India needs ₹84-lakh cr to phase out coal, thermal power in 30 yrs: iForest

India will need over $1 trillion (₹84.06 lakh crore) over the next 30 years to phase out coal mines and thermal power plants (TPPs) by 2050, according to a recent report by the International Forum for Environment, Sustainability, and Technology (iForest).

“These investments will facilitate a smooth shift from coal to renewable energy (RE), ensuring minimal disruption to existing infrastructures and jobs, while maintaining energy access and security and supporting green jobs and growth in the coal-dependent regions,” says the think tank.

These investments cover the costs of closing coal mines with a combined annual production capacity of 1,315 MTPA (million tonnes per annum) and phasing out 237.2 GW of coal-based power. This includes rehabilitating and repurposing 3.43 lakh hectares of coal mining land, green repowering of 1.24 lakh hectares at thermal power plant sites and providing transition support for about 5.9 million workers dependent on these industries.

These costs are likely to rise further, as India is expected to add new thermal power plants (TPPs) and coal mines until 2030 to meet growing energy demand.

The cost estimates, however, exclude the investments needed to build new green energy plants and infrastructure to meet India’s future energy demand, which could amount to trillions more. They also omit the costs of transitioning coal-dependent industries such as steel and cement.

The report indicates that green energy investments, including the repowering of thermal power plants (TPPs), will constitute the largest share of the transition costs, accounting for approximately 52% of the total. These investments include building new green energy plants, repowering existing TPPs, and investments in Battery Energy Storage Systems (BESS) and grid upgrades. The remaining 48% of costs are for non-energy investments, with the largest portion of about 21.7% allocated to economic diversification. These funds will support green growth, and job creation, and help offset lost government revenue.

Further, the report shows that India is set to close nearly 250 coal mines and decommission 224 thermal power plant (TPP) units over the next decade, driven by the financial non-viability of many coal mines and the ageing TPP fleet.

The report suggests that social welfare funds such as the District Mineral Foundation (DMF) and Corporate Social Responsibility (CSR) funds will offer an immediate opportunity for supporting transition efforts in coal districts. As of March 2023, DMF funds have accrued $3.7 billion since 2015-16. However, with $420 billion required over the next 30 years, these resources will only cover initial investments.

To achieve a just energy transition, the report says that India will need substantial international financial support, as outlined in its Long-Term Low-Carbon Development Strategy. Current mechanisms, like the Just Energy Transition Partnerships (JET-P), are inadequate, and global institutions must step up with more ambitious funding, grants, and concessional loans to meet the challenge.