Petcoke imports double on plunging global prices, absence of carbon tax

Pratim Ranjan Bose | | Updated on: Jan 20, 2018

Demand for coal from cement industry down

Over the last two years, the Centre has imposed ₹300 a tonne clean energy cess on coal, but spared ‘petroleum coke’ or pet coke — a more polluting alternative to coal — the carbon tax.

This, coupled with a meltdown in global petcoke prices, triggered a huge demand for the petroleum refining product to replace coal.

While coal imports were down 20 million tonnes last year, petcoke imports nearly doubled to 10.5 million tonnes. According to a mjunction publication, imports increased 3.6 times since March 2014, exceeding market projections.

Increasing use

Among the user industries, cement is a major gainer, as petcoke comes cheaper than even domestic coal of comparable varieties. Cement industry sources say, kilns apart, petcoke is also increasingly used in captive power generation.

Reliance and Essar, controlling 75 per cent of the 12 mt domestic production, made the most of the rising demand.

CIL suffers

The only sufferer was Coal India (CIL). Cement makers lifted a fraction of the contracted quantities last year. And, not many had shown interest in new contracts, at the recently concluded pre-bid meeting for 2-mt-linkage auction.

Unhappy with the development, the company recently requested the Coal Ministry for remedial measures. Coal Secretary Anil Swarup was not available for comments on if the Ministry would recommend an identical pollution tax on petcoke.

Industry sources say the use of the fuel may reduce due to the recent rise in crude oil prices and imposition of stricter green laws in 2017 that will force them to curb sulphur emission.

Petcoke contains 3 to 7 times more sulphur and, various heavy-metal contaminants, including mercury, arsenic, chromium, nickel, cadmium, as well as dioxins, hydrogen chloride, and hydrogen fluoride that are emitted when it is combusted.

According to a Platts report in October 2015, India and China are taking different course on petcoke consumption as the latter is expected to curb the use of the polluting fuel. On the contrary, Indian consumption is expected to reach new high.

Polluting agent

Interestingly, the report expected India to reach 10-mt import mark in 2017, when Reliance will come up with its estimated $4 billion petcoke gasification project (that is considered a more environment friendly use of the fuel). India crossed the mark this year.

Meanwhile, Chinese researchers are demanding carbon tax and stricter monitoring on end-use to cut petcoke consumption in the country. China is the largest consumer of petcoke at 33 mt.

According to a 2015 paper by Wang Tao, of Carnegie-Tsinghua Center for Global Policy, Beijing, high-sulphur petcoke burnt to generate power and heat emits “11 per cent more greenhouse gas than coal, and nearly twice the emissions of natural gas”. The National Green Tribunal, Delhi, is currently hearing a petition seeking a ban on use of pet coke. Media reports say the tribunal sought the Centre’s view on the issue in May.

Published on June 27, 2016
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