By R.K. Choudhary, Former Member, Bihar Electricity Regulatory Commission
For decades, studies of Indian coal have shown that it is typically low in sulphur and high in ash, except for certain reserves in the north-eastern states. In contrast, imported coal from Indonesia, Australia and Africa usually has higher sulphur content but lower ash. Despite this established fact, the Ministry of Environment, Forest and Climate Change (MoEFCC) issued a gazette notification on August 7, 2015, under the Environment Protection Act, 1986, prescribing stricter emission norms for thermal power plants (TPPs). These norms covered water consumption, sulphur oxides (SOX), nitrogen oxides (NOX), mercury and particulate matter.
The requirement to limit SOX emissions within notified levels brought flue gas desulphurisation (FGD) technology into sharp focus. All TPPs were directed to install FGDs within defined timelines, which were later extended multiple times due to execution hurdles. The mandate, however, divided the industry. Many utilities argued that FGDs were unnecessary because of the inherently low sulphur content of Indian coal while raising concerns about their financial and operational implications. FGD installation costs about Rs 5 million per MW, with additional auxiliary power consumption and deterioration in heat rates. Since most projects are tied under long-term power purchase agreements, utilities sought cost pass-through to consumers. They also feared that higher energy charges would push such plants down in merit order dispatch. Nonetheless, in view of the binding directive, central, state and private players, including NTPC, moved ahead with FGD plans.
Research institutions, however, presented a different view. Studies by IIT Delhi, the National Institute of Advanced Studies and the National Environmental Engineering Research Institute suggested that SO2 levels in Indian coal-based plants were already within national norms. They recommended prioritising the control of overall particulate matter pollution instead of focusing primarily on SO2.
Policy recalibration in 2025
In response to these concerns and compliance difficulties, the MoEFCC issued a revised notification on July 11, 2025. The new framework relaxed the requirements significantly and categorised plants into three groups. Category A plants, were required to install FGDs by December 2027. Category B plants, were required to install FGDs only if directed on a case-to-case basis by the expert appraisal committee. Category C plants, exempted. This change reduced the requirement for FGDs to only about 19 per cent of India’s 600 TPPs.
Supply chain and implementation challenges
When the 2015 mandate was announced, very few suppliers such as Chinese companies and GE, were active in this space. Over time, domestic firms including Bharat Heavy Electricals Limited and Larsen & Toubro entered the market. However, Indian capacity still depends on imported components such as absorbers, slurry tanks and pumps. Logistics for limestone supply and systems for gypsum disposal also evolved gradually. By the time the 2025 relaxation was announced, many plants had already installed or ordered FGDs, creating a financial burden for discoms and consumers. Although these systems cannot be dismantled, they can generate valuable emissions data that will strengthen air quality monitoring frameworks.
Another challenge is that the revised notification is based on the 2011 census. With urbanisation and rapid population growth around many plant sites, more units may eventually fall within Category A or B. Thus, while the amendment reduces the immediate compliance burden, demand for FGDs could rise again in the future.
The way forward
The road ahead presents both economic and regulatory challenges. Plants in Category C that have already installed FGDs will face higher generation costs and may lose out in merit order dispatch. To address this, either the costs of FGD installation should be socialised across interstate and intra-state utilities, or the incremental costs should be excluded from merit order calculations. For Category A and B plants, the commercial impact of FGD installation must be recognised and allowed as pass-through.
Installed FGDs can also be leveraged beyond compliance. They should be used to generate reference data on sulphur emissions and support efforts in improving the country’s air quality index. Meanwhile, greater indigenisation of FGD equipment is essential to reduce per-MW costs. Electrostatic precipitators currently in operation at 500 MW, 600 MW and 800 MW plants already achieve 99.98 per cent efficiency.
Conclusion
The evolution of FGD deployment in India reflects the ongoing conflict between environmental imperatives and economic realities. Strengthening indigenous capabilities, rationalising cost recovery and leveraging installed systems to build robust emissions databases will be crucial in shaping the path forward.
