iForest reports on the impact of energy transition on coal and power centric districts

Delhi based environmental think tank – International Forum for Environment, Sustainability & Technology (iFOREST) – has released a comprehensive report called ‘Korba: Planning a Just Transition for India’s Biggest Coal and Power District.’ According to the report India’s biggest coal and power districts will face energy transition challenges much earlier than anticipated and economic restructuring and development intervention will be essential to counter it.

iFOREST studied Korba in Chhattisgarh which is India’s biggest coal-producing district to analyze challenges and opportunities of energy transition. The district has over 40% tribal population and about 41% people living below the poverty line.

The report says that the energy transition, propelled by the fast-growing and cost competitive renewable energy sector, coupled with declining coal reserves and unprofitable coal mines, necessitates just transition planning to start urgently.

Today, Korba is highly dependent on the coal industry for jobs and growth as more than 60% of Korba’s GDP and one-in-five jobs (which makes it 20%) come from coal mining and coal related industries.

The situation of the day is that the mines are getting exhausted and half of the thermal power plants are also older than 30 years. The present policies aligns with India’s net-zero emission target of 2070 and all mines in Korba can be closed by 2050 and power plants by 2040 in a phased manner. This can be a win- win for the South Eastern Coalfields Limited (SECL), as the resources saved can be diverted to start a just transition in Korba.

The report also says that Korba has an ageing formal workforce – at least 70% of SECL and NTPC workers are 40-60 years of age. Hence, their retirement can be synchronized with plant and mine closures.  Although biggest challenge is the re-employment of informal workers and skilling for the new economy.

In this scenario, the report adds, economic and industrial restructuring and physical and social infrastructure investments will be essential for a just transition. The government will need to couple this with substantial policy and legal reforms in land, labour and finance.

The report also holds that public sector companies – CIL and NTPC – will have a significant role in enabling the transition in India’s coal-dependent regions.

Way Forward

To counter the anticipated challenges, the iFOREST report has developed a just transition planning framework for Korba that is based on the 5 R’s principle. These are restructuring of the economy, repurposing of land and infrastructure, reskilling and skilling of the workforce, revenue substitution, and responsible social and environmental investments and practices. The think tank says that his can be a template for all the similar districts of India.

To fund just transition, both domestic and international finance will be required. DMF fund, CSR funds and coal cess will be the most significant domestic sources for transition financing. These three currently contribute about Rs. 5300 crores in Korba, which will increase to Rs. 7500 crores by 2035. The coal cess can be the most critical green fund for a just transition.

“Just transition is not just about climate change action; it is an opportunity to reverse the resource curse in the coal districts. We need to have the right policies and governance mechanisms to ensure that this opportunity to build a new inclusive economy is realised” said Srestha Banerjee, Director, Just Transition, iFOREST.

TS Singh Deo, Chhattisgarh’s Minister of Panchayat and Rural Development, said, “Justice will be the most critical aspect of the energy transition, and this will need to be addressed. This will be possible through not only state intervention, but through a collaborative effort at various levels.”

Coal Secretary Anil Kumar Jain opined, “A place-based approach is the answer to ensuring a just transition as districts have different issues.” He also said that land will be a key issue to build a new economy and repurposing of mining land can provide a key opportunity.

“For India, development intervention will be a key aspect of just transition. We also need to invest in human capital in states like Chhattisgarh, Jharkhand and Odisha,” said NITI Ayog CEO Amitabh Kant.