India’s journey toward energy security hinges on one crucial imperative — reducing our dependence on imported fuels while maximizing the potential of every domestic energy resource. In recent months, much attention has rightly been paid to coal, particularly thermal coal and the role of Coal India Limited in supplying base-load capacity to our national grid. However, one often under-examined contributor to our domestic energy matrix is lignite, or what is colloquially referred to as brown coal.
As we transition toward a diversified and secure energy future, lignite is poised to play a critical—if understated—role. Here’s why the sector needs to revisit its potential through a policy, operational, and industrial lens.
Understanding Lignite: Characteristics and Use-Case
Lignite is a brownish, soft coal with a high moisture content and relatively low calorific value, typically ranging from 2000 to 4000 kCal/kg. Compared to Indian thermal coal (3000–5000 kCal/kg) and imported coal (6000+ kCal/kg), its energy density may appear limited. However, its cost advantages, ease of mining, and domestic abundance provide a compelling economic case, particularly for captive and near-mine applications.
What this really means is: lignite makes sense when utilized at source, especially for electricity generation, syngas, and industrial heating applications. It doesn’t compete with black coal on energy yield, but excels as a regionalized energy solutions—minimize transport, localize generation, and strengthen grid integration in power-starved zones.
India’s Lignite Geography and Institutional Players
India’s lignite reserves are concentrated in Southern and Western India, primarily across:
- Tamil Nadu (Neyveli region)
- Gujarat (Kutch, Bhavnagar)
- Rajasthan (Barsingsar, Bikaner)
The development of these reserves has followed two distinct institutional models:
- Central PSU Model: NLC India Ltd.
Formerly known as Neyveli Lignite Corporation, NLC India Ltd. is a Navratna public sector company under the Ministry of Coal. It has developed a vertically integrated model — lignite mining, captive thermal power generation, and grid supply. With operations centered in Neyveli, Tamil Nadu and Barsingsar, Rajasthan, NLC accounts for a significant portion of lignite-based power in India.
- Projects such as Neyveli New Thermal Power Station (2 x 500 MW) showcase lignite’s base-load potential.
- The company has also forayed into renewable energy, demonstrating how lignite can coexist with India’s clean energy goals.
- State-Driven Model: GMDC, Gujarat
In contrast, Gujarat Mineral Development Corporation (GMDC) operates a decentralized model focused on enabling local industry. It mines lignite and supplies it to Gujarat’s SMEs in ceramics, textiles, chemicals, and manufacturing, where it competes with imported coal on price.
GMDC also runs lignite-based thermal power plants, further strengthening Gujarat’s internal energy network. Their business model has proven effective in:
- Import substitution for industrial fuels
- Lowering energy input costs for MSMEs
- Stabilizing regional power supply
The success of this model demonstrates how lignite, despite its limitations, can be economically viable in localized energy loops.
Why Lignite Now? Relevance in 2025 and Beyond
Here’s the macro-context.
India aims to achieve net-zero by 2070 and reduce emissions intensity of GDP by 45% by 2030 (as per India’s updated NDCs to the UNFCCC). Yet, coal and lignite are expected to remain key players in India’s energy mix till at least 2040 (IEA India Energy Outlook 2021).
This gives lignite a transitional role—bridging base-load energy needs while renewables scale up and storage technologies mature.
Key drivers for lignite resurgence:
- Rising international coal prices due to supply shocks (as seen post-Russia-Ukraine conflict)
- Need for domestic price stability in energy markets
- Localized industrial clusters looking for cheap and reliable fuel
- Push for energy self-reliance (Atmanirbhar Bharat)
Use-Case Expansion: Beyond Just Power
While thermal power generation remains the dominant application, lignite holds potential across several verticals:
🔹 Syngas & Chemical Feedstock
Lignite gasification can produce syngas, which can be converted into methanol, ammonia, and urea. With India importing over 8 million tonnes of urea annually, lignite-based syngas can partially localize fertiliser production.
NLC is already exploring this through its Lignite to Methanol project. If scaled, this could support both energy security and agricultural input security.
🔹 Industrial Heat for MSMEs
Industries that require medium-temperature heat — such as brick kilns, textile processing, and ceramics — benefit from direct lignite combustion, especially where piped natural gas is not available.
🔹 Carbon Capture and Storage (CCS) Pilots
As global carbon credit markets mature, India can leverage CCS pilots in lignite plants, especially in mine-mouth operations with controlled flue gases, to test the viability of cleaner combustion.
Challenges That Need Addressing
While lignite has strategic advantages, a few structural and environmental limitations persist:
- Environmental Impact: Higher CO₂ and SOx emissions due to moisture and sulfur content
- Water Usage: Lignite combustion and beneficiation require significant water
- Transport Limitations: Not feasible for long-distance haulage due to self-combustion risks and low energy density
- Public Perception: Lignite is often lumped together with “dirty coal”, hindering policy traction
These can be addressed through:
- Mine-mouth generation
- Advanced combustion technologies
- Strict emissions standards
- Better communication of lignite’s role in a transitional energy mix
Policy Recommendations
As a research analyst looking ahead, the following policy actions are worth consideration:
- Incentivize Captive and Local Use Models: Prioritize mine-head power generation or SME supply to avoid logistical inefficiencies.
- Lignite Gasification Fund: Allocate funds under the National Green Hydrogen Mission for lignite-to-syngas pilot projects as well.
- Carbon Efficiency Index for Coal & Lignite Mines: Let cleaner mines and users get a better ESG score and carbon pricing benefits.
- Create State-Led Lignite Clusters: Similar to Gujarat, allow other lignite-rich states to create vertically integrated industrial parks.
- Technology Sharing Between PSUs and Private Sector: Particularly in CCS, cleaner combustion, and waste heat recovery.
Conclusion: A Pragmatic Piece of the Energy Puzzle
Lignite is not glamorous. It won’t headline COP summits or attract billion-dollar VC funding. But it holds undeniable practical value in India’s energy transition story.
It is domestic, cost-efficient, and well-suited for decentralized energy models. In a country as large and diverse as India, no single energy source will solve everything — but lignite can certainly fill some key gaps, especially in the next two decades.
To ignore lignite is to ignore a pragmatic, readily available solution sitting right beneath our feet.
As energy researchers and policymakers, we need to stop viewing lignite through a black-or-white lens of clean versus dirty. Instead, it’s time to assess its role as a regional, transitional, and strategically deployable resource — one that can ignite not just kilowatts, but inclusive and self-reliant development.
Lignite has a role in igniting a billion dreams.
The author, R. Subramaniam, is Head of Sales at AGR Knowledge Services in Mumbai. He can be reached on subra@agrknowledge.com
