India to seek billion-dollar assistance from the World Bank for just transition programme

India is planning to seek the assistance of nearly one billion U.S. dollars (about Rs. 75 billion or Rs. 7,500 crores) from the World Bank to develop a comprehensive framework for handling closures of coal mines and undertake pilot projects for the socio-economic transformation of the country’s coal mining areas.

Last month, in a statement, the union coal ministry had said that it is in the process of finalising a “robust mine closure framework with thrust on three major aspects of institutional governance, people & communities and environmental reclamation & land repurposing on the principles of just transition.” It had emphasised that the ministry is in consultation with the World Bank, a UN organisation that finances projects in developing countries, for obtaining support and assistance in this program.

This support will be significant for India as it aims to move away from coal-based energy to comparatively cleaner forms of energy, while ensuring a healthy economy and a just and equitable transition for all stakeholders involved, including the affected communities.

The proposed project, which aims to facilitate this just transition, could be crucial for a highly coal-dependent country like India where millions are directly or indirectly dependent on the socio-economic ecosystem around coal mines and the power plants running on it. With the economies of several states closely intertwined with the fate of coal mines, despite health and pollution issues, experts have often said that the path of just transition is crucial but has to be taken carefully.

Moreover, India is increasingly facing pressure from across the world to reduce its dependence on fossil fuels and phase out coal. Even in the run-up to the United Nations Conference of Parties (COP 26) that started in Glasgow on October 31, India, which features among the top five countries in terms of carbon emissions, has been under pressure to make decisions to move away from coal as quickly as possible.

In the coal ministry’s statement, it said, “Vast experience of the World Bank in handling mine closure cases in different countries will be highly beneficial and will facilitate adoption of the best practices and standards in handling of mine closure cases. A Preliminary Project Report (PPR) for the proposed engagement with the World Bank has been submitted to the (union) finance ministry for necessary approvals.”

“There are some objections to the PPR that was submitted (in August 2021) … The consultation is going on. But it is a long drawn process with the involvement of many ministries of the Indian government. Finalising this proposal and then seeking assistance will take time,” a senior official of the ministry of coal told Mongabay-India while wishing anonymity.

The proposed project, which aims to run for a period of eight years till 2029, aims to involve all major coal-mining states such as Jharkhand, Chhattisgarh, West Bengal and others.

According to the PPR submitted by the coal ministry, the goal of the project is to seek proper support for the union coal ministry in developing a countrywide coal mine closure framework in line with a methodology developed for global application by the World Bank.

For the project to ensure coordination across multiple agencies involved, the ministry proposes to create a “Special Purpose Entity under the administrative control of the ministry of coal” that will spearhead the efforts in a multi-phase manner. For instance, the activities envisaged under this entity include “conducting analytical work to undertake baseline assessments of coal ecosystem, strengthen policies including the coal mine closure framework, national standards, institutional governance and capacities, drafting just transition strategies, support early smaller mine closures, and assessment and learning from early closures guiding subsequent mine closures.” It will also look at “subsequent multiple phases of concessional financing wherever required for implementing coal mine closures.”

In 2018, the World Bank had come out with a report Managing Coal Mine Closure, Achieving a Just Transition that discussed in detail the lessons learnt on past coal-sector adjustment exercises and offered practical ways for a process to transition away from coal. Following the report and the subsequent consultations, the World Bank in August 2019 launched a global programme Support to Energy Transition in Coal Regions.

Read more: About 40 percent of India’s districts have some form of coal dependency

India to focus on standards for decommissioning and repurposing of mines 

Under the proposal submitted to the finance ministry, the coal ministry proposes to develop a comprehensive pathway for closure of coal mines, introduce “global good practices” for coal mine closures and new technical standards for decommissioning mines. It also aims to strengthen policies, laws and institutional capacities to ensure good social and environmental performance.

It seeks “an informed decision-making process underpinned by a comprehensive mapping of the coal ecosystem in states of Jharkhand, West Bengal and Chhattisgarh, among others and understanding of the scheduling of coal mine closures.”

In order to ensure that all stakeholders are involved, the proposal seeks to have widespread “consultation across diverse stakeholders and an understanding of the environmental remediation investments that would lead to repurposing of post-mining lands and assets and investment by the private sector.” It further states that the project is a core contribution to India’s coal regions’ socio-economic transformation as mines close, with mineral reserves getting exhausted.

The coal ministry’s proposal emphasises that the “global experience is that coal mine closures having weak institutions, inadequate social protections for workers and communities, and inadequate environmental remediation and repurposing of lands and assets, leads to poor and unsustainable closure of mine sites and opposition by various stakeholders.”

Thus, the project looks at supporting the social-economic transitions in India’s major coal regions such as Jharkhand in line with the World Bank latest methodology for just transition and “aligning India with a worldwide community of nations transforming its coal regions. It aims to address the “needs of direct/indirect workers, communities and providers of goods and services along a complex value chain from mines to power plants.”

A similar emphasis on comprehensive planning was recommended in a recent study by a joint team of researchers from the Center for Strategic and International Studies (CSIS) and Climate Investment Funds (CIF) that explored the coal-related socio-economic dependency in Mpumalanga (South Africa) and Jharkhand (India) to understand the challenges and opportunities associated with diversification of provincial/state economies while dealing with just transition issues.

The study, which also analysed the issues related to the environmental rehabilitation of coal mines and power plants, said local governments and communities in Mpumalanga and Jharkhand are deeply intertwined with the coal industry. “In both places, the coal-dependent ecosystem has many layers. Existing literature and data sources clearly show that the industry generates significant local jobs, government revenues, and local mixed infrastructure, among other key services,” it said while emphasising that quantification of coal ecosystems, including of dependent stakeholders, will be vital to planning for an inclusive and just transition in coal-dependent states.

Sandeep Pai, who is the lead author of the study, said, “Robust land-use policies post the closure of mines are required for effective environmental rehabilitation to support diversification of the local economy.”

“Coal mine rehabilitation should not be a top-down process and local stakeholders including under-represented and marginalised stakeholders must be meaningfully engaged to ensure that the process of just transition is actually just to them,” Pai told Mongabay-India.

The coal ministry proposal, meanwhile, also stressed that the cases of mine closure are likely to happen across both state-owned and private sector enterprises. “Private sector producers will benefit from a methodology that manages the wind-down of coal operations so that land and assets can be repurposed to new uses. Adopting a just transition for all framework for India will open the door to a private sector actor remaining within the coal region, engaged in new commercial activities,” explained the ministry in the PPR.

In fact, the ministry’s proposal also outlined two major climate change-related benefits of the project. It said the closure of coal mines guided will support the repurposing of coal mining land for potential renewable energy or energy storage projects thereby reducing carbon dioxide (a greenhouse gas). Also, the adoption of coal mine closure technical standards addresses “fugitive methane” post-closure which means removal of the second source of potent greenhouse gas emissions.

However, this proposal comes even as India, despite all the pressures, has been looking at ramping up the production of coal to nearly one billion tonnes per year. In 2020, India produced 729 million tonnes of coal. The government maintains that coal production is important in order to ensure the development and fulfil the energy needs of all its citizens. At present, India has over 450 operational coal mines.

In its October 2021 statement, the coal ministry said the process of repurposing of closed mines sites has already been set in motion by their sustainable development cell and several rounds of meetings have been held with coal companies to discuss various aspects. “Inter-Ministerial consultations have also been made with ministries concerned and NITI Aayog to obtain their views and suggestions,” it had said.

The concept of systematic mine closure is, however, not new to India. India had first introduced the mine closure guidelines in 2009, re-issued them in 2013 and they are still evolving.

The ministry said that the country’s coalfields are replete with several legacy mines remaining unused for long and, in addition, mines are closing and will close in future also due to reasons such as exhaustion of reserves, adverse geo-mining conditions, safety issues etc. It had said that these mine sites should not only be made “safe and environmentally stable but the continuity of livelihood should be ensured for those who were directly or indirectly dependent on the mines.” In the statement, the ministry added, “reclaimed lands will also be repurposed for economic use of the community and State including tourism, sports, forestry, agriculture, horticulture, townships etc.”

According to the ministry, once the project starts, in the next 3-4 years a comprehensive mine closure framework will be developed with an adequate strengthening of mine closure institutions and much-improved policy needed to support mine closures. “The most important outcome of the program will be sustainable remediation of all legacy mine sites, which are lying unattended since long. Not only the mine sites will be restored sustainably but livelihood of families, dependent on mines will also be taken care of,” it had said.

Read more: There is a path to prosperity for India’s coal-dependent towns, but it’s tough

Banner image: In 2020, India produced about 730 million tonnes of coal. The aim of the government is to take the production to about one billion tonnes per year. Photo by Srikant Chaudhary/Mongabay.