Green energy and just transition

Coal-rich states in the country can take a cue from Odisha’s new renewable energy policy, which is geared to ensure a just energy transition for the state.

By Nikunja B Dhal and Chandra Bhushan

Odisha has been playing a central role in meeting the country’s growing energy needs. The state is the largest coal producer, producing about 185 million tonnes of non-coking coal in 2021-22. This is sufficient to fuel about a quarter of the country’s coal-based power generation. But Odisha is also one of the most climate-vulnerable states, with extreme weather events like cyclones, heat waves, floods and droughts taking a significant toll on the livelihoods and the economy every year.

To balance the imperatives of energy and climate change, thegovernment of Odisha has unveiled a new renewable energy (RE) policy during the Make in Odisha Conclave held recently Bhubaneswar, with a clear ambition and objective of ushering in a just energy transition in the state.

Increased adoption of RE has become vital for the state due to multiple reasons:

  • First, the government of India has committed to a net-zero target by 2070. This means that coal production and consumption would have to decline significantly over the next two to three decades, impacting the lives and livelihoods of coal-dependent communities. Therefore, Odisha must plan for the coming energy transition to safeguard the interests of vast numbers of people in its coal and industrial districts
  • Second, Odisha is among the country’s leading industrialized states, and a continuous increase in energy demand from all sectors is expected in the coming years. There is an apparent demand for RE from electricity distribution companies (discoms) and industries due to Renewable Purchase Obligations (RPOs). But the state currently accounts for just 0.55% of the country’s RE capacity (excluding hydropower) and imports renewable power to meet most of the existing RPO requirements. Without a rapid RE scale-up within the state, RE imports will increase several times in the coming years as RPO targets reach closer to 45% by 2030
  • Third, it is highly dependent on the mining and metal sector for growth and jobs. Currently, 39.5% of the state’s gross value addition comes from the industry sector, the highest in the country. Moreover, the global mining and metal sector is transitioning to renewable energy and green hydrogen to reduce its carbon footprint and meet net-zero targets. Odisha, therefore, has an opportunity to become the hub of the green mining and metal sector by encouraging its industries to install captive RE plants within the state
  • Lastly, sectors like green hydrogen, green ammonia and energy storage are developing rapidly. Given the strong manufacturing base, Odisha has the opportunity to grow these green sectors to support the next phase of industrialization, creating new employment opportunities as well as boosting economic activity and income. But, so far, the RE sector has not taken off in the state due to certain policy challenges and perceptions. For instance, there is a misconception that the state has low solar and wind potential. This misconception has been created due to gaps in potential estimation, which the Odisha Renewable Energy Policy, 2022 (OREP-2022) is addressing on an urgent basis. Likewise, the policy challenges have also been addressed in the new policy

Overall, a combination of factors has led to a scenario that it is cheaper for discoms and industries to buy renewable power from states like Gujarat and Rajasthan than to install RE projects within Odisha. Therefore, one of the key aims of OREP-2022 is to bridge the cost delta by providing best-in-class incentives to attract investors to develop the vast untapped RE potential of the state.

The policy includes several exemptions on duties, charges and surcharges for 15-20 years duration, along with investment facilitation and single window clearances. In addition, several measures have been introduced to ease land allocation for RE project development, including priority allocation under the state’s land bank scheme, provisions for aggregation of private land, and exemptions from the land ceiling.

The policy pays special attention to certain high-potential technologies, such as pumped-storage hydro and small-hydro, for which the requirement of free power supply to the state has been waived for projects contributing to the state’s RPO. In addition, given the paucity of large wasteland tracts, the policy pays special attention to developing solar rooftops, floating solar, and distributed solar projects. Furthermore, wind power is proposed to be promoted through feed-in-tariff, and upcoming technologies like green hydrogen and ammonia are also being promoted through various incentives.

Meanwhile, economic diversification, and the need for skilled human resources for new and emerging sectors, would be vital to ensure a just transition of the coal districts of the region. Odisha’s new RE policy addresses this by including explicit measures for creating a skilled and semi-skilled workforce for the RE sector. Existing educational infrastructure in the state is planned to be upgraded to provide training on RE component manufacturing, installation, operations and maintenance. Most importantly, to maximize RE job creation in the state, the green energy manufacturing sector has been included as a ‘thrust sector’ in the state’s new Industrial Policy Resolution (IPR), which aims to transform Odisha into the most “Preferred Investment Destination in India”.

Overall, OREP-2022 and IPR are timely steps taken by the government to boost green investments in the state and decarbonise the energy sector. These policies will also support balanced RE growth in the country and help meet the nation’s RE and Net-Zero targets. But, most importantly, they will help ensure a just energy transition in coal regions over the next decades.

Jharkhand contributes to 32% of the country’s reserves but loses more than it gains from coal

In an exclusive conversation with iFOREST, the Chief Minister of Jharkhand, Shri Hemant Soren, talks about the role of coal in Jharkhand’s economy, and the need to develop other economic sectors to transition to a non-coal economy.

Q. 1 How important is coal for Jharkhand in the present day?

Jharkhand is one of the few states in the country that is blessed with rich mineral wealth. The state contributes to 32% coal reserves in India. Although, coal has always been an important resource for revenue generation for the state. But the state has not attracted investments worthy of its endowments. 
Additionally, lakhs of tribal and indigenous people have been displaced from their lands without proper rehabilitation benefits. It is therefore an irony that Jharkhand illuminates the country with its coal but is forced to live in darkness. Coal is important to Jharkhand but not at the cost of huge societal and environmental loss.

Q2. Is Jharkhand benefiting from coal as expected?

The abundance of mineral wealth has been a resource curse for Jharkhand. The state contributes to 32% coal reserves in India. However, the benefits accrued to the state aren’t in the same proportion and we lose more than we gain. There’s DMF which allows some developmental activities in the mining affected regions and communities, but its functioning needs to be streamline.

Q3. Under what conditions do you want to increase coal production in the state?

With the increase in coal production, state revenue will also increase. However, our government is determined to safeguard the interests and rights of people and state. The Union Government has opened up auctions for commercial mining within the coal sector. The auction area also includes Jharkhand. However, I had requested the central government to provide a moratorium of 6-9 months. In this regard, I had written a letter to Hon’ble Minister of Coal, Mines & Parliamentary Affairs, Government of India requesting that due to COVID-19 pandemic, many domestic/foreign players might not participate in the auction process due to travel restrictions and several enterprises facing financial liquidity crunch.
My government also wants to ensure that steps taken for sustainable mineral development are in harmony with prevalent social and environmental practices and the adverse costs on tribal populace and the ecologically fragile zones do not outweigh the benefits that we might get economically.

Q4. What do you think are the challenges of coal mining in environmental and social terms? How is the Jharkhand government planning to offset or deal with these?

Over all these years, Jharkhand has been forced to drink ‘laal-paani’ and ‘kaala-paani’ due to mining activities. Many people were forced to leave their land. Those left behind were exposed to severe diseases and complications. As a result, much more deliberations are required with various stakeholders for creating a conducive policy framework. Thus, it is vital that a balance is struck between societal expectations, environmental preservation and economic growth.

Q5. The Intergovernmental Panel on Climate Change (IPCC) report has spoken about phasing out coal for climate change concerns. Do you think Jharkhand can transition to solar and wind energy from coal? If yes, how long do you think this transition will take? If no, what are the alternatives?

Climate change related issues are increasing at an alarming rate. Due to the erratic changes in climatic conditions, it is mostly those at the margins who are most affected. Therefore, switching to renewable energy resources becomes essential. My government is committed to exploring alternate energy resources, especially solar energy for both electrification, saving unforeseen costs of conventional sources and also for facilitating micro irrigation to farmers and farmers collectives.

Q6. A new concept called Just Transition in coal mining areas has been emerging. The basic idea is that local communities in coal mining areas/ coal districts should not become the victims of coal phase-out in the next 20/30 years as the IPCC report says. Therefore, it says that economic opportunities should be created for mining dependent communities in these areas. Given this, is the Jharkhand government open to developing a Just Transition plan in coal mining areas? If yes, what should be the major components of the just transition plan?

I have not heard much about the Just Transition concept. But my government welcomes any concept that provides equity to people and other stakeholders affected from coal mining, directly or indirectly in districts and zones affected by mining.

Q7. A key component for transition towards a non-coal economy will be diversification of economic opportunities. What are some of the economic sectors in the state with growth opportunities that can substitute for the revenue and employment that the coal industry currently provides?

Jharkhand is rich in minerals. But it has also been endowed with rich and diversified natural resources across the state. Tourism is one of the sectors which has been left untapped until now. We have so many states in India which generate revenue by focusing solely on Tourism. Not only does it create revenue but also promotes conservation and sustainable use of natural resources. Although post COVID 19 recovery will take time, we are focused to create a nature-based tourism plan to attract citizens across the country towards natural beauty and alternative indigenous living practices, prevalent in the state.

The other is NTFP (Non-Timber Forest Produce) based economy in Jharkhand. The NTFP based economy has never been given due attention until now. My government is working on strengthening the overall structure of NTFP based backward and forward linkages. I believe that with due policy in place – not only the tribals and forest dwellers will get a decent income but it will also accentuate sustainable use of natural resources. Jharkhand also has great potential for renewable energy, pharmaceuticals, textile and other rural based industrialization initiatives. We are also going to soon start a process to map out specific enterprises/ industrial units that could be promoted/ developed to boost our rural economy and economic resilience.

Q8. Which social security measures should the government prioritize to facilitate a well-planned transition? What can be the main revenue sources for it?

We have been committed to ensure social inclusion in all our programmes in this brief 6 month period. We will also soon launch the Urban Wage Guarantee Initiative, a first in its country and want to understand how a safety net for intra-state workers could be created in urban and peri-urban areas through state commissioned public works. Jharkhand is blessed with an industrious labour force. Our government prioritizes keeping welfare and pride of the labour force and other people intact. Keeping this as our priority, we promoted direct engagement with the Border Roads Organization (BRO) when they had approached Jharkhand for labour force. Our government is working on developing a plan and policy measure to ensure the rights and welfare of the people of Jharkhand especially towards responsible business practices and establishing an aspirational and responsible migration pattern in the future, contrary to the distress migration that has been practiced.

Q9. What is your opinion about the political momentum / or support for transiting to non-coal economy in the mining districts? How do you think a favorable political will can be built?

Jharkhand Mukti Morcha (JMM) has always fought for the rights of people of Jharkhand. We always support less extractive and more equitable platform for our state. Our coalition government and JMM welcome any opportunity to promote equitable opportunities for both industries and people.

Q10. What do you think that can be done to build a multi-stakeholder consensus and engagement for a transition?

Multi-stakeholder consensus cannot be attained unless there is democratisation of processes. We have the political will to do that and will deliberate more once the larger socio-economic picture is clearer. We also need time – I spent 4 months tackling COVID-19 and it has been a learning time. There are several plans but definitely they will be laid in the times to come.

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