Lessons learnt from FGD policy
Deployment of new clean technologies may lead to cost reduction in long term but the avoidable increase in energy prices in near to medium term has the risk of impacting the attainment of Sustainable Development Goals and industrial competitiveness.
Let us look at the facts which led to revision in the approach regarding installation of Flue Gas Desulphurisation (FGD) equipment in existing and new coal-based power plants. Instead of focussing at the compliance with National Ambient Air Quality Standards (NAAQS), the SO2 emission standards notified at stack level(discharge from chimney of the plant) in 2015 led to a situation where each thermal plant was required to invest in technologies like FGD.
This imposed not only extra cost of about 30 paise per unit of electricity but also higher emissions of carbon dioxide due to increase in auxiliary consumption of the plants for running the FGD. The imbalance in supply of imported components and sudden increase in demand led to a situation that Damodar Valley Corporation saw an increase of cost in FGD project from ₹50 lakh per MW to ₹1 crore per MW in a short period.It took several years and avoidable cost increase in power supply to realise on the basis of a number of scientific studies that in most of the cases, NAAQS could be easily met by simply adhering to the already laid down chimney height norms which ensure that the emission from low sulphur Indian coal combustion get dispersed easily. Except for the coal deposits of NE region of India, Indian coal is characterised by high ash but low sulphur with less than 0.6 per cent concentration. Coal in our NE region has sulphur content from 3 to 5 per cent which is not used much in power generation. The sulphur concentration can go up to 5 per cent in imported high sulphur coal.Thus, the Ministry of Environment and Forest has rightly exempted about 78 per cent of the power plants from investing in FGD and saved the avoidable burden on electricity prices while mandating the adherence to stack height norms to ensure dispersion of emissions. At the same time, it has continued the obligation for plants in or vicinity of NCR region and million plus cities where SO2 emission load in the ambient air is high on account of other pollution loads like industrial units and vehicular emissions. For other critically polluted areas, a case-by-case approach has been planned based on scientific analysis. But meanwhile several power plants have started implementation of FGD which would add a burden of about more than ₹50000 crores. However, the revised policy approach has saved avoidable investment of more than ₹1.4 lac crores.The revised approach is welcome as it meets the national environmental standards without avoidable cost increase in basic infrastructure like electricity. It will also avoid the increase of CO2 emissions which last far longer in the atmosphere aggravating global warming, emissions involved in mining and transport of lime stone and wastage of water. I am sure that Hon’ble Courts will also approve the decision based on scientific studies.But the lessons learnt in this case should not be forgotten while designing the policies in other areas. Two key lessons emerge. First, that major decisions should be taken only on the basis of pilot projects in multiple locations with their results thoroughly assessed by independent scientific studies, and secondly, the policy design should be largely technology neutral for achieving the overall national goals.Another case of such a policy overreach is the mandated source wise renewable energy consumption obligations. We have mandated separate targets for various sources like solar, wind, hydro, distributed energy sources etc within the overall yearly targets.
Some fungibility has been permitted for year-to-year adjustments. But the cost optimisation opportunities are largely missed at the stage of capacity expansion planning if the concerned distribution company has to comply with the source wise targets. The overall objective is decarbonisation of grid electricity which can be achieved by several routes like solar, wind, hydro or for that matter even nuclear. A sound policy will be to permit complete fungibility as long the overall targets of non-fossil electricity are met. Why a state of NE region rich in hydro should be compelled to import wind energy from far off distances if it increases the overall system costs.A case of sound and balanced policy is Carbon Credit Trading Scheme for reducing the emission intensity of high emitter industrial units. The scheme permits adoption of the most cost-effective technologies, and even trading of the credits, as long as overall trajectory of emission intensity reduction is achieved. This gives full freedom to the designated industrial unit in making economic choice while ensuring compliance with nationally determined goals.
The policy makers need to make choices very carefully based on economic principles and scientific reasoning and not on the basis of opinions to avoid the risks to our development attainments.
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