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A policy that has made it mandatory for coal-fuelled power projects to use biomass pellets as 5% of their fuel mix and help farmers earn around 15,000 crore annually may find a mention in finance minister Nirmala Sitharaman’s budget speech, two government officials aware of the development said.

The plan, tentatively named SAMARTH, is part of the government’s strategy to support India’s energy transition and check pollution from crop-stubble burning by converting them into pellets and facilitating their sale.

The pellets are mixed with coal to generate electricity.

With India’s power plants consuming around 700 million tonnes (mt) of coal every year, a 5% blend will result in around 35 mt less of coal being burnt, helping reduce carbon emission. The plan is to encourage farmers to convert crop stubble into pellets rather than burn it. Stubble burning is rampant in Punjab, Haryana, Uttar Pradesh, Delhi, Rajasthan and Madhya Pradesh.

Coal-fuelled power projects totalling 202.22 gigawatts (GW) remain the mainstay of India’s power generation and account for more than half of India’s power generation capacity. India has the world’s fourth-largest reserves and is the second-largest coal producer.

“It has been mandated that all thermal power plants use 5% blend of biomass pellets made, primarily, of agro residue along with coal with effect from one year of the date of issue of this guideline. The obligation shall increase to 7% (except for those having ball and tube mill the use of biomass remain 5%) with effect from two years after the date of issue of this order and thereafter," according to the 8 October’s Revised Policy for Biomass Utilization for Power Generation through Co-firing in Coal-based Power Plants.

The percentage of biomass pellets to be used for co-firing will be reviewed over the 25 years of the policy or the “useful life" of thermal power plants, whichever is earlier. Also, the minimum contract period for procuring these biomass pellets is seven years.

“The policy has been approved and is part of India’s strategy to reduce carbon footprint," said one of the two government officials cited above, requesting anonymity.

State-run NTPC Ltd and Haryana, Punjab and Uttar Pradesh have started procuring biomass pellets as fuel to generate electricity.

At the COP26 summit in Glasgow in November, Prime Minister Narendra Modi pledged to cut India’s carbon emission by 1 billion tonnes by 2030, reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade and achieve net-zero carbon emissions by 2070.

The commitment also includes meeting 50% of India’s energy requirements from renewable energy by 2030 and increasing non-fossil fuel power generation capacity to 500GW by the end of this decade.

Queries emailed to the spokespeople for the ministries of finance and power on Friday afternoon remained unanswered till press time.

Of around 750 million tonnes (mt) of biomass available annually in the country, around 230 mt is surplus, comprising agricultural residues.

Pollution in Delhi caused due to crop stubble burning in Punjab and Haryana has become an annual flashpoint between the respective state governments.

The Union government is also exploring a raft of carbon emission and intensity reducing measures such as a waiver of 400 cess on every tonne of coal used by power projects meeting emission norms and a scheme tentatively named Road map for Sustainable and Holistic Approach through National Energy Efficiency, or ROSHNEE, as reported by Mint earlier.

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