Fuel 263 (2020) 116595

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Full Length Article

Enabling a gasification and carbon capture economy in India: An integrated T

techno-economic analysis
⁎
Atanu Mukherjeea, , Arunava Maitya, Saikat Chatterjeea,b
a
M. N. Dastur & Co. (P) Ltd., P-17 Mission Row Extension, Kolkata 700013, India
b
Dastur Innovation Labs, 250 Yonge Street, Suite 2201, Toronto, ON M5B 2L7, Canada

A R T I C LE I N FO A B S T R A C T

Keywords: India emits over 2.4 gigatons of CO2 [1,2] today and will continue to see the biggest increase in fossil fuel CO2
Coal gasification emissions. This is partly due to rapid economic growth, industrialization, and efforts to bring electricity to rural
Carbon capture communities. Apart from restructuring the power sector through progressive adoption of high efficiency low
utilization and storage (CCUS) emission (HELE) power plants with potential carbon capture, pre-combustion carbon capture along with syngas
Steel
based industrial production and petrochemical feedstock substitution can lay the foundations for an econom-
Ammonia
ically viable, less carbon emission intense industrial future for India. One of the biggest opportunities for carbon
Methanol
Techno-economic analysis dioxide abatement through clean coal technology lies in using India’s abundant low rank coal reserves through
coal gasification and carbon capture to enable and expand a carbon neutral industrial economy, which today
emits close to 25% [1–3] of the total greenhouse gases (GHG).
A practical and holistic macro and micro-level techno-economic analysis is an essential pre-requisite for
enabling a clean coal-based industrial economy in a cost-sensitive developing country like India. Through this
study, the key sectors that can be enabled using coal gasification and carbon capture are identified and the viable
techno-economic options, macro-economic and trade impact, policy support options and a carbon capture fi-
nance model for India are analyzed.

1. Introduction
Although most of the initiatives in the world is focused on using
renewable sources of energy such as solar and wind for a carbon dioxide
neutral economy, the likelihood of addressing the greenhouse gas
(GHG) emissions problem through a renewables-only strategy does not
address the core issue of economy wide carbon dioxide abatement.
While electricity generation and transportation sector results in gen-
eration of 35% [2,4] and 10% of the total CO2 emissions respectively in
the Indian economy, industrial sources (including steel, cement and
plastics) give rise to ~25 to 30% of the total CO2 emissions [2,4]. It is
imperative that a developing nation like India which will see ac-
celerated industrialization, address the GHG emissions from the CO2
emissions intensive industry in a practically realizable manner, while
not compromising economic growth. India can utilize its large reserves
of high-ash low rank coals to transform large parts of its growing
manufacturing sector, into a gasification enabled industrial economy
integrated with carbon capture, utilization and storage (CCUS) so as to
ensure carbon dioxide abatement in its industrial ecosystems while not
compromising on growth.
In this paper, we investigate both the macro and micro level techno-
economic viability and policy mechanisms for producing methanol,
steel and ammonia along with CCUS in India through coal gasification
using low rank Indian coals. Using a variant of the applied general
equilibrium (AGE) model [5], our initial workings indicate that with
the right policy initiatives and market design, hyper-scale coal gasifi-
cation, based on low-grade Indian coal, along with CCUS can enable a
large-scale carbon-neutral industrial economy of methanol, ammonia/
fertilizer, olefins, steel, and power while potentially enhancing India’s
oil production from its depleting oil fields. The methanol can be used
for producing methanol-based chemicals and olefins for plastics and as
a substitute for petrol, diesel and liquefied petroleum gas (LPG). Close
to 15% of the petrol used today in vehicles can be substituted by me-
thanol. Additionally, 20% of imported diesel and cooking gas can be
substituted by domestically produced methanol. Over 15% of plastics/
olefins feedstock based on imported crude oil heavy distillates can be
replaced by coal gasification-based methanol, saving over $5 billion in
imported naphtha. Similarly, India as a nation has a plan of producing
300 million tonnes per annum (mtpa) of steel by 2030 [6]. It is envi-
sioned that most of this production will happen through the energy and

⁎
Corresponding author.
E-mail address: atanu.m@dastur.com (A. Mukherjee).

https://doi.org/10.1016/j.fuel.2019.116595
Received 31 May 2019; Received in revised form 8 September 2019; Accepted 5 November 2019
Available online 19 November 2019
0016-2361/ © 2019 Elsevier Ltd. All rights reserved.
A. Mukherjee, et al.
carbon-emission intensive blast furnace route using imported coking
coal. Since the average CO2 emission for the steel industry through the
blast furnace route is 2.1 tons of CO2 per ton of crude steel produced
[7], the Indian steel industry is set to produce around 0.5 billion tons of
CO2 by 2030, considering 80% capacity utilization. However, a sig-
nificant portion of such steel making, estimated at about 50 mtpa of
capacity, can be through the gas-based direct reduction route based on
coal gasification and CCUS. This will reduce coking coal imports by
over $6 billion while cutting carbon emissions by over 50%. Captured
CO2 based Enhanced Oil Recovery (EOR) can increase India’s oil pro-
duction by up to 30% resulting in $4 billion (BB$) worth of excess
production from the ageing oil fields.
Our techno-economic analysis for the methanol, steel, and ammonia
based clean coal economy through gasification and carbon capture
utilization and storage (CCUS) have high GDP, employment and trade
impact while capturing 50–70% of the CO2 present in the syngas (also
referred as “gasification economy” in our analysis). Through sectoral
analysis and related techno-economic models, an attempt to integrate
the different facets of technology options, substitution, policy, and fi-
nancing has been made to enable gasification and carbon capture based
industrial economy for the most opportune sectors of the Indian in-
dustry. It is hoped that this framework will contribute to laying the
foundations for a clean coal-based gasification economy in India.
2. Framework for a sustainable ‘gasification + CCUS’ based Indian
economy
The broad results of our gasification economy framework for the
Indian economy based on gasification and carbon capture has been
depicted in Table 1. We assume that the large Indian coal endowments
with appropriate blending can be seamlessly accessed and commer-
cially exploited to build high value competitive and sustainable me-
thanol, steel and ammonia-based gasification value chain. Trade and
current account deficit impacts of the gasification economy are integral
to this framework and are shown to significantly reduce the de-
pendency on imports with respect to coking coal, crude oil and deri-
vatives, and natural gas. In our framework, an economy-wide techno-
economically viable coal-gasification and related industry and con-
sumption model drives the development of an economically viable, and
policy enabled carbon capture and storage infrastructure – which is a
requirement for a sustainable coal gasification enabled Indian economy.
Our analysis indicates that by 2030, the gasification economy can
enable major sectors viz. methanol, steel and ammonia. The GDP impact
and multiplier effects corresponding to these sectors are shown in
Table 1. GDP impact and value creation have been estimated based on
revenue and EBITDA generated from each of the industries respectively.
There are a few operating principles that drive our gasification enabled
industrial economy framework:
a) Bring “technology to the coal – not coal to the technology” – This we
believe is fundamentally important in the Indian context because of
the abundant availability of low rank high ash coals. This places
constraints on the options for economically viable and scalable ga-
sification and related technologies for the clean coal enabled
economy.
Table 1
Framework of a sustainable Indian economy based on gasification and carbon
capture.
Production Area 2030 Output GDP Impact Value Creation Investment
Methanol 40 mtpa 17 BB$ 6 BB$ 20 BB$
Steel 50 mtpa 28 BB$ 8 BB$ 30 BB$
Ammonia 16 mtpa 5 BB$ 1 BB$ 16 BB$
Total 50 BB$ 15 BB$ 66 BB$
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Fuel 263 (2020) 116595
b) Prioritize pre-combustion over post-combustion based capture sys-
tems – We believe that, techno-economic viability of integrated
CCUS and the seeding of n-of-a-kind learning and scale multipliers
for CCUS in the future can be best achieved through pre-combustion
capture.
c) Adequate coal sourcing, consistency and blending are essential pre-
requisites to the working of the clean coal-based gasification
economy.
Our gasification economy model (see Fig. 1) shows that about
300 mtpa of coal is required for gasification to produce 40 mtpa of
methanol, 16 mtpa of urea and 50 mtpa of steel. Of the 300 mtpa,
260 mtpa will be high ash Indian coal which needs to be blended with
40 mtpa of higher quality imported coal from South Africa, USA or
Australia. With technological and operational development in the fu-
ture, the 40 mtpa of imported coal is likely to be substituted by
100 mtpa of indigenous coal (considering yield loss in beneficiation and
difference in fixed carbon content), eventually leading to utilization of
360 mtpa indigenous coal. Further with a 70% pre-combustion capture,
about 85 mtpa of CO2 can be captured for storage and EOR. The gasi-
fication economy is estimated to create an incremental 50 BB$ of direct
GDP value.
3. Coal – the fuel for India’s future
India has abundant coal, which is a key raw material for gasifica-
tion. With a total reserve of ~150 gigatons, India currently is the 3rd
largest in coal reserves after the USA and Russia (see Fig. 2). About 80%
of the total reserves is concentrated in the eastern region of India, as
shown in Fig. 3.
Unlike other countries, coal mined in India consists of high ash due
to its nature of formation. For thermal usages, Indian coals are cate-
gorized based on gross calorific value (GCV). Grades and corresponding
ranges of GCV are given in Table 2. G9-G14 grades are predominant
with a share of 70% of the total reserves, followed by G7-G8 con-
tributing around 15% [8].
The state-wise coal quality of G9-G14 has been analyzed, as shown
in Fig. 4. Proximate analysis for G9-G14 grade coal in all the states
shows that the weighted average ash content is > 35 mass%, which is
on the higher side. However, the ash contents can be easily reduced
economically to less than 30 mass% through washing. The total ‘Fixed
Carbon (FC) + Volatile Matter (VM)’ content is > 50 mass%, resulting
in moderate GCV values in the range of 3600–4300 kcal/kg.
Apart from ash, FC and VM content, CO2 reactivity is another im-
portant metric. It is widely used for getting an indication of the rate of
gasification reactions and is defined as the rate of mass loss at 50%
burn-off under a CO2 rich atmosphere. Although coal types with re-
activities in the range of 0.5–9 hr−1 have been successfully tested, the
lower limit of reactivity below which gasification reactions become too
slow for complete conversion is uncertain [10]. The CO2 reactivity of
various Indian coals is depicted in Table 3, along with ash fusion
temperature and ash composition. The reactivity values of most of the
grades (2–7 hr−1) are favorable for gasification reactions (Table 4).
Ash fusion temperature gives an indication of the extent of ash
agglomeration and clinkering within the gasifier. Ash clinkering can
cause channel burning and pressure drop within the gasifier leading to
unstable operations. High contents of SiO2 and Al2O3 and low contents
of CaO in coal ashes of Indian origin lead to high ash fusion tempera-
tures, which is unfavorable for gasifier operations as it hinders smooth
ash flow.
Although the mineral composition (high SiO2 and Al2O3) and high
ash fusion temperatures are not favorable, high CO2 reactivity and the
presence of > 50 mass% ‘FC + VM’ makes Indian coal a good candidate
for economical coal gasification. All the gasification technologies come
with certain cut-off criterion of coal quality in terms of ash, ash fusion
temperature, ash mineralogy amongst others, but almost all kinds of
A. Mukherjee, et al.
Fig. 1. Framework of a sustainable Indian economy based on gasification and carbon capture.
Fig. 2. Proven Coal Reserves [8,9]. Note: After exploration carried out up to the
maximum depth of 1200 m by the GSI, CMPDI, SCCL and MECL etc. as on
01.04.2018.
coal can be used for gasification.
It is therefore imperative that a proper gasification technology is
applied for utilization of the large Indian coal reserves, rather than
3
Fuel 263 (2020) 116595
making coal available to meet the demands of a specific technology. We
next analyze the suitability of the gasification technology for the gasi-
fication economy based on Indian coals.
4. Coal gasification technologies to utilize Indian coal
The choice of the right gasification process depends on several
factors including feedstock characteristics, product gas quality, type of
waste products generated and operating conditions. Based on the type
of reactor bed in which coal is gasified, the gasifiers are classified as
follows:
(i) Entrained Flow (EF): concurrent flow of pulverized coal with oxi-
dant gases at high speeds to ensure high carbon conversion over
the short gas residence times
(ii) Fixed Bed Dry Bottom (FBDB): mostly counter current flow where
gases flow upwards through a bed of coal feed; suitable for lump
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 3. State wise distribution of coal reserves in India.

Table 2 three types of gasifiers has been done.

Coal grades and corresponding ranges of GCV. The comparative evaluation also suggests that careful consideration
Grade GCV range (kcal/kg) needs to be given to a few key factors – especially in the context of
Entrained Flow type of gasifiers.
G1 > 7000
G2 6700–7000 a) Composition of the inherent mineral matter has significant ramifi-
G3 6400–6700
G4 6100–6400
cation on the gasification process. High Silicon (Si) and Aluminium
G5 5800–6100 (Al) content of Indian coals cause the Ash Fusion Temperature to be
G6 5500–5800 greater than 1550 °C. Such high Ash Fusion Temperatures in en-
G7 5200–5500 trained flow gasifier technologies will affect the gasification opera-
G8 4900–5200
tions and economics due to excess requirement of oxygen and de-
G9 4600–4900
G10 4300–4600 creased refractory life. Higher temperatures also lead to clinker
G11 4000–4300 formation within the gasifier.
G12 3700–4000 b) The Ash fusion temperature in the coal is not the only critical op-
G13 3400–3700 erating parameter in a gasifier technology selection. In an Entrained
G14 3100–3400
G15 2800–3100
Flow Gasification process the slag (ash) is extracted from the gasifier
G16 2500–2800 in liquid form. Entrained Flow Gasifiers, like Shell, Siemens or GE,
G17 2200–2500 therefore, require that the viscosity (a measure of the flowability of
liquid) of the ash after conversion within the gasifier attains a cri-
tical value, known as Critical Viscosity (Cv), of less than 250 poise
ores for slag to flow out optimally during slag tapping. In order to lower
(iii) Fluidized Bed (FB): coal particles suspended in gas flow the viscosity to the optimal slag tapping viscosity, the mineral
composition has to be adjusted by adding a fluxing agent (Calcium
In the context of our framework, a comparative analysis of these or Magnesium). Such flux additions to lower the viscosity will likely

4
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 4. State-wise coal quality average G9-G14 coal quality.

be more than 55% of the coal consumed for gasification and will
affect the cost and operating performance of the gasifier. This is
independent of what the ash content is (20%, 25% or 30%), but is
completely based and determined by the quality of the mineral
structure and not the quantity [10]. Blending of the high ash Indian
coal with petcoke will only lower the total ash content but will not
affect the viscosity in any manner.
Although the output gas pressure is favourable for methanol plant, it
may not be prudent to use this technology for utilization of high ash low
rank Indian coals due to the aforementioned limitations.
Moving/fixed-bed gasification method is the second-best option for
high-ash coals. In this method, the temperature is regulated by using a
high steam to oxygen ratio so that the ash does not melt and form slag.
Both FBDB and FB operate within the dry ash regime, thereby avoiding
any clinker formation. FB gasifiers are said to work well for particle
sizes in the range of 6–50 mm. One of the biggest limitations of FBDB
gasifiers is their inherent inability to handle fines due to loss of bed
permeability. Based on the operating database [11] of existing fixed bed
coal gasification plants, it has been observed that the process can not
afford to absorb beyond ~28% ash in feed coal, which necessitates
blending of the washed low rank (Indian) coal with imported low ash
coal.
Since fluidized bed gasifiers are well known due to its versatility in
utilizing low rank coals, their installation can exploit the low rank high
ash Indian coals. The bed material, which is usually the coal ash along
with additives, helps to achieve proper heat distribution within the
gasifier to mix the fuel with the gas produced. Use of feed coal in the
size range below 6 mm eliminates wastage of coal fines. The process
operates at around 1000 °C which is below the average Indian coal ash
fusion temperature. Moreover, the operating efficiency of fluidized bed
gasifiers has been observed to be better than the other two [11]. From
the above discussion, the most suitable gasification method for high-ash
Indian coal seems to be fluidized bed gasification.
5. Syngas as a driver of Indian fuel, olefins, steel and fertilizer
industries
In the context of the proposed gasification economy, the syngas
produced from coal gasification, will be utilized in the following ways:
a) Feedstock for methanol production (and dimethyl ether (DME))
b) Reductant for production of direct reduced iron (DRI)
c) Feedstock for ammonia (urea)
The various ways of utilization of syngas in the gasification
economy is depicted schematically in Fig. 5. The raw syngas needs to be
treated in order to control the H2:CO ratio, which is different for dif-
ferent application. Methanol blends can be used to substitute petrol, or
it can be converted to dimethyl ether (DME) whose blends can sub-
stitute diesel, LPG or produce olefins. On the other hand, direct reduced
iron and ammonia serves as input material for steel and urea production
respectively.
5.1. Feedstock for methanol production (and dimethyl ether (DME))
Production of petrochemicals such as methanol, dimethyl ether
(DME) and olefins through gasification can play a big role in the near
future to secure India’s energy demands. They can be used as substitute
of fuels either through blending such as petrol, diesel and LPG or
through replacing imported feedstock like naphtha. Our market de-
mand model estimates that enabling the right drivers for gasification
economy will allow the growth of methanol demand in India to 40 mtpa
by 2030 [12] (see Fig. 6). Potential replacement of fuels such as petrol,
diesel and LPG by 70–100% through methanol-based blends such as
M15 and DME20 generates a requirement of 34 mtpa (4 mtpa for petrol
substitution, 20 mtpa for diesel substitution and 10 mtpa for LPG sub-
stitution). The remaining 6 mtpa comes from substitution of naphtha to
produce olefins.
The economic impact for substitution of petrol, diesel, LPG and
olefin through blending or change of feedstock is depicted through
Fig. 7a and 7b respectively. It is estimated that petrol demand will in-
crease to 40 mtpa by 2030 [13,14] and our models indicate that 70% of

Table 3
CO2 reactivity, ash fusion temperature and mineral composition of Indian coals.
Rank A sub-bituminous CO2 reactivity (50% burn-off at 1000 °C) Ash fusion temperature (°C) Ash composition (mass %)

SiO2 Al2O3 CaO

Low Rank A Sub-bituminous/Medium rank D Bituminous 4.5 1550 58.4 29.9 0.8
Low Rank A Sub-bituminous/Medium rank D Bituminous 4.5 1520 58.3 29.8 0.9
Rank A sub-bituminous 3.6 1350 62.8 26.8 1.6
Sub-bituminous 5.9 1550 64.3 25.7 0.3
Bituminous, medium rank D 6.8 1540 61.4 25.1 1.66
Bituminous, medium rank D 2 1600 59.6 27.9 1.1
Bituminous, medium rank D 4.9 1600 59.8 28.9 1.6

5
A. Mukherjee, et al. Fuel 263 (2020) 116595

Table 4
A comparative analysis of the key performance indicators (KPI) of three types of gasifiers (EF, FBDB and FB).
Gasifier Entrained Flow (EF) Fixed Bed Dry Bottom (FBDB) Fluidized Bed (FB)

Types Slagging (KT, Shell, GE-Texaco) Dry bottom (Lurgi, Sedin) Dry ash (Winkler, HTW, KBR) Agglomerating (U-GAS, SES)

Feed characteristics
Preferred feedstock Lignite, reactive bituminous coal, petcoke Lignite, reactive bituminous coal Lignite, bituminous coal, biomass
Acceptability of ash content < 20% < 35% < 40%

Operating conditions
Operating temperature High (1250–1600 °C) Low (500–650 °C) Moderate (900–1050 °C)
Oxygen demand High Low Moderate
Steam demand High High Moderate
H2/CO in raw gas 0.5–0.6 1.5–1.7 0.9–1.0
CH4 reforming Not required More Less
Water gas shift for methanol High Not required Low
Ash/Slag High flux requirement Consistent ash quality Consistent ash quality
Cold gas efficiency 81% 72% 72%
By-product recovery No by-product Yes No by-product
Fines utilization No limitation Limited to 5% No limitation
Carbon conversion High Moderate Moderate

Expenditure
CAPEX Medium High Low
OPEX High Low Low

total petrol replacement is possible by M15 blend. So, substitution
economy for M15 blend will be ~4 BB$ considering replacement of
4 mtpa i.e. 35 million barrels of petrol and current cost of production of
petrol at ~ 0.7 US$/litre (considering crude oil barrel price of 75 US$).
Similarly, substitution economy for diesel replacement of 14 mtpa i.e.
90 million barrels with DME20 is estimated to be 11 BB$ for a cost of
production of 0.75 US$/litre of diesel. Similarly, if DME20 can poten-
tially blend 100% of LPG by 2030, it will create additional demand of
10 mtpa of methanol. With a current cost of production of LPG @ 685
US$/t and replacement of 7 mtpa of LPG through blending, total sub-
stitution for LPG is estimated at 5 BB$. DME20 blending, thus has po-
tential to substitute existing fuel worth 16 BB$. However, our techno-
economics show that DME is only economically viable if methanol
production is integrated with DME production, as conversion of me-
thanol to DME based on sourcing of methanol at market price does not
support economically viable production of DME.
In the Methanol to Olefins (MTO) side, methanol can substitute
imported expensive naphtha as a feedstock through production of ole-
fins at much lower cost. Considering the current prices of Ethylene and
Propylene i.e. 1200 and 1300 US$/t respectively [12,15] and corre-
sponding demand, economics of naphtha substitution is calculated at 3
BB$.
5.2. Reductant for production of direct reduced iron (DRI)
India’s steel production is set to rise to 300 mtpa [6], which is al-
most double the current production capacity. It is currently envisioned
that the majority of this production will be through the Blast Furnace
route, which is GHG intensive ranging between 2.1 and 2.5 tons of CO2/
ton of steel produced. We envision that even with a modest 15%+
(~50 mtpa) replacement of steel capacity through ‘coal gas based direct
reduction route (CGP-DR)’ with carbon capture, GHG emission intensity
will reduce by over 50% on the replaced capacity of the blast furnace
route. CGP-DR based steel production can create an economic value of
about 30 BB$ considering the average selling price of 570 US$/ton. In
addition to that, India will be able to reduce about 6.3 BB$ worth of
coking coal imports due to the replacement effect. At the same time,
cost of production and profitability of steel production through the

Fig. 5. The various ways of utilization of syngas.

6
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 6. Outputs of market demand model showing creation of high demand for methanol. *~1.4 tons methanol is required for production of 1 ton of DME and ~1.6 tons
DME is required for production of 1 ton olefin (both ethylene and propylene).

‘gasification-based Direct Reduction-Electric Arc Furnace (DR-EAF) 5.3. Feedstock for ammonia (urea)
route’ is comparable to the ‘Blast Furnace-Basic Oxygen Furnace (BF-
BOF) route’ [7]. The techno-economics for the steel sector is captured Agriculture contributes to 15% of India’s GDP and about 18% of
through Fig. 8. fertilizers are imported [12]. The current imported quantity of

Fig. 7a. Substitution economics of methanol on fuel through blending. (#Cost of Production).

7
A. Mukherjee, et al.
Fig. 7b. Substitution economics of methanol on naphtha through olefin production. (#Cost of Production).
Fig. 8. Production economics of CGP based steel production. (#Cost of Production).
ammonia-based fertilizers is around 8–10 mtpa [16,17], which is set to
rise to 16 mtpa by 2030, resulting in an outflow of 5 BB$. These imports
can be replaced with coal gasification-based production of ammonia.
However, the economics of setting up a coal gasification-based am-
monia/urea plant does not appear to be attractive. Large capital in-
vestment requirements are not commensurate with the earnings before
interest, taxes, depreciation, and amortization (EBITDAs) and returns
with an Internal Rate of Return (IRR) at 3% are not particularly at-
tractive (Fig. 9).
6. Technoeconomic attractiveness of coal gasification-based
methanol, steel and ammonia units
To compare techno-economics of various gasification technologies,
8
Fuel 263 (2020) 116595
three gasification technology options i.e. Fixed Bed Dry Bottom (FBDB),
Fluidized Bed (FB) and Entrained Flow (EF) have been chosen. Raw
syngas composition and hence the H2/CO ratio is different for each
gasification technology, and therefore the synergy with downstream
facilities like Methanol, direct reduction (DR) or ammonia plants are
different for each technology option. To evaluate the techno-economic
viability, operational economics along with the Return on Investment
(RoI) and Internal Rate of Return (IRR) have been computed and
compared for each of the candidate plant units for methanol, steel and
urea. Candidate plants sizes are 1.0 mtpa, 3.0 mtpa and 1.27 mtpa for
methanol, steel and urea production respectively. Plant sizes are chosen
considering its replicability to meet the total demand of 2030 without
losing the advantages of scale.
For each of the options, capital cost, operating cost and revenue
A. Mukherjee, et al.
Fig. 9. Production economics of urea.
(a) Input cost, $/t (b) Sales realization, $/t
have been estimated based on DASTUR’s in-house data base and en-
gineering models, discussions with technology suppliers and informa-
tion provided by DASTUR’s partners. Cost and prices (sustainable for
long terms) considered for the study are shown in Fig. 10.
The cost of indigenous coal is estimated from Coal India price [18]
for G13 grade adjusted with taxes and freight and imported coal cost is
estimated from SA-RB2 fob cost [19] adjusted with tax and freight. The
net sales realization (NSR) for methanol, steel and Urea has been esti-
mated from prevailing prices, long term price trends and DASTUR in-
ternal market databases.
6.1. Representative configurations for techno-economic evaluation
Considering the constraint on operating parameters for each gasi-
fication technology (ash cut-off, cold gas efficiency, etc.) and Indian
coal characteristics, capacity of facilities for each option has been es-
timated and shown in Fig. 11. All the assumptions for estimating plant
sizes are given in Fig. 12.
6.2. Techno-Economic comparison of 1.0 mtpa methanol plant
Based on assumptions on consumption parameters and input prices,
estimated raw syngas cost is the lowest for Fixed Bed gasifier (FBDB) at
5.7 US$/mmBtu and highest for Entrained Flow (EF) at 7.3 US
$/mmBtu. The syngas cost is significantly lower than the current li-
quefied natural gas (LNG) price in India (the only means of sourcing
natural gas at scale in India) of about 10 US$/mmbtu (CFR before re-
gasification and pipeline transport to the plant battery limits). As the
required H2:CO is 2:1 for the methanol production, raw gas produced
9
Fuel 263 (2020) 116595
Fig. 10. Raw material cost and sales realization of
products.
from gasifier for each option needs to be treated through reformer and
water-gas shift reactor. Treated syngas cost is significantly different
than that of raw syngas cost due to mismatch of typical and desired raw
syngas compositions. Treated syngas cost is quite close for all the op-
tions: 8.5 US$/mmBtu, 9.2 US$/mmBtu and 9.4 US$/mmBtu for FBDB,
FB and EF respectively. Although FBDB is advantageous in terms of
lower cost of production due to high CH4 percentage in raw gas, its
capex is significantly high due to substantial investment for by-product
recovery unit. A techno-economic comparison including capex, cost of
production, manufacturing cost and profitability is shown in Fig. 13.
Based on the comparison, the most suitable technology for India seems
to be Fluidized Bed (FB) gasification due to comparatively lower capex
in addition to advantages of higher ash and fines acceptability.
6.3. Techno-economic comparison of 3.0 mtpa steel plant
To evaluate the economic viability of a 3.0 mtpa steel plant, we have
considered an integrated steel plant with matching capacity of pellet
plant, DR plant, EAF and Long Mills. Using an approach similar to that
described in the earlier section, capital cost, manufacturing expenses
and profitability have been computed and shown in Fig. 14.
With advantages of high ash indigenous coal utilization along with
zero dependency on coking coal and almost 50% lower CO2 footprint in
comparison to the conventional BF-BOF route, fluidized bed gasifica-
tion-based steel plant comes out to be the most attractive in terms of
RoI and IRR.
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 11. Configuration of candidate plant units.

7. CCUS technologies and their economics for methanol, steel and

ammonia production

Carbon capture technologies separate carbon dioxide from flue

gases emitted from industrial production processes. The two major CO2
capture technologies, viz. pre-combustion capture and post-combustion
capture systems were considered for the methanol, steel and ammonia
economy. Captured CO2 can be used for use in oil recovery, gas re-
covery, soda ash manufacturing and the food and beverage industry.
However, most of the captured CO2 will need to be stored in geological
formations like spent oil and gas wells or saline basins.

7.1. Pre-combustion capture

Fig. 12. Operating parameters considerations. When CO2 is captured from a pressurized, reducing environment
process gas stream, it is known as pre-combustion capture. Depending
on the end-user requirement, syngas composition is changed through
6.4. Techno-economic comparison of 1.27 mtpa urea plant
reformer and water-gas shift reactors. In this process, the CO2 is usually
captured by chemical/physical absorption in a solvent and subse-
For ammonia production, raw syngas needs to be treated through
quently released by thermal regeneration which can be further com-
reformer and water shift reactor to ensure treated syngas has almost
pressed for transport and storage. The industrial processes that already
100% H2. Due to the requirement of reforming and water-gas shift re-
require the generation of hydrogen or synthesis gas, pre-combustion
actions, the consumption of steam, and other utilities increase, thereby
capture is the preferred route.
reducing the overall efficiency of the process. This leads to substantial
increase in treated syngas cost (lowest for FB at 10.7 US$/mmBtu and
7.2. Post-combustion capture
highest for EF at 12.9 US$/mmBtu). An economic comparison, shown
in Fig. 15, indicates non-viability of urea plant as stand-alone unit due
When CO2 is captured in a low pressure, low CO2 concentration, and
to very high up-front investment, even though the EBITDA margin of
oxidizing environment flue gas stream it is known as post-combustion
22–24% is attractive. However, the operations of urea plant as part of a
capture. This process separates CO2 from the exhaust gases after com-
large coal-to-poly complex may be an economically viable option due to
bustion (taking place during iron and steel making processes such as
larger scale of operation as common gasification infrastructure reduces
DR, EAF and BOF). CO2 can be captured using a liquid solvent like
unit fixed costs (Fig. 16a and 16b).
monoethanolamine (MEA). After absorption in the solvent, the CO2 is
released by thermal regeneration to obtain a high-purity stream of CO2.
It has been discussed earlier that the fluidized bed (FB) gasification-

10
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 13. Comparison of economics of different gasification technology for methanol production.

based production is the most techno-economically suitable option for
production of methanol, steel and urea based on Indian blended coals.
Although post-combustion capture is technically feasible for iron and
steel making processes such as DR and EAF, our analysis finds post-
combustion capture economics to be mostly unviable, hence only pre-
combustion capture with a 45Q type of credit has been considered. The
pre-combustion CO2 emission resulting from production of 40 mtpa
methanol, 50 mtpa steel and 16 mtpa urea through FB based gasifica-
tion has, thus, been estimated and is shown in Table 5. Based on the
specific emission values stated in Table 5, the total available pre-com-
bustion CO2 is estimated to be ~122 mtpa. While the opportunity for
post-combustion capture for another 135 mtpa CO2 exists, we have not
considered it as a part of the current analysis due to significantly high
capture cost based on current techno-economics.
7.3. CO2 storage and use
The primary storage mechanism of CCUS is “Structural Storage”
that stores CO2 below an impermeable layer of rock. After storage, the
CO2 moves up through the geological storage site towards the cap rock
and is trapped in the microscopic porous spaces of the rock. Finally,
when the CO2 binds chemically and irreversibly to the surrounding rock
it is known as “mineral storage”. When CO2 is stored under sea water,
over time the CO2 stored dissolves into the surrounding salty water

Fig. 14. Comparison of economics of different gasification technology for steel production.

11
A. Mukherjee, et al.
Fig. 15. Comparison of economics of different gasification technology for urea production.
making it denser allowing it to sink down to the bottom of the storage
site, this is known as “dissolution storage”. CO2 can also be used for
Enhanced Hydrocarbon Recovery i.e. Enhanced Oil Recovery (EOR),
Enhanced Gas Recovery (EGR) and Enhanced Coal bed Methane
Recovery (ECBM). It has an economical value to offset CO2 storage
which, otherwise, cannot be extracted. We consider a combination of
structural storage and CO2 EOR for the methanol, steel and ammonia
economy.
7.4. CCUS economics
Techno-economic considerations show that a 70% capture effi-
ciency on the pre-combustion capture is a suitable starting point. Of the
total 122 mtpa CO2 generation (Table 5), the capturable CO2 quantity
comes out to be ~85 mtpa. Thus, the CCUS economic analysis is based
on 85 mtpa CO2. The CAPEX, OPEX and amortized cost of CCUS op-
erations are depicted in Table 6. The amortized costs have been cal-
culated by discounting total life cycle cost throughout the economic life
of equipment. As India is a developing country and EOR opportunity is
limited by geographic location of oil fields and coal mines, it is assumed
that 20% of the capturable 85 mtpa CO2 is utilized in EOR, while the
remaining 80% goes to storage.
In the proposed gasification economy, the EOR route leads to ad-
ditional value creation by aiding oil recovery from depleting oil fields,
the basic route involves just carbon capture and storage. The three main
components of value chain in CCUS include: (a) CO2 separation in
rectisol/selexol, (b) Compression to desired pressure based on re-
quirement and (c) transportation through pipeline/tanker & storage.
The individual contributions to the total cost of capture and storage are
12
Fuel 263 (2020) 116595
Fig. 16b. Mechanism of post-combustion capture (removing CO2 after com-
bustion).
determined to be 19, 8 and 8 $/t of CO2 respectively. Given the fact that
Rectisol/Selexol is an integral part of the production process and does
not require additional investment, effective cost of ‘capture + storage’
comes down to 16$/t of CO2. On the other hand, the estimated 17 mtpa
CO2 to be utilized for EOR can aid in oil recovery of 60 million barrels
per year, considering 1 t CO2 can recover 3.5 barrels of oil. This can
lead to a decrease in imports amounting to 4.5 BB$ annually, con-
sidering a cost of 75$ per barrel of oil. Moreover, the capture of 85 mtpa
CO2 can result into atmospheric carbon reduction by a few ppm. The
entire scheme depicted in Fig. 17 shows how pre-combustion carbon
capture with EOR and storage can economically capture over 85 mtpa
of CO2 generated.
8. Policy support mechanism
8.1. Technology push policy
Our analysis further indicates the need for an appropriate and ro-
bust policy support from the government for CCUS technology to be
Fig. 16a. Mechanism of pre-combustion capture
(removing CO2 prior to their combustion).
A. Mukherjee, et al. Fuel 263 (2020) 116595

Table 5 We have taken a variant of the 45Q mechanism and applied it as a

Specific carbon emission and generation values for methanol, steel and am- candidate policy mechanism for the potential coal gasification-based
monia production processes. methanol, steel and ammonia economy for India. Our analysis finds,
Product Estimated Specific emission, in tCO2/t of Total CO2 that the gasification based industrial expansion will result in increased
gasification- product generated tax revenues, which, along with the right investment instruments, can
based (considering pre- easily offset the government subsidies. A policy mechanism framework
production by Pre- Post- combustion
for enabling a carbon neutral gasification Indian economy has been
2030, in mtpa combustion combustion only), in mtpa
presented in Fig. 18. We have augmented the basic 45Q mechanism
Methanol 40 1.7 1.4 68 with a Carbon Credit Finance Corporation (CCFC), which acts as a self-
Steel 50 0.65 1.05 32 financing funding vehicle for CCUS, with a likely fund size of between 5
Urea 16 1.4 1.3 22
and 10 BB$. As shown in the figure, the funding is offset by the tax
Total 122
receipts and the returns on the investment made by the CCFC in the
gasification economy. So, in effect the CCUS funding could be subsidy
Table 6 neutral.
Considerations for CCUS economics [20].
8.2. Carbon credit financing model
Unit operation CAPEX, in $/t OPEX, in $/t Amortized cost, in $/t
CO2 CO2 CO2
An outline of CO2 financing model that has been developed to
Carbon capture# 17 5 8 promote and accelerate the adoption of technology through investment
Storage* 37 4 8
in gasification-based project, is shown in Fig. 19. The Carbon Credit
EOR* 40 5 13
Finance Corporation (CCFC) is a financing vehicle which is funded
#
Without considering the cost of Rectisol unit. through the participation of the government and private investment
* Per 250 km; transport CAPEX: 30$/t CO2 & transport OPEX: 2$/t CO2. bodies.
As illustrated in Fig. 18, the CCFC uses equity and debt raised
cost competitive on a commercial scale. Our premise is that “technology through the bond markets to finance the carbon capture costs. By in-
push” policies that promote the adoption of capture and utilization vesting the funds in the gasification economy, along with a part of the
technologies are more effective, than “carbon tax” policies which pe- tax generated from the gasification, it should be possible to fund the
nalizes and restricts carbon emission through taxes. Incentivized in- carbon capture credits of 1–3 BB$/year in a deficit neutral manner.
vestments through capture credits allow progressive reduction of cap-
ture costs as well as establish markets for carbon-based products. 9. Macro-economic impact
The US government, through its pioneering Future Act 2017 [21],
has reformed the tax credit mechanism proposed earlier under 45Q 9.1. Socio-economic impact
[21] in order to boost implementation of large scale CCUS technologies
to reduce emissions and enhance domestic energy production through The gasification-based economy, supporting methanol, ammonia
EOR and EGR. and steel production, has a direct GDP impact of over 50 BB$. This does

Fig. 17. Carbon capture, storage and utilization: Key components and related economics.

13
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 18. Policy mechanism for enabling carbon neutral gasification.

Fig. 19. A Carbon Credit Finance Corporation (CCFC) is a deficit neutral way of financing capture.

not include the indirect multiplier effect and the employment multiplier
effect which can range from 3 to 14 [22,23]. Additionally, our esti-
mations indicate that the gasification economy can generate over half a
million jobs. The investments at about 66 BB$, with significantly high
RoI (24%–28%) for the methanol and the steel sectors, indicate that
these are productive investments for the economy. Fig. 20 illustrates the
key socio-economic impact parameters and their values based on our
model estimations.
9.2. Trade balance, current account deficit and foreign-exchange impact
The gasification economy has significant impact on trade and cur-
rent account deficit dynamics due to the substitution effect due to a
combination of feedstock substitution and fuel substitution through
methanol and CO2 EOR. While trade deficit decreases by over 20 BB$,
the current account deficit and forex outflow is also significantly re-
duced. The latter is important as it bolsters macro-economic stability
for a non-reserve currency developing nation like India. Fig. 21 below
gives the model outputs for the impact on trade due to the substitution

14
A. Mukherjee, et al. Fuel 263 (2020) 116595

Fig. 20. Socio-economic impact, investment and return.

effect. compositional characteristics of the abundantly available low-rank

10. Conclusions
A coal gasification based industrial economy in India with pre-
combustion carbon capture and storage, which enables a less carbon
intense industrial ecosystem of methanol, steel and ammonia, appears
to be a techno-economically viable proposition. The gasification
economy can directly contribute over 50 billion USD to the economy
with extended macro-economic multiplier impacts on the GDP, while
abating CO2 emissions by close to 100 mtpa. However, given the
Indian coals, appropriate gasification technologies and feedstock
blending need to be applied for the gasification economy to be viable.
Our analysis shows that Fixed Bed and Fluidized Bed gasifiers with pre-
combustion carbon capture yield positive techno-economic outcomes,
with the Fluidized Bed gasifiers yielding the best outcomes in terms of
feasibility and operating economics on Indian coals with the right
blend. However, the techno-economic viability of gasification economy
requires the adoption of a suitable policy instrument for viability of
carbon capture and storage. To incentivize and accelerate adoption
while maintaining competitiveness with incumbent options, and to

Fig. 21. Incremental trade balance, Billions of $s, 2030.

15
A. Mukherjee, et al.
progressively reduce costs of capture, we evaluate a 45Q like “tech-
nology push” carbon capture credit policy model for supporting pre-
combustion-based capture and storage. We introduce an innovative
carbon capture credit mechanism along with a carbon credit financing
model to support the policy option. The model shows that a financing
entity with the right sovereign, debt, equity, and incremental tax claw-
back mix can generate sufficient returns to be deficit neutral and can
finance the costs of pre-combustion capture and storage. The current
framework can be extended to include other industries in the gasifica-
tion economy, like Integrated Gasification Combined Cycle (IGCC)
based power generation with pre-combustion capture, so as to create an
industrially inclusive gasification economy based on low ranked Indian
coals. Further extensions to scale through hyper-scale utility style coal
gasification network with optimized pre and post combustion capture
systems is the next step in the evolution of an inclusive gasification
economy optimized for efficiency, carbon abatement and scale. An ar-
chitecture of such a system along with detailed computable general
equilibrium modeling to determine the macro and micro-economic
impacts on the Indian economy will be a useful next step in determining
the path to a robust gasification-based economy in India.
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