A proposed plan to encourage ‘clean’ power plants
Coal-based power is one of the most resource-intensive and polluting industries. In a long-overdue action, on December 7, 2015, the Union ministry of environment, forest and climate change (MoEFCC) introduced stricter environmental standards for coal-based thermal power plants (TPPs) under the Environment Protection Act, 1986. The first deadline to meet the norms was 2017; this was extended to 2022 in 2017 by the Supreme Court.
That, unfortunately, was not the end. There has been constant tweaking of the standards in between: The water and nitrogen oxide (NOx) norms were diluted under pressure from the industry. Later, an effort was made by the industry to delay the installation of sulphur dioxide (SO 2 ) control equipment, the excuses being work was hampered due to the Covid-19 pandemic and the industry does not want to import equipment from China.
What did the MoEFCC do in response to the constant nudging from industry and the Union ministry of power? It extended the deadline – once again -- for meeting the norms.
Thermal power plants are placed in three categories: Category A includes TPPs in a 10-km radius of the National Capital Region (NCR) (or any cities with a million-plus population as per the 2011 Census); Category B includes TPPs in a 10-km radius of critically polluted areas and non-attainment cities; and the rest of the TPPs are in Category C. As per the ministry’s new deadline, TPPs in Category A have to meet the norms by 2022, those in Category B by 2023, and those in Category C by 2024.
The notification has conveniently disregarded the efforts of those plants which are already meeting the 2015 norms or have floated tenders to install pollution control equipment to meet the 2022 deadline in a timely manner. The power plants that have been sitting idle for the last five-and-a-half years have been granted another escape route.
The maximum penalty imposed on non-compliant units after this relaxed deadline is a mere 20 paise per unit of electricity. But the levelised cost of retrofitting pollution control equipment to meet the new norms for these plants are estimated between 30-70 paise a unit. In terms of per MW, a 500 MW unit receiving ₹60 lakh/MW fixed charges is liable to pay between ₹5-11 lakh/MW on default, whereas to retrofit pollution control technology, it may have to invest ₹40-100 lakh/MW. This clearly shows that the cost of non-compliance is lower than that of compliance – which is why plants are taking it easy.
So what should be done? Centre for Science and Environment (CSE) has proposed a way of resolving this. Fixed cost is the charge paid to a power station even when it is not in operation; the plant simply indicates that it has the technical capacity to generate electricity when needed. Plants will have serious difficulty in continuing operations if their fixed charges are stopped. Why can’t we come with a methodology that combines fixed cost and compliance?
Let us divide thermal power plants in three categories - yellow, orange and red. The ‘yellow’ category could be defined as power stations that have awarded tenders or are in the process of complying with the norms. Full fixed charges should be reimbursed to this category. This can serve as an incentive, and might motivate other power stations to follow suit. Let us call these yellow category units as First Run plants. The First Run power stations should be ranked and power procured from them on a priority basis (after must-run plants in the merit order).
The ‘orange’ category could be those plants that are in the stage of tendering or doing a feasibility study. Only 50% of the fixed cost should be reimbursed to these stations. The ‘red’ category plants would be those that do not have any plans till now to meet the norms. To these plants, no fixed cost should be paid until they meet the norms. Fear of a halt on operations or minimal operations can drive the rest of the non-complying power stations to meet the norms at the earliest.
Most of India’s centrally-run power stations – such as National Thermal Power Corporation, Neyveli Lignite Corporation, LC and DVC – have shown progress in their efforts to meet the norms by awarding contracts for installing pollution control equipment -- they should be included in the yellow category to incentivise them. The laggards largely consist of state- and privately-run power stations. These plants should be penalised for their non-serious attitude about implementing the 2015 standards.
(The article has been authored by Nivit Kumar Yadav, Programme Director, Industrial Pollution Unit, Centre for Science and Environment.)