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Project Report Template Final Report Equitable sharing of benefits arising from coal mining and power generation among resource rich states Supported by Planning Commission, Government of India Equitable sharing of benefits arising from coal mining and power generation among resource rich states © The Energy and Resources Institute 2013 Suggested format for citation T E R I 2013 Equitable sharing of benefits arising from coal mining and power generation among resource rich states New Delhi: The Energy and Resources Institute. 204pp. [Project Report No. 2012IA06] For more information Veena Aggarwal T E R I Tel. 2468 2100 or 2468 2111 Darbari Seth Block E-mail [email protected] IHC Complex, Lodhi Road Fax 2468 2144 or 2468 2145 New Delhi – 110 003 Web www.teriin.org India India +91 • Delhi (0)11 ii Equitable sharing of benefits arising from coal mining and power generation among resource rich states Team members Team leader Ligia Noronha Project coordinator Veena Aggarwal Project team Souvik Bhattacharjya Trishita Ray Barman Tarun Gopalakrishnan Arpita Khanna Harsha Meenawat Aastha Mehta Nidhi Srivastava Project advisors Leena Srivastava, K Ramanathan and Prabir Sengupta Secretarial assistance Soy Joseph iii Disclaimer The views expressed in this report are that of The Energy Research Institute (TERI) and not of Planning Commission. This report is intellectual property of the Planning Commission and the same or any part thereof may not be used in any manner whatsoever, without express permission of Planning Commission in writing . Equitable sharing of benefits arising from coal mining and power generation among resource rich states Acknowledgements We are grateful to the Planning Commission of India for giving TERI the opportunity to examine a very complex but extremely relevant issue for the Indian economy and society. We are extremely grateful to the stakeholders who gave their inputs and shared their perspectives with regard to this issue and we have tried to represent these to the best of our ability in the report. We are particularly thankful to the various departments in the states of Odisha and Jharkhand with whom we interacted, who provided us with data and assisted us in our work. We would like to acknowledge the incomparable support of Mr. P K Jena, Secretary, Department of Energy, Odisha and Mr. V K Gaur, Special Secretary, Department of Energy, Jharkhand who not only provided us with their perspectives but also coordinated our interactions with other relevant departments in these states. The Chairman and representatives from CIL, Chairman and officials of CMPDIL and representative of the Association of Power Producers provided their valuable inputs and perspectives for this study. We would like to gratefully acknowledge the feedback and suggestions received from Mr. Ashok Sreenivas and Mr. Shripad Dharmadhikary of Prayas Energy Group, Pune and Dr. Ajay Mathur, DG of BEE. We are grateful to Dr. R K Pachauri for his overall guidance and support. The study greatly benefited from inputs and suggestions from various colleagues at TERI and we acknowledge the support of Dr. Prodipto Ghosh, Mr. R K Batra, Mr. Shri Prakash, Mr. S K Chand, Dr. S K Dube, Mr. Shahid Hasan, Mr. Gurudeo Sinha, Mr. Anshuman, Dr. Suresh Jain, Ms. Richa Mahtta, Ms. Anju Goel, Mr. Ramit Malhotra, Dr. Prasun Gangopadhyay, Mr. Sumit Sharma, Mr. Jonathan Syiemlieh, Mr. R K Joshi and Mr. John Andruse. We are also thankful for research assistance provided by Ms. Denise Fernandes. v Equitable sharing of benefits arising from coal mining and power generation among resource rich states Table of Contents EXECUTIVE SUMMARY ........................................................................................................................ 15 Background and rationale .......................................................................................................... 15 Purpose of this study .................................................................................................................. 15 Approach and methodology ...................................................................................................... 16 Coal bearing states....................................................................................................................... 16 Assessments and analyses .......................................................................................................... 17 Study recommendations ............................................................................................................. 26 1. INTRODUCTION ............................................................................................................................ 33 Background .................................................................................................................................. 33 Objectives of this study ............................................................................................................... 36 Terms of reference ....................................................................................................................... 36 Approach and methodology ...................................................................................................... 36 A. The problem ...................................................................................................................... 36 B. Research questions ........................................................................................................... 37 C. Methodology ..................................................................................................................... 37 2. COAL RICH STATES ....................................................................................................................... 43 Socio-economic profile ................................................................................................................ 43 Minerals and coal ........................................................................................................................ 44 Power scenario in the study states ............................................................................................ 49 Installed and planned capacity expansion in the XII plan in resource rich states ....... 51 3. ASSESSMENT OF NEGATIVE EXTERNALITIES FROM COAL MINING AND COAL BASED POWER GENERATION ................................................................................................................................. 53 Coal mining externalities ............................................................................................................ 53 Environmental externalities................................................................................................. 53 Social externalities ................................................................................................................. 66 Summary of externalities from coal mining in study states ........................................... 70 Externalities of coal transportation ........................................................................................... 72 Estimation of coal spillage and resultant fugitive emissions .......................................... 72 Externalities of coal based power generation .......................................................................... 73 Air pollution .......................................................................................................................... 73 Fly ash generation ................................................................................................................. 74 Health impacts ....................................................................................................................... 75 Stress on natural resources .................................................................................................. 76 Displacement of people ........................................................................................................ 78 4. AGENCIES, ADMINISTRATIVE EXPENSES AND REGULATORY FAILURES IN COAL MINING ... 81 Institutions involved in coal governance ................................................................................. 81 Approvals and agencies ....................................................................................................... 81 Administrative expenses towards environment protection .................................................. 87 vii Equitable sharing of benefits arising from coal mining and power generation among resource rich states Regulatory framework ................................................................................................................ 92 Environmental protection .................................................................................................... 93 Land acquisition .................................................................................................................... 93 Policy instruments for addressing externalities ............................................................... 94 Resettlement and rehabilitation policies ............................................................................ 95 Regulatory deficits and failures ................................................................................................. 96 Pre mining stage .................................................................................................................. 100 Measures to compensate for forest land
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