The Indian Government’s recent relaxation of the 2015 mandate for installing flue-gas desulphurisation (FGD) systems in coal-fired power plants has sparked a debate on the balance between environmental protection and economic viability. The exemption, applying to nearly 79% of India’s thermal power capacity, is a significant shift in policy, driven by new data and analysis.
The Central Pollution Control Board’s findings revealed that existing control measures increased carbon dioxide emissions, prompting a re-evaluation of the FGD installation requirement. The new rules focus on plants within 10km of cities with populations over one million, while other sites are exempt. This differentiated compliance approach considers proximity to urban populations and the sulphur content of the coal used.
Studies by institutions like IIT Delhi, CSIR-NEERI, and the National Institute of Advanced Studies (NIAS) showed that ambient sulphur dioxide levels in most parts of India are within the National Ambient Air Quality Standards. These studies questioned the environmental and economic benefits of universally mandating FGD systems, given India’s relatively low sulphur coal content of less than 0.5%.
The NIAS study highlighted potential environmental drawbacks, including an additional 69 million tonnes of CO₂ emissions from 2025 to 2030 due to activities associated with FGD systems, such as limestone mining and transportation. The anticipated reduction in electricity costs, estimated at Rs0.25 ($0.0029) to Rs0.30 per unit, is expected to benefit consumers directly. This cost-saving measure is particularly significant in a high-demand, cost-sensitive market like India, where it could help state electricity distribution companies contain tariffs and reduce government subsidies.
The financial implications of mandatory FGD retrofitting were substantial, previously estimated at over Rs2.5tn ($29.1bn), equating to Rs120m per megawatt, with installation timelines extending up to 45 days per unit. This policy shift could free up significant capital for other investments in the power sector.
Concurrently, India is focusing on meeting its growing electricity demand through renewable energy sources. A report from the Rocky Mountain Institute outlines India’s approach to harnessing clean energy while addressing affordability, job creation, domestic production, and competitiveness. India’s electricity demand is projected to triple by 2050, driven by increased vehicle usage and air conditioning needs.
This policy change could accelerate India’s transition to renewable energy by making coal-fired power more economically viable in the short term, while also highlighting the need for more targeted environmental regulations. It also raises questions about the role of international standards in shaping domestic environmental policies and the balance between global environmental goals and local economic realities.
The differentiated compliance approach could set a precedent for other countries grappling with similar challenges, encouraging a more nuanced discussion on environmental regulations and economic development. However, it also underscores the need for robust, independent studies to inform policy decisions and ensure a balanced approach to environmental protection and economic growth.