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The exemption of Flue Gas Desulphurization (FGD) systems for some coal-based power plants is a positive for thermal power producers, according to a report by CareEdge Ratings.
The Ministry of Environment, Forest and Climate Change (MoEF), vide its notification dated July 11, 2025, has issued significant amendments to the Flue Gas Desulphurisation (FGD) norms, particularly concerning the sulphur dioxide emission standards for coal and lignite-based thermal power plants. FGD is a system that removes sulphur dioxide (SO) from the smoke released by coal-fired power plants. Considering a capital expenditure of Rs 0.6-0.8 crore per MW, this would reduce the capex burden by Rs 87,000-Rs 1,16,000 crore, CareEdge said in a report earlier this week. The exemption of such norms will save Rs 19,000 crore to Rs 24,000 crore in annual tariff expenses, equivalent to Rs 0.17 per unit to Rs 0.22 per unit of tariff, the the rating agency has estimated. Plants located outside sensitive zones, categorised C, are exempt from mandatory Sulphur dioxide emission compliance, subject to adherence of some other pollution norms. Coal-based power generation in India remains the backbone of India's power generation sector, accounting for approximately 75 per cent of the total generation in 2024-25, despite having a share of only 47 per cent of the total installed capacity. This is primarily due to the higher Plant Load Factor (PLF) of coal-based plants compared to renewable and hydroelectric sources. "Notwithstanding the focus on renewable capacity addition in the future and lower coal-based capacity addition, the share of coal-based plants in generation is expected to remain significant, at around 60 per cent by 2029-30," the CareEdge report read. Furthermore, given that absolute energy consumption is going to increase, the overall offtake of thermal power will remain significant at around 1,233 billion units in 2029-30. A side effect of a high share of coal-based power plants in the generation mix has been the detrimental impact on the environment since coal-based power plants are major contributors to air pollution, accounting for nearly 50 per cent of Sulphur Oxide (SOx) and 30 per cent of Nitrogen Oxide (NOx) emissions as per the IEA 2015 study. To curb these emissions, the environment ministry introduced stricter emission norms in 2015, particularly for projects commissioned after January 2017. In compliance with regulations, thermal power producers were required to install Flue Gas Desulphurization (FGD) systems, resulting in significant capital investments. As per the revised norms this months, thermal power plants are classified into three categories. Category A plants, located within 10 km of the National Capital Region (NCR) or cities with a population of over one million, are required to achieve SO2 emission compliance by December 2027. Category B plants, situated within 10 km of critically polluted areas or non-attainment cities, will have their compliance determined on a case-by-case basis by an expert appraisal committee. If applicable, they must meet the standards by December 2028. (ANI)
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