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India's Coal Gasification Incentive Scheme



  Sep 16, 2023

Coal Gasification


What Is the Coal Gasification Incentive Scheme?

The Coal Gasification Incentive Scheme is a government initiative in India designed to promote and incentivize coal gasification projects.
Coal gasification is a process that converts coal into fuel gas, offering a cleaner and more environmentally friendly alternative to burning coal directly.
The scheme aims to encourage the adoption of this technology and reduce carbon emissions associated with coal use.

The scheme encompasses three main components:

PSU-Led Gasification Projects:
 
This category focuses on projects led by Public Sector Units (PSUs).

It provides for a viability gap funding (VGF) of up to Rs.1,000 crore or 10% of the project's expenditure.

Private Sector Projects:
 
Private sector coal gasification projects are eligible for government support of up to Rs.600 crore or 15% of the total project expenditure.

Pilot Projects for Technology Development:
 
To foster innovation and technology development, the scheme allocates Rs.100 crore per project or up to 20% of the project cost for five pilot projects.
 
One of the key features of the scheme is the reimbursement of the Goods and Services Tax (GST) on coal used for gasification.

This incentive may be provided for a duration of ten years.
 
The initiative aligns with India's broader goals of reducing carbon emissions and transitioning to cleaner energy sources.

With the declining use of coal in thermal power generation due to a shift towards renewables, the scheme aims to explore alternative uses for coal, making it a more sustainable energy resource.
 
The scheme has undergone approval by the Expenditure Finance Committee (ECF)


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