Can efficient carbon management solutions reduce the impact of rising emissions?

What a change three months can make. Since Israel and the US bombed Iran on February 28, and the subsequent blockade of the Strait of Hormuz, global energy markets have gone into a tizzy.

For India, particularly vulnerable since 80% of its crude transits through the Hormuz, the war has triggered a fundamental rethink about the energy transition playbook.

Coal is no longer a dirty fuel. Instead, as a transition fuel via coal gasification, it is now central to the country’s plans to meet the growing industrial energy demand. After all, India holds one of the world’s largest coal reserves, estimated at around 401 billion tonnes, along with nearly 47 billion tonnes of lignite reserves. Union Minister Ashwani Vaishnaw has said India’s coal reserves were sufficient for nearly 200 years, making coal gasification an important pillar of long-term energy resilience.

Indeed, for India Inc, the shift to coal as a bridge fuel has been fast, especially where immediate electrification is difficult, as industrial operations have been hit by a shortage of Liquefied Natural Gas (LNG) amidst the West Asia conflict.

For instance, Jindal Steel recently switched to synthesis gas (syngas) through coal gasification due to a shortage of LNG supplies for its steel-making units. UltraTech is increasing the share of domestic coal in its energy mix in its cement plants. Mahindra & Mahindra is looking for electrification of fossil fuel processes across its ecosystem.

Boosting these efforts, the central government recently announced a Rs 37,500 crore incentive scheme for coal gasification projects aimed at cutting India’s Rs 2.77 lakh crore import dependence on LNG, ammonia, methanol, fertilisers and other industrial feedstocks.

Of course, there is a trade-off here. India’s carbon emissions will increase in a transition towards fossil-based power for energy security. This comes at a time when India has upped its climate action goals, pledging to achieve 60% of installed power capacity from non-fossil fuels by 2035. As part of its submission to the United Nations in March this year, the country committed to reducing emissions per unit of GDP by 47% by 2035 from 2005 levels.

Coal gasification, one of the solutions being touted now to offset the crude vulnerabilities, produces more carbon dioxide than a conventional coal-powered thermal power plant, according to an assessment by the think tank Centre for Science and Environment (CSE).

“It remains a carbon-intensive pathway. Without carbon capture, utilisation and storage (CCUS), coal gasification can lead to substantial CO emissions and lock in high-carbon infrastructure,” says Parth Kumar, Programme Manager Sustainable Industrialisation Unit, CSE.

Of course, it isn’t just coal that is being explored. There is a renewed focus on ramping up renewable energy capacity as well, along with a focus on nuclear power. India added a record 15.3 GW of solar capacity in the first quarter of 2026.

Once you have an electricity-based process, you can further optimise the cost by shifting to renewable power. Embracing industrial electrification is essential.

-ANKIT TODI,CHIEF SUSTAINABILITY OFFICER, MAHINDRA GROUP

Corporates step in

Among the first movers was Jindal Steel Ltd. In April, the company announced that it would embrace coal gasification technology to enhance energy self-reliance and sustainable steel production.

The company has achieved a world-first by establishing India’s premier coal gasification-based Direct Reduced Iron (DRI) plant. This facility utilises syngas rather than traditional fossil fuels for iron making, according to the company.

“Syngas from swadeshi coal can replace imported methanol, ammonia, ammonium nitrate, and LNG. India must utilise its vast coal reserves to future-proof low-carbon growth and reduce forex outflow,” says PK Biju Nair, Executive Director of Jindal Steel’s facility in Angul, Odisha.

The company has also deployed syngas in its galvanising, colour coating line furnaces, a first for the global steel industry, and has injected syngas into blast furnaces.

Simultaneously, the company is working on green pathways. By 2030, it has a target of reducing CO2 intensity by 30%, increase renewable energy to 50% and ensure full biodiversity coverage across all sites. In the decade to 2040 it will scale hydrogen circularity and carbon capture and storage (CCS) infrastructure.

Apart from steel, the West Asia conflict has also hit energy feedstock supplies for sectors such as ceramic, cement, urea and other high-heat processing units. Some companies in those sectors, too, have decided to increase the coal share in the fuel mix.

Atul Daga, Chief Financial Officer of UltraTech Cement, says the company is actively managing its fuel mix, optimising between pet coke, coal, alternative fuels, and increasing the share of domestic coal wherever required and possible. About 43% of Ultratech’s power requirement is met from green sources, which the company plans to increase to about 85% by FY30.

Elsewhere, too, the importance of coal is being appreciated anew. In the power sector, though India has paused the addition of thermal plant capacity, the country announced an expansion of existing thermal capacity in 2024 to meet the growing electricity demand. India’s peak power demand touched 270 GW on May 21, an all time record as a result of soaring temperture, compared to 243 GW peak demand in 2025.

S.B. Khyalia, CEO of Adani Power, the largest private thermal power producer, says the world has come to realise that fossil fuel-generated power cannot be just wished away.

“It has a crucial role to play in balancing the grid as renewable energy penetration increases. As our power needs become more intense, it is reliable and domestic energy sources like coal that come to our help and provide electricity that runs our ACs, our factories, and our data centres,” he says.

India proposes to set up an additional 100 GW coal-based capacity by 2031-32. Adani Power, Torrent Power, JSW Energy, and the state-owned NTPC have planned investments of over Rs 5.5 lakh crore.

Transition journey

Syngas, complemented with the carbon capture technology, is being projected as a possible transition fuel for the hard-to-abate sectors. Though some players are working on CCUS technology in India, none have been successful commercially yet.

JSW Steel has implemented CCUS technology at JSW Salav Works in Maharashtra for producing low-grade emission steel from natural gas and DRI, and renewable energy, eyeing exports.

It is also a part of an industrial consortium looking to set up CCUS hubs in Asia. “As one of India’s leading steel producers, JSW Steel is taking a leadership role in advancing CCUS as a critical enabler for hard-to-abate sectors, alongside renewable energy, efficiency and process innovation,” says Prabodha Acharya, Chief Sustainability Officer of JSW Group.

The energy transition is accelerating as a strategic risk hedge rather than a pure economic choice for Indian corporates.

M&M runs more than 50 resorts that have large-scale commercial kitchens. Yet it faced only limited disruption from the LPG crunch triggered by the blockade of the Strait of Hormuz.

Ankit Todi, Chief Sustainability Officer of M&M Group, says the current energy crisis has provided strong validation of the company’s green energy transition strategy across group companies.

“For example, at Mahindra Holidays, we have been able to eliminate fossil fuel use completely in about 20. They ran entirely on electricity-based systems for cooking, including for complex operations such as tandoors,” says Todi.

The company is now looking to scale similar measures across the entire ecosystem.

“There are many industrial processes that require temperatures below 400°C and can be largely electrified in a financially viable manner. Once you have an electric-based process, you can further optimise the cost by shifting to renewable power. Embracing industrial electrification is essential for building energy resilience,” he explains.

Indeed, if there is one major lesson from the current crisis, it is that for developing countries like India, balancing energy security, industrial competitiveness and climate goals requires pragmatic transition pathways rather than binary choices. “The climate compatibility of coal gasification will depend on the efficiency of technology, adaptation to Indian coal characteristics, deployment of carbon management solutions and supporting policy and innovation ecosystems,” says Vibha Dhawan, Director General of the non-profit The Energy and Resources Institute (TERI).

Coal gasification is likely to be viewed more as an energy security and industrial resilience strategy rather than a substitute for the expansion of renewable energy.

“In the near to medium term, there will be greater policy focus on earmarking coal for gasification and coal-to-chemicals projects. Over time, this could lead to greater diversification in coal consumption patterns, with a large share being directed towards chemicals, synthetic fuels and industrial feedstocks alongside conventional power generation,” says Pritish Raj, coal pricing analyst, S&P Global Energy.

Experts are unanimous in their view that coal gasification should not be viewed as a replacement for solar or wind, or long-term decarbonisation. Industries must continue building non-fossil power capacity.

Trade restrictions

As India scrambles to meet the immediate impact of the West Asia war, there is another external challenge it must confront. Increasingly, global trading partners are mandating that exporters cut their emissions by moving towards a low-carbon road map. This is being primarily driven by the European Union with its Carbon Border Adjustment Mechanism (CBAM), which embeds carbon costs directly into market access conditions. The EU accounted for 17% of India’s exports and was its third largest trading partner in 2025.

For India, the impact will be felt hardest in carbon intensive, trade exposed sectors such as steel, aluminium, cement and fertilisers. Exporters must comply with mandatory emissions disclosures; purchase certificates aligned with EU emission trading system prices and the subject themselves to stringent verification.

The first annual CBAM declaration for 2026 imports is due on September 30, 2027, marking the beginning of full financial compliance under the definitive regime.

Taking it a step ahead, the EU plans to charge CBAM tax on 180 new steel- and aluminium-based products from January 2028. This will impact the medium and small enterprises dealing in manufacturing and industrial goods.

The Global Trade Research Initiative (GTRI), a trade think tank, says Indian industry should no longer view CBAM as a regulation affecting only steel and aluminium. GTRI estimates that by 2030, most industrial products entering the EU could potentially face some form of carbon tax exposure.

As one of India’s leading steel producers, [we] are taking a leadership role in advancing CCUS as a critical enabler for hard-to-abate sectors, alongside RE.

-PRABODHA ACHARYA,CHIEF SUSTAINABILITY OFFICER, JSW GROUP

“It is a very challenging situation. Everything has to be calculated product by product,” says Anil Bhardwaj, Secretary General of Federation of Indian Micro Small & Medium Enterprises (FISME).

Bhardwaj explains that SMEs are completely dependent on grid power, where coal-based thermal power constitutes 80-85% of supply. This is not the case for large industry, because the latter can set up their own captive power plant and have green energy wheeled into their plant.

“We are talking to the government about how green power can be provided to clusters exporting to the EU,” says Bhardwaj, adding the sector largely lacks data on emissions.

In April, the European Parliament also opposed allowing international carbon credits for CBAM compliance. Hence, firms exporting to the EU would have to physically reduce emissions at source or operate under a domestic carbon pricing system accepted by the EU.

India has notified the Carbon Credit Trading Scheme (CCTS) with the objective of reducing, removing, or avoiding greenhouse gas emissions from the Indian economy by pricing such emissions through the trading of Carbon Credit Certificates. However, the market has not yet begun credit issuance under the compliance mechanism.

Hence, India’s immediate solution of embracing coal again may complicate its energy transition trajectory. Multiple fuels will likely coexist for decades. The country must look past the immediate challenge to focus on cleaner alternatives that will make it less vulnerable to external shocks.

@richajourno