India’s expanding coal-to-chemical push raises concerns amidst global exit call

 

As the world prepares for COP30 in Belém, a new global report has raised serious alarms about the continued expansion of coal-based industries, particularly in India and China. The 2025 Global Coal Exit List (GCEL), released by Germany-based NGO Urgewald and 48 partners, reveals a worrying rise in coal-to-chemical projects and captive power plants despite mounting evidence of climate risks and tightening international finance restrictions.

The GCEL, claiming to be the world’s most comprehensive database tracking companies across the thermal coal value chain, lists over 1,500 parent companies and 1,400 subsidiaries engaged in mining, coal power, and related industries. It notes that 669 financial institutions from 31 countries now use the database to curb or monitor financing to the coal sector. Yet, the findings indicate that global coal capacity has grown by 30 GW in the past year—more than the entire coal plant fleet of Germany—suggesting that global efforts to phase down coal remain inadequate.

A major red flag, according to the report, is the accelerating development of coal-to-chemical projects that convert coal into chemical products such as methanol, urea, and ammonia. These processes emit far more greenhouse gases than direct coal combustion, and are also water-intensive, posing significant risks to already stressed ecosystems. Globally, 47 such projects are under construction or planned, with China leading the expansion and India emerging as the second-largest player.

In India, 14 new coal-to-chemical projects are in the pipeline, backed by generous state incentives. The Indian government provides a 50% rebate on coal block purchases if at least 10% of the coal is used in gasification projects. Coal India Limited, the world’s largest thermal coal producer, mined 721 million tonnes in 2024 and is spearheading multiple joint ventures to develop coal-to-chemical plants. 

The state-owned company also tops the list of global coal mine developers, with 90 expansion projects under way. These ventures are part of India’s broader industrial strategy, but analysts warn that they come with heavy financial and environmental risks.

India’s expansion mirrors China’s aggressive push in the sector, which now accounts for about 7% of its coal use and is expected to grow further. The report underscores that many of China’s new projects are located in sensitive regions such as Inner Mongolia and Xinjiang, where human rights abuses and environmental degradation have been widely reported. Experts caution that China’s shift from burning coal for electricity to using it for chemical production is simply transferring pollution from urban centers to peripheral regions.

Globally, the GCEL identifies 354 coal mine developers in 35 countries planning projects with a total capacity of 2.86 billion tonnes of coal annually—about a third of current global output. Apart from India and China, major expansions are also taking place in the United States, Indonesia, and Kazakhstan. The United States, despite its aging coal fleet, has revived large-scale coal leasing on federal lands under the Trump administration, raising concerns among environmental groups about backsliding on climate commitments.

On the power generation front, the database lists 303 coal power developers with active projects in 33 countries. Captive power plants, which supply industries directly rather than the grid, are driving much of the growth, particularly in emerging economies. In Indonesia, for instance, more than half of the planned coal capacity falls under the captive category. Environmental groups warn that such developments lock countries into decades of high emissions, even as renewable energy technologies become more affordable.

The GCEL data reveal that 95% of companies in the coal sector have no credible transition plans. Of the 1,516 parent companies and 1,463 subsidiaries analyzed, only 160 have set coal phase-out timelines, and just 76 are aligned with the Paris Agreement’s 1.5°C target. Even among these, more than half intend to replace coal with gas or biomass, rather than renewable sources. The report cites Indian utility Tata Power as an example: while it has pledged to phase out coal by 2045, it is also expanding coal-based capacity through its Prayagraj Power Generation unit.

Financial backsliding further complicates the global transition. Several banks and investment institutions, including Bank of America, Bank of Montreal, and Spain’s Santander, have relaxed their coal financing restrictions in recent years. Between 2022 and 2024, commercial banks collectively lent over $385 billion to coal-linked companies, underscoring the persistent financial support enabling the industry’s expansion.

The report concludes that the coal industry remains far from a meaningful transition, with massive new investments contradicting stated climate goals. Urgewald Director Heffa Schuecking warned that “as long as banks and governments continue keeping coal alive, the temperatures will keep on rising.” She emphasized that the coming decade will be decisive for whether countries like India can reconcile industrial growth with global climate imperatives.

The GCEL 2025 data, available at coalexit.org, arrive at a critical juncture as world leaders prepare to convene at COP30 to assess global progress toward the Paris Agreement. For India, the findings highlight the urgent need to balance its economic ambitions with a credible plan for energy transition—before coal’s legacy becomes an even heavier burden on its environment and people.