over the first version of the standard. But it took some work to get there. In the mid-1990s, engineers at coal-burning electrical generating plants all around the world were wondering why they saw discrepancies between their predictive heat values or the amount of electricity that they expected to generate and the actual plant rate. They found that even when engineers at different plants tested the same coal for carbon and other elements, they had different results. More alarming, those engineers also had different results when testing pure substances, laboratory samples specially prepared to contain the same substances. Because measuring the carbon in coal is essential for predicting the amount of carbon dioxide emissions it will create when burned, there was a clear need for a standard that delivered accurate, repeatable results. Janke explains, You cant negotiate emissions standards if you dont have a reliable way of measuring emissions. To address this need, Janke organized an international control study, eventually developing the revised standard, which instructs engineers at coal-fired power generating plants how to use pure substances to calibrate their instrumental analyzers. That way, they can determine more accurate heat values as well as carbon content and carbon dioxide emissions, features that also make the standard useful to governmental and other entities concerned with the environmental impact of burning coal. The revised standard forces us to be honest about emissions and encourages more efficient use of coals that are appropriate for their end product, says Janke.

Natural Gas from Coal:A proposed D05 standard, WK8750, Practice for Determination of Gas Content of Coal Direct Desorption Method, addresses the amount of natural gas, also referred to as methane or unconventional natural gas, in coal beds. As a greenhouse gas, methane contributes 21 times as much to global warming as carbon dioxide. Its also volatile, fueling explosions and fires in coal mines. WK8750 could have the combined effects of helping energy producers recover a useful and plentiful fuel, control greenhouse gas emissions and make coal mining operations safer. Coal beds in the United States contain an estimated 30 to 604 trillion cubic feet (1 to 17 trillion cubic meters) of recoverable methane. In the last 15 to 20 years, coal bed methane has grown to account for some seven to 10 percent of total natural gas production in the U.S., and its likely to increase as large fields of natural gas are depleted and producers drill for gas in the coal fields of Wyomings Powder River Basin, the San Juan Basin in New Mexico and Colorado, the Warrior Basin in Alabama and in fields along the Rocky Mountains, Gulf Coast and in the Midwestern states. Overseas, China and Australia are also known to have large reserves of coal bed methane. Currently, there are two methods for determining the viability of recovering coal bed methane in a particular area or region. One is an indirect method that makes inferences from available geological information. The other, advocated by the proposed standard, uses the direct desorption method where a core of coal is extracted from a deposit and put in a sealed container. Measuring the amount of gas released from the core over time determines how much natural gas is contained in a coal bed. Peter Warwick, research geologist with the U.S. Geological Survey, Reston, Va., and technical contact for the task group, explains, Determining whether a coal deposit is a viable source of natural gas in advance of mining leads producers to use coal deposits more efficiently. A draft of the proposed standard is expected to be ready for review this spring. Once approved by ASTM, it is hoped that the standard will be adopted internationally.

Standards for New Coal Technologies:In the spirit of recognizing the coal industrys evolving needs, Committee D05 has formed a technical planning group to consider opportunities for standards that promote alternative uses for coal and consider existing standards in new ways. For instance, the revised D5373 standard, says Janke, could also be used as an initial screening tool for hydrogen and nitrogen to indicate whether a certain type of coal is appropriate for more advanced coal technologies such as coal gasification or liquefication, where coal is processed into fuels like gasoline and diesel. Integrated gasification combined-cycle power plants that remove harmful materials from coal before burning it may require new measurement standards. The plants operate more efficiently and with lower emissions than conventional power plants. Its better to remove hazardous elements before combusting them because that potentially makes it easier to dispose of them or convert them to a form that might have some other use, notes Jay Albert, technical director at Parr Instrument Co., Moline, Ill., and a member of the group working on WK8750. If we determine how to extract hazardous elements at the most appropriate time in the energy-production cycle, the environmental impact can be much less. There are also opportunities to develop new standards in areas where coal is mixed with other fuels such as biomass, biodiesel and briquetted biomass fuels. For example, a Chinese organization recently submitted a draft of a new standard for testing sulfur-fixing briquettes for domestic heating and cooking. The briquettes, which are composed of high sulfur coal, plant and wood materials, and a sulfur-fixing agent, prevent sulfur from becoming sulfur dioxide when burned, thereby reducing the harmful environmental impact of acid rain.

Making Coal Clean:But can coal ever be really green or is clean coal truly an oxymoron?

Former D05 chair and current ASTM board of directors member James Luppens, project chief, U.S. Coal Assessment, U.S. Geological Survey, says, Coal utilization is getting cleaner all the time, but theres no free lunch. Its still a fossil fuel. Janke believes that the coal-burning industry will refurbish itself in relation to generation capacity. It will become learner and meaner, using less coal to generate more power. But the real challenge will be to use carbon dioxide emissions in a positive way. For Riley, improvements in the sustainable use of coal ultimately come back to respecting standards. If we use standards, we have a better understanding of the coal were using and how were using it, and that leads to more efficient use.

CONCLUSION

CONCLUSION:Coal plays a crucial role in Indias future development, particularly in its power sector. Demand for coal in India is projected to increase dramatically in the short to medium term, although there are several key constraints that the Indian coal industry has to overcome. Advanced power generation technologies have a central role in helping to meet the various challenges in the countrys coal-power sector. Although several new technologies have been explored in the Indian power sector, it is far from clear what the appropriate future technology choices might be, as all of the current and emerging technologies worldwide have their strengths and limitations. Therefore, it is critical for policy makers not only to consider and implement technologies that meet the near-term needs of the country, but also to set the coal-based power sector on a path that would allow it to better respond to future challenges, including the key challenge of reducing GHG emissions. This paper reviews the Indian coal and coal-power sectors against the backdrop of the broader effort to reduce greenhouse gas emissions from a growing power sector throughout the world. It is part of a Pew Center on Global Climate Change Coal Initiative, a series of reports examining and identifying policy options for reducing coalrelated GHG emissions. The Pew Center brings a cooperative approach and critical scientific, economic, technological, business and policy expertise to the global climate change debate at the state, federal and international levels.