India’s Coal Challenge : Lessons From Chile

Introduction :

Recently, COP-30 of the UNFCCC was concluded in Belem, Brazil. With it, the global push to reduce fossil fuel dependence has intensified.

 

India, which relies heavily on coal for electricity and employment, now faces increasing pressure to align with global climate goals while ensuring energy security.

 

In this context, Chile’s coal phase-out experience provides important lessons for India on how to transition towards more cleaner and sustainable power.

Why India Is Heavily Reliant On Coal?

Reasons :

1. Cheap Availability
   • Coal has historically been the cheapest and most easily available domestic energy source.
   • This made coal – the backbone of power generation.
2. Abundant Supply
   • India has the 4th largest coal reserves in the world.
   Eg ; The all-India coal production in the year 2023-24 was 997.826 Million Tonne (MT) in comparison to 893.191 MT in the year 2022-23 with a growth of about 11.71%.
3. India’s Electricity Needs
   • More than half of India’s electricity still comes from coal-based power plants.
   • According to CEA(Central Electricity Authority), Coal nearly accounts for 72.5% of India’s total electricity generation during financial year 2023-24.
4. Employment Generation
   • The coal-producing PSU’s of the GOI, collectively employ a workforce of 3,69,053 individuals, including 1,28,236 contractual workers.
5. Well-Established Coal Infrastructure
   • India has over 200 coal-based power plants and a vast rail network for coal transport.
   Eg ; 70% of India’s steel capacity is powered by coal.

 

Types of Coal :

1. Anthracite Coal
   • Hardest and oldest form
   • Has highest carbon content – 80-90%
   • Least smoke and highest heat
   • Rarest and most expensive
2. Bituminous Coal
   • Medium hard coal
   • 60-80% carbon
   • High heat and more smoke than anthracite
   • India has large reserves of this type
   • Eg ; Damodar, Mahanadi, Godavari and Son river valleys
3. Sub – Bituminous Coal
   • Lower carbon content – 40-60%
   • Burns with less heat than bituminous
   • Cheaper and more available
4. Lignite
   • Brownish-black coal – 25-35%
   • High moisture
   • Lowest heat output
   • Pollutes more compared to others
   • India has large lignite reserves
   Eg ; Tamil Nadu

Issues Associated With Coal :

1. Environmental Pollution
   • Burning coal releases Co2,So2,Nox,and PM.
   • Causes air pollution, acid rain and respiratory diseases.
2. Climate Change
   • Accelerates global warming and climate change.
   • Eg ; Coal is the largest source of Co2
3. Deforestation
   • Coal mining requires large areas of land.
   • Leads to clearing of forests, loss of biodiversity, soil erosion and habitat destruction.
4. Overuse of Natural Resources
   • Mining produces toxic wastewater that can contaminate rivers and groundwater.
   • Also coal plants require huge amounts of water, competing with agriculture and drinking needs.
5. Affecting India’s NDC Targets
   • Continued dependence on coal undermines India’s updated Nationally Determined Contributions(NDC) commitments.
   • Makes it difficult to achieve goal of reducing emission intensity of GDP and increasing non-fossil electricity capacity by 2030.

 

India’s Climate Commitments : NDC Goals

India’s Strengths /Existing Advantages :

1. Rapid expansion of renewable energy
   • Eg ; By June 2025, India has already crossed 50% of installed power capacity from non-fossil sources, achieving the 2030 target five years in advance.
2. Strong Domestic Manufacturing Base
   • India has rapidly developed solar PV, wind-turbine and green hydrogen manufacturing capabilities.
   • Eg ; National Green Hydrogen Mission
   • Also reduced dependence on imports making large-scale renewable deployment more secure and affordable.
3. Abundant Renewable Energy Potential
   • India has vast solar, wind, hydro and biomass resources. This natural advantage enables large-scale clean electricity generation.
   • Eg ; According to IRENA Renewable Energy Statistics 2025,India ranks 3rd in Solar energy,4th in Wind energy,4th globally in total installed renewable energy capacity.
4. Improved Energy Efficiency And Demand-Side Management
   • Overall electricity demand got reduced and consumption became more flexible, lowering dependence on baseload coal power.
   • Eg ; UJJALA LED programme, smart meters, PAT scheme, time-of-day tariffs
5. Policy momentum and climate commitments
   • Government schemes coupled with production-linked incentives created a supportive policy environment for reducing coal dependence.
   • Eg ; PM-KUSUM,RDSS(Revamped Distribution Sector Scheme),PM Surya Ghar

Lessons To Learn From Chile :

1. Time-Bound Coal Phase-Out Roadmap
   • Chile announced an explicit commitment to phase out coal power by 2040.
   • India needs a formal, actionable coal exit strategy with defined timelines. This accelerates progress towards net-zero by 2070.
2. Renewable Energy Expansion + Regulatory Reforms
   • Chile rapidly scaled up solar and wind energy coupled with battery storage investments to replace coal reliably.
   • India needs renewable deployment, grid/storage upgrades and policy incentives.
   • India’s total installed electricity generation capacity has doubled from 249GW in 2014 to over 500GW in 2025,reflecting rapid expansion in renewable energy.
3. Just-Transition With Support For Coal Dependent Regions
   • Chile’s transition included worker reskilling, alternative employment and socio-economic welfare measures to prevent job loss shocks.
   • India needs targeted social protection plans, workforce training and regional economic diversification for a socially sustainable coal transition in coal dependent regions.
   Eg ; Jharkhand, Chhattisgarh, Odisha, West Bengal
4. Reform Energy Markets – Prioritise Clean Power
   • Chile used electricity market reforms and transparent pricing to make renewables cheaper and more attractive.
   • India needs to strengthen market mechanisms like faster approvals for renewables, long-term renewable procurement contracts and rules that reduce financial risk for clean energy investors.
5. Financing Mechanisms
   • Chile’s transition supported by Public + Private capital, along with community welfare and worker retraining.
   • India needs a dedicated financing model to support plant retirement, social protection for coal regions.

Conclusion :

Chile proves that a planned, equitable and well-financed coal phase-out can ensure both clean energy security and social stability. India can achieve the same with a clear timeline, robust renewable expansion and protection for coal-dependent communities. Though,