India’s Energy Transition: Stranded coal power assets, workers and energy subsidies

The document examines the crisis of 'stressed' coal power assets in India, where approximately 21% of operational capacity was identified as non-performing in 2018. It identifies current drivers of stranding, such as the financial distress of distribution companies (DISCOMs) and coal shortages, alongside future risks including water scarcity, air pollution regulations, and the increasing cost-competitiveness of renewable energy. The authors argue that government subsidies and preferential financing have artificially dampened market signals, prolonging the life of unviable assets. Finally, the brief advocates for a 'just transition' framework to prevent the burden of asset stranding from falling on the millions of workers in the coal value chain, particularly in states like Jharkhand, Odisha, and Chhattisgarh.

• As of 2018, approximately 21% of India's total operational coal capacity—consisting of 34 plants with a combined capacity of 40 GW—was identified as 'stressed' or 'non-performing'. Some estimates suggest the affected capacity could be as high as 75 GW, or 39.5% of operational capacity.
• The stranding crisis is heavily concentrated in the states of Chhattisgarh, Odisha, and Jharkhand, where 58%, 55%, and 27% of state capacity was categorized as stressed, respectively. These three states account for 22% of all operational coal power plants in India.
• The vast majority of stressed coal assets are privately owned, representing 88% of stressed capacity, while central government institutions operate the remaining 12%.
• Current drivers of asset stranding include the financial inability of state-owned distribution companies (DISCOMs) to pay generation companies and systemic coal shortages. Only about one quarter of currently stressed assets had an assured supply of coal via fuel supply arrangements (FSAs).
• Future financial pressures on coal power will likely be driven by water scarcity, air pollution regulations, and the cost-competitiveness of renewables. By 2050, all six major water basins supplying Chhattisgarh, Jharkhand, and Odisha are expected to be stressed, with some reaching 'absolute scarcity'.
• Government interventions, including subsidies estimated at INR 13,850 crore (USD 2.15 billion) in FY 2018, preferential loan rates, and the delay of air pollution regulations, have masked financial stress and prolonged the life of unviable assets.
• New air pollution regulations, such as those from the Central Pollution Control Board, may require retrofits with an estimated total capital cost of around INR 75,000 crore (USD 11.6 billion).
• The transition away from coal poses significant risks to employment. There are an estimated 1.2 million workers in the coal mining industry, and coal accounts for approximately 30% of India's rail network revenue, which employs 1.3 million people.
• While the renewable energy sector is creating jobs—with 432,000 direct jobs in 2017—these are not geographically aligned with coal jobs. Most coal reserves are in central states (Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, and Andhra Pradesh), while renewables are concentrated in South, West, and North Indian states.
• The document recommends implementing 'just transition' policies, such as voluntary retirement schemes, retraining, and cash transfers, potentially funded by the existing cess on coal intended to account for GHG emissions.

APA

Worrall, L., Roberts, L., Viswanathan, B., & Beaton, C. (2019). India’s Energy Transition: Stranded coal power assets, workers and energy subsidies. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/india-energy-transition-stranded-coal-power-assets_0.pdf

Chicago

Worrall, Leah, Leo Roberts, Balasubramanian Viswanathan, and Christopher Beaton. India’s Energy Transition: Stranded coal power assets, workers and energy subsidies. International Institute for Sustainable Development, 2019. https://www.iisd.org/system/files/publications/india-energy-transition-stranded-coal-power-assets_0.pdf.

Wikipedia

{{cite report |last1=Worrall |first1=Leah |last2=Roberts |first2=Leo |last3=Viswanathan |first3=Balasubramanian |last4=Beaton |first4=Christopher |title=India’s Energy Transition: Stranded coal power assets, workers and energy subsidies |publisher=International Institute for Sustainable Development |date=April 2019 |url=https://www.iisd.org/system/files/publications/india-energy-transition-stranded-coal-power-assets_0.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worrall2019indias, author = {Worrall, Leah and Roberts, Leo and Viswanathan, Balasubramanian and Beaton, Christopher}, title = {{India’s Energy Transition: Stranded coal power assets, workers and energy subsidies}}, institution = {International Institute for Sustainable Development}, year = {2019}, month = apr, url = {https://www.iisd.org/system/files/publications/india-energy-transition-stranded-coal-power-assets_0.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }