India stands at a critical energy crossroads where abundance and vulnerability coexist. The country has nearly 400 billion tonnes of coal resources, placing it among the most coal rich nations globally. Of this, about 163 billion tonnes are proven reserves. Coal remains the backbone of India’s energy system, supplying around 55 per cent of the primary energy mix and nearly 74 per cent of electricity generation. Annual coal demand is already close to one billion tonnes and is expected to rise further by 2047, even as India advances toward its net zero target for 2070.
This dependence brings a contradiction. Coal ensures large-scale energy security for a rapidly growing economy, but its combustion is also a source of carbon emissions in the power sector. The central policy challenge is no longer whether coal will remain part of the energy system, but how it can be used in a cleaner, more efficient, and higher value form. Coal gasification is emerging as that strategic pivot. Instead of burning coal directly, the process converts it into synthesis gas, or syngas, a mixture of hydrogen and carbon monoxide. This syngas becomes a versatile building block for producing synthetic natural gas, methanol, ethanol, ammonia for fertilisers, petrochemicals, and hydrogen. In effect, coal shifts from being a combustion fuel to becoming an industrial chemical feedstock.
The significance of this transition is heightened by India’s high import dependence. The country imports about 83% of its crude oil, nearly 50% of its natural gas, and over 90% of key inputs such as methanol and fertilisers. This exposes the economy to global price shocks and supply disruptions. Coal gasification offers a pathway to substitute part of these imports with domestically produced fuels and chemicals, improving energy security and industrial self reliance. Beyond import substitution, gasification enables deeper value addition to India’s vast coal base. It also creates scope for integrating cleaner technologies such as carbon capture, utilisation, and storage, which can reduce the overall carbon intensity of coal based production.
As India balances rapid economic expansion with climate commitments under the Paris Agreement and its Nationally Determined Contributions, coal gasification represents a pragmatic transition tool. It does not eliminate coal from the system, but fundamentally redefines its role from a high emission fuel to a flexible industrial resource that supports both energy security and a gradual shift toward a lower carbon future.
The technology
Coal gasification is a process that converts solid coal into a gaseous fuel called syngas. Instead of burning coal directly, it is heated at high temperatures in a controlled environment with limited oxygen and steam. This chemical transformation breaks coal into its core components, mainly carbon monoxide, hydrogen, carbon dioxide, and smaller hydrocarbons.
Unlike combustion, which releases energy by burning coal, gasification extracts the chemical value embedded in coal. This makes it fundamentally different, which means that coal is no longer just a fuel for electricity, but a raw material for producing industrial chemicals and cleaner fuels.
Why it matters now
India’s energy system is undergoing simultaneous pressures. On one side, electricity demand is rising with industrialisation, urbanisation, and digital expansion including artificial intelligence. On the other, climate commitments require a steady reduction in emission intensity, expansion of non fossil energy, and creation of additional carbon sinks. Coal gasification offers a bridge between these two competing demands. It allows India to continue utilising its abundant domestic coal while significantly reducing environmental impact compared to direct combustion. More importantly, it expands the utility of coal far beyond power generation. A mixture of hydrogen and carbon monoxide produced via coal gasification, acts as a feedstock for chemical and energy products. Key uses include manufacturing synthetic natural gas, methanol, ethanol, ammonia, urea, and hydrogen, supporting industrial efficiency and energy transition efforts.
Import substitution is one of the strongest drivers of coal gasification in India. India currently imports a significant portion of its methanol, ammonia, and even natural gas based feedstocks. These imports create vulnerability in both price and supply chains. By converting coal into chemicals domestically, India can reduce dependence on imported fertilisers and petrochemical inputs. This aligns with the government’s vision of Atmanirbhar Bharat by strengthening domestic manufacturing, energy self-sufficiency, and industrial resilience.
The Ministry of Coal has therefore set an ambitious target: achieving 100 million tonnes of coal gasification capacity by 2030.
From combustion to chemical value creation
The core transformation being pursued is conceptual as much as technological. Traditionally, coal has been viewed as a fuel to be burned for electricity. Gasification reframes it as a chemical resource. This shift has three major consequences. First, it increases value addition. Instead of selling coal as a low margin fuel, it is converted into high value industrial products such as methanol, ammonia, and synthetic fuels. Second, it diversifies end uses. Coal becomes relevant not only for power generation but also for agriculture, chemicals, transport fuels, and manufacturing.
Third, it enables integration with carbon capture and storage technologies, allowing a lower carbon pathway even within a coal based system. A significant innovation in India’s coal strategy is underground coal gasification, or UCG. Unlike conventional mining based gasification, UCG converts coal into syngas directly within underground seams without physical extraction. This is particularly important for deep, thin, or otherwise unmineable coal deposits that are economically unviable under traditional mining methods. UCG effectively expands India’s usable coal resource base. By integrating UCG provisions into coal mine development agreements, India is trying its best in future-proofing its coal economy. It allows operators to extract value from previously inaccessible reserves while reducing surface mining impacts.
Policy push and financial incentives
To accelerate adoption, the Union government has introduced structured financial support mechanisms. Under the coal and lignite gasification incentive scheme, projects receive capital support for demonstration and commercial scale plants. Recent initiatives include allocation of projects for coal to chemicals, such as acetic acid production, with significant private sector participation. These pilot projects are intended to demonstrate commercial viability and scale up technology adoption. The policy framework reflects a clear intent: coal gasification is no longer an experimental idea but a strategic industrial pathway.
Global lessons
Coal gasification is not new. Its origins date back to the 19th century when coal derived gas was used for street lighting in cities such as London. During World War II, Germany used coal gasification extensively to produce synthetic fuels through processes such as Fischer Tropsch conversion, driven by a lack of oil imports. South Africa adopted large scale coal gasification during the apartheid era due to sanctions and continues to operate major facilities. The US expanded coal gasification after the oil shocks of the 1970s, but many projects declined after the shale gas boom made natural gas cheaper. But the technology remains in vogue and India is in discussion with the US on this.
China, however, has emerged as the global leader. With massive coal reserves and limited oil and gas resources, it has integrated coal gasification into its industrial strategy. Today, China produces a significant share of its methanol and ammonia from coal based syngas, reducing import dependence and strengthening energy security, an area where New Delhi thinks it can work closely with Beijing. India is now attempting a similar transition, albeit with a stronger climate constraint framework. India’s coal gasification mission is not only about energy security but also about industrial expansion. Large scale coal auctions and gasification linked projects are expected to generate significant investments, revenues, and employment. By linking coal gasification to chemical production clusters, India can create integrated industrial ecosystems that connect mining, energy, fertilisers, and petrochemicals.
Climate dimension and transition route
Coal gasification is often seen as a transitional technology. While it still relies on coal, it allows for more efficient use and potential integration with carbon capture technologies. This positions it as a bridging solution between high carbon legacy systems and a low carbon future. India’s broader climate strategy includes reducing emission intensity, expanding renewable energy, and increasing non fossil fuel capacity. Within this framework, coal gasification acts as a stabilising tool that prevents abrupt energy disruptions while enabling gradual decarbonisation.
Coal gasification represents a fundamental rethinking of India’s most abundant energy resource. Instead of treating coal as a polluting fuel to be phased down rapidly, India is attempting to transform it into a feedstock for industrial growth and energy security. The shift is strategic as well as pragmatic. It recognises that coal will remain part of India’s energy system for decades, but its role can evolve from combustion to conversion, from emissions to value creation, and from dependency to self-sufficiency. If implemented at scale, coal gasification could become one of the most important bridges in India’s energy transition, linking its fossil fuel legacy with its clean energy future.