A bottom-up Modelling Analysis ofIndian Coal Sector
Manmohan Kapshe, Vineet Tiwari
Maulana Azad National Institute of Technology, Bhopal, India

Aashish Deshpande
National Institute of Technical Teachers' Training and Research, Bhopal, India

20th AIM International Workshop,NIES, Tsukuba Japan
23-25 January 2015

Presentation Outline
Introduction: Why coal is important for India?

Analysis Framework and Model Development

Results and Discussions

Future Work

Maulana Azad National Institute of Technology, Bhopal, India

Why coal is important for India?
• Energy is a priority for economic growth fordeveloping countries• High energy demand at increasing rate• Coal is a major player in energy supply mix• Energy security concerns• Availability, affordability, reliability safety and easytransportation• Major challenges– Environmental concerns especially climate change– Functional and structural shortcomings

Maulana Azad National Institute of Technology, Bhopal, India

Key Learning from existing literature••••
Coal Fraternity is committed to –• Supporting major research efforts to makecleaner technologies affordable;• Raising awareness within the industry;• Providing credible input to policy making; and• Demonstrating leadership in implementing
the Guiding Principles for the Coal Industry••

Previous studies give meaningful
insights
Coal will continue to dominate in
medium to long term
Substantial capacity addition in thepower sector is coal based and it is
to be viewed in the context ofdomestic supply, imports,
infrastructure and regulations
related to policy and market
Strong directives needed to
optimize efficiencies in coal value
chain like economic, technological,
operational, regulatory & policy
These need to be integrated in themodel to have robust analysis
Scenario analysis is possible withthe help of bottom-up modeling

Maulana Azad National Institute of Technology, Bhopal, India

Major gap to be addressed….

In India, effect of coal use on emissions has been
extensively reported and discussed but effect of climate
policies on coal sector growth and market development
has not been analyzed using bottom-up modeling.

What would be the expected technology trajectory in future
in view of changing requirement of local and global
pollution control with special focus on coal sector for India?

Maulana Azad National Institute of Technology, Bhopal, India

Coal Facts for India
Million Tonnes
90080070060050040030020010002006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13(P)
DemandSupplyImports
P - Projected

Coal Demand, Supply and Imports in India[Source: MOC, Annual Report (2011-12)]

Comparison of Projected Future Demand for Coalin India [Source: Sathaye and Phadke, 2006]

The coal reserves in India up to the depth of 1200 meters have been estimated by theGeological Survey of India at 285.86 billion tonnes as on April 1, 2011 and Lignite reserve
are around 40.91 billion tonnes. Coal deposits are chiefly located in Jharkhand, Odisha,
Chhattisgarh, West Bengal, Madhya Pradesh, Andhra Pradesh and Maharashtra.

Maulana Azad National Institute of Technology, Bhopal, India

Analysis framework for managing the transition inthe Coal Sector in India
Issues

Policy Guidelines

Structural
Shortcomings

Globals Policy

Target Actions

Facilitation
Mechanism

National Policy
Environmental(local emissions)Global & National
Climate Protocol

Availability &Economics ofother resources

Policy Initiatives

Current use
Future use

Problems & Issues

Enabling Environment

Local Policy

Management
PolicyInstitutional
Framework

Actions
PollutionControl
Encouraging
Renewable &OtherResourceTechnologyPolicy

Regulatory
Framework

EconomicInstruments

MarketPolicyBusiness entry

Environment
PolicyRestructuring

Coal Sector[Future]Coal Sector[Present]

IssuesTransition
Maulana Azad National Institute of Technology, Bhopal, India

Model Development• Setting up of country-level AIM/End-use model for
India had following steps:
1. Selection of sectors, services, technologies, baseyear
– The model has traditionally been set-up with six
sectors, namely the industrial, transportation,agriculture, commercial, residential and power sectors.
– For better understanding separate coal sector has
been especially added. Year 2000 has been taken asthe reference year. Year 2010 has been used for finetuning. A total of 141 technologies have beenconsidered.
Maulana Azad National Institute of Technology, Bhopal, India

Model Development
2. Estimation of data for services and technologies• The data for technologies in the base year has been taken from publishedreports or journals. The values for fixed cost, variable cost and fuelconsumption have been taken at current prices for the base year i.e. 2000.
For the future technologies, which have not been commercialized, thesecosts are relative estimates taken on the basis of available literature.

3. Projection of service demands, technology shares andtechnology improvement• The improvements in the technology are estimates based on detailed
studies of the various technologies. Not all technologies are suitable in allconditions. They depend on a number of factors like raw material andavailability of other resources. So the penetration of a technology is not
same in all countries. The maximum share in the model is the estimation offuture scenario in the sector.

Maulana Azad National Institute of Technology, Bhopal, India

Model Development
4. Scenarios Development: Three scenarios considered•••Business-as-usual scenario: No action has been specificallydirected at limiting greenhouse emissions or any technology.
Assumes a continuation of current energy policies and a steady, butmodest pace of technological progress.
Carbon Constrained Scenario: Policies support mitigation efforts.
CO2 emissions are required to be reduced at some benchmark level.
This scenario is developed as a policy analysis tool for understanding
technology choices under different carbon constraint cases.
Carbon Capture Scenario: In addition to reduction in the CO2emissions the emitted carbon can be captured and sequestered. This
would specially focus on the possible reduction that can be brought
up if capturing carbon and sequestration is introduced.

Maulana Azad National Institute of Technology, Bhopal, India

Modelled for finer understanding of coal supply curve
EnergyTechnology

Coal A1

CA1

Coal A2

CA2

Coal A3

CA3

Coal B1

CB1

Coal B2

CB2

Coal B3

CB3

Coal C1

CC1

Coal C2

CC2

Coal C3

CC3

LigniteCD

Coal I

CIInternalService

Final Serviceor Energy

Coal A
Coal B

COAL
Coal C
Coal D
Imported Coal
Disaggregated Detailing of Coal

Maulana Azad National Institute of Technology, Bhopal, India

11Biomass

Coal

Gasoline

DieselJTF

Natural Gas

Nuclear

Kerosene

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

Peta Joule

90000
80000
70000
60000
50000
40000
30000
20000
10000
0

Fuel Oil

Fuel-wise Primary Energy Consumption in Enduse Sectors in BAU• Total energy consumption in India
increases five times by the year 2050
• In BAU, the coal and nuclear
consumption is grows rapidly.
• Energy mix is weighted towards coaland would contribute nearly 47% ofthe total energy requirement in 2050
• Gas would have about 16% share inthe fuel mix.

Results from ongoing study. Please do not quote.

Fuel consumption for Electricity
Generation in BAU• Some inter-switching between coal andgas is observed Coal share in electricity
generation somewhat declines withincrease in gas share.
• In this state of energy transition, theimport dependence of energy needs
would continue, as coal demand of theUMPPs, would be mostly met by imports.

Maulana Azad National Institute of Technology, Bhopal, India

Technology-wise electricity generation inBAU• The electricity generation is likely to growat the rate of 4.2 per annum• In the year 2000, the electricity
technology mix based on fuel consists ofcoal 67%, gas 10%, hydro 17% and rest
from oil, nuclear and renewable.
• The share of renewable is negligible in2000 which is likely to grow to 12%
excluding hydro in 2050.
Results from ongoing study. Please do not quote.

Electricity generation capacity in BAU• In BAU 770 GW capacities by 2050.
• Coal capacity would increase fivefold.
• The share of solar and wind generation
would be 1.4% and 8% respectively
from a meagre share in the year 2000.
• More than 30% of new installed capacity
would come from coal while 14% and
10% would be added by gas and hydro.
• Wind-based generation is also likely tocontribute more

Maulana Azad National Institute of Technology, Bhopal, India

7000

6000

6000

5000

Agriculture

PowerIndustrial

Residential

Transport

Enduse Sector-wise CO2 Emissions in BAU• Power generation 37% and industrial sectors
34% are major emitters of CO2• The high thermal capacity as reflected inanalysis is also a sign of environmental concern
due to having direct contribution in the CO2emissions.
• Power generation sector having the greater
scope of reduction becomes the target for being
used for environmental advantage. Other sectors
have limited flexibility

Results from ongoing study. Please do not quote.

Agriculture

PowerIndustrial

Residential

2050

2045

2040

2035

2030

2000

2050

2045

2040

2035

2030

2025

2020

2015

0
2010

0
2005

1000

2000

1000

2025

2000

2020

2000

3000

2015

3000

4000

2010

4000

2005

Mt-CO2

Mt-CO2

5000

Transport

End-use Sector-wise CO2 Emissions in COC• In this scenario simulation only 15% reduction
is possible through advanced technology
penetration in various industrial processes• This scenario requires huge capital lock-in in
both the demand and supply sectors forcapacity expansion.

Maulana Azad National Institute of Technology, Bhopal, India

Technology-wise electricity generation inCOC• With emission constraints majorindustrial activities, like cement
production, steel manufacturing, pulp
and paper, etc. would shift towards
electricity based advanced technologies
thereby reducing direct fossil fuelconsumption.
• electricity generation increases morethan 10% to around 16000 PJ

Results from ongoing study. Please do not quote.

Electricity generation capacity in COC• 900 GW of capacity would be required• Hydro and nuclear would contribute around
15% and 20% of the total generation
respectively• The renewable would be contributing 11%of
the total generation but it has nearly 28% of
the total stock.
• This is because of low availability factor ofrenewable. About 27% would be coal based
followed by gas which is contributing 24% of
the total generation.

Maulana Azad National Institute of Technology, Bhopal, India

Technology-wise electricity generation inCCS•••

Electricity generation capacity in CCS

CCS gives rise to the situation of using coal in a manner as green aspossible
Electricity generation would be further increased in CCS scenario but
the electricity generation stock is less than the COC scenario
Due to higher PLF of Coal based technologies as compared torenewable, less capacity would be needed

Results from ongoing study. Please do not quote.

Maulana Azad National Institute of Technology, Bhopal, India

6000050000

Peta Joule

40000

BAU-Coal

30000

COC-Coal
20000

CCS-Coal

10000

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

0Coal Demand in BAU, COC and CCS

Comparison of CO2 in BAU, COC and CCS• Coal demand would substantially decline in COC and increase in CCS scenario• This can be attributed to deployment of advance technologies with higherefficiencies.
• In Carbon Constraint case 15% reduction is possible whereas with CCS upto 40%
reduction is achievable• continuance of existing technologies would not result in emission reduction till2025.
• Almost 90% of emission from highest coal consuming sectors especially power,
steel and cement would be captured• Introduction of new technologies with higher efficiency will favour CCS
Results from ongoing study. Please do not quote.

Maulana Azad National Institute of Technology, Bhopal, India

Future Extension of Present Work• Any future outcome would depend upon volatility of pricesof fuels. A stochastic analysis can also be carried out for
improving future estimates and better understanding ofuncertainties.
• In the present work three scenarios have been analysedthat mostly emphasised carbon cut vis-a-vis BAU. Otherscenarios such as renewable push scenario in which roleof subsidy, tax holiday and other promotional incentives
can also be analysed.
• Cost burden of emission reduction has not beenestimated. Further detailing can help in analysing theeffect of emission mitigation on economy. It may be useful
to look at the cost of mitigation policies in alternate lowcarbon scenarios.
Maulana Azad National Institute of Technology, Bhopal, India

Major Findings• Any effort of emission mitigation puts additional burden on
power sector as other sectors move to electricity basedtechnologies.
• Through advanced technology penetration only 15% CO2
reduction is achievable. Further reduction requires carbon
capture in future. Even with CCS only about 45% CO2emission reduction is possible by 2050.
• Many uncertainties associated with viability of CCS fromboth technical and economic point of view but the newinvestments in power sector can be made CCS compliant.
Thus UMPP’s are more suited to adoption of CCS.
• Implementation of CCS would result in additional cost andenergy penalty that needs to be analysed further.
Maulana Azad National Institute of Technology, Bhopal, Indiamkapshe@gmail.com

Maulana Azad National Institute of Technology, Bhopal, India