The ongoing conflicts and wars are widening the energy crisis around the world. Global markets remain volatile and supply chain disruptions are directly affecting the fuel and fertilizer prices. In this context, as more and more countries are looking for different ways to become independent in terms of energy security, coal gasification is gaining increased attention. While many experts see it as a viable solution to overcome the energy and fertilizer shortages, critics warn about its costs and long-term impact on climate goals. We have asked several experts about the pros and cons of coal gasification for developing countries. Read their answers below.
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Key Takeaways:
- Coal gasification converts coal into synthetic gas (primarily hydrogen and carbon monoxide), which can then be used to generate electricity, produce chemicals, manufacture fertilizers (through ammonia synthesis), or create liquid fuels.
- According to experts, coal gasification can help developing countries use domestic coal to produce gas, fertilizers, and chemicals. This can reduce dependence on imports, improve energy security, and support industrial growth.
- However, building gasification plants is very expensive, the coal-to-gas process is carbon-intensive and potentially conflicts with national climate commitments, and it releases sulfur compounds that may contribute to air pollution.
- Such projects require substantial investment, foreign financing, and technological support, along with strong policy frameworks and government incentives to ensure commercial viability and alignment with long-term development goals.
DevelopmentAid: What are the main pros and cons of coal gasification for developing countries seeking greater energy security, industrial growth, and lower import dependence?
“Coal gasification can help developing countries use domestic coal to produce gas, fertilizers, and chemicals. This can reduce import dependency, enhance energy security, and foster industrial growth. It may also stabilize input costs for key sectors such as agriculture and create jobs. However, the technology has clear drawbacks. It is expensive to build and operate, often requiring government support. It is also carbon-intensive, which can conflict with climate commitments and limit access to international financing. In addition, coal gasification uses large amounts of water and can increase local pollution. Overall, coal gasification may provide short-term benefits for energy security and industry, but it carries financial and environmental risks. Countries need to weigh these trade-offs carefully and align such investments with longer-term energy transition plans.”
“Coal gasification offers developing countries a pathway to greater energy security and industrial diversification, but it comes with material economic and environmental trade-offs. Its main advantage is the ability to convert abundant, often low-grade domestic coal into synthetic fuels, fertilizers, methanol, and synthetic natural gas, reducing reliance on imported oil, LNG, and ammonia. This can contribute towards stabilizing foreign exchange outflows, supporting agro-industrial growth, and developing new chemical industries. It also enables higher-value use of stranded coal that cannot be exported competitively. However, gasification plants are capital-intensive, require strong industrial off-takers, and depend on stable oil and gas prices to remain competitive. Water demand is high, especially in arid regions, and without carbon capture, the process is CO₂-intensive, limiting climate finance eligibility. The production of coal may be accompanied by methane leakage and underground water pollution. Thus, specific and targeted environmental safeguards against these risks are needed. Countries must establish appropriate policy, legal, and regulatory frameworks for the development of sustainable coal-to-gas and related industries. Countries also face technology, skills, operational risks, infrastructure deficits, and macro-economic instability. These risks require careful policy design and implementation to ensure coal gasification supports long-term development goals.”
“Coal use in developing countries is mostly for small-scale thermal applications such as home heating and cooking. The World Bank’s development of High-Efficiency Low-Emissions (HELE) coal gasification technology in Kyrgyzstan and Mongolia in the form of a domestic cross-draft gasifier, brings undeniable benefits to homeowners. It is fully described here. Typical results show PM2.5 emissions reduction of 95% per kg of coal burned, black carbon reduced by 90%, and fuel consumption (CO2) reduced by 40% or more. A key element of this success, apart from the affordable and innovative gasification technology, is to select high volatiles, low ash, low sulphur coals. These low-carbon, high-hydrogen coals must be sized to 13-19 mm. Sizing requires a modest additional cost per ton, far outweighed by reduced consumption. There are numerous benefits to switching from imported LPG or kerosene to local, sized coals such as Nalaikh and Baganuur in Mongolia, or Kara-Keche in Kyrgyzstan. This pro-poor combination provides heating and cooking energy for less than $0.01 per delivered MJ. Nothing compares with this.”
“Coal gasification has a number of advantages, providing a cleaner alternative to traditional coal burning, by converting coal into “synthesis gas” (syngas), with many industrial and environmental benefits, including better greenhouse gas emission control; easier and cheaper carbon capture capability; greater energy efficiency when utilized in an integrated gasification combined cycle system; an easier mode of transport, with coal transported via pipeline in gaseous form, rather than as raw coal. Syngas can also be converted into a high-value commodity like hydrogen for use as a fuel, or to make ammonia-based fertilizers, or it can be converted into synthetic natural gas or chemical feedstock. However, coal gasification also has a number of disadvantages, any of which can be a significant problem for a developing economy.
Coal gasification plants carry a very high up-front capital cost compared with conventional or renewable alternatives, and also high operational costs. Unless combined with Carbon Capture, Utilization, and Storage, the process releases substantial amounts of carbon dioxide, contributing heavily to climate change; and creating harmful emissions and particulates.
Gasification can significantly strain local water tables, and result in large amounts of contaminated wastewater containing toxic byproducts. Gasification equipment is difficult and expensive to maintain.”
“The ongoing blockade of the Strait of Hormuz and the Russia-Ukraine conflict have severely affected the supply chain for importing natural gas and petroleum. Many developing countries are facing pressure to secure energy supplies for industrial and household consumption. India, one of the largest economies, imports approximately 85% of its crude oil and nearly 50% of its liquefied natural gas (LNG). China is similarly reliant on imports for 70% of its oil consumption, and several other countries are equally vulnerable to supply disruptions. One potential solution that is attracting renewed policy attention these days is the gasification of coal. Gasification converts coal into synthetic gas (primarily hydrogen and carbon monoxide), which can then be used to generate electricity, produce chemicals, manufacture fertilizers (through ammonia synthesis), or create liquid fuels. Several developing countries hold significant coal reserves, and gasification can convert coal into synthetic gas for generating electricity, producing chemicals, and manufacturing fertilizers. If realized, this approach will reduce import costs, save foreign exchange, and stabilise commodity price fluctuations. However, building gasification plants is expensive, often requiring billions in investment with a delayed return on investment. Additionally, the coal-to-gas process is carbon-intensive and potentially conflicts with national climate commitments, emitting significant CO₂ and requiring large amounts of water. It also releases sulfur compounds that may contribute to air pollution, especially in regions with weak environmental regulations. Effective gasification usually requires high-quality coal, such as bituminous, which is generally the preferred feedstock.”
“For developing nations, demand for reliable and affordable energy is ever-increasing. Dependence on energy imports is increasing due to a lack of investment in indigenous resources. To overcome the energy crisis and ensure food security, coal gasification presents an opportunity for import substitution and alleviating poverty by creating economic activity. Pros: Coal gasification is an environmentally clean utilization of indigenous coal compared to burning coal for power. It produces value-added products like synthetic natural gas (SNG), liquid fuels, and fertilizers. SNG’s combustion characteristics are similar to natural gas and it can be transmitted through conventional pipelines with minimal changes. Furthermore, coal-to-urea production facilitates the agriculture sector to increase production output, while providing useful by-products like coal tar and ammonia. Cons: The necessary infrastructure to support accessibility, including road, water, and energy utilities, is not adequately available in the Thar region. Furthermore, fertilizer production is one of the most energy-intensive processes. To be commercially competitive, these projects require immense capital, relying heavily on foreign direct investment, foreign financing, and technological support. This obligates the government to provide extensive fiscal measures, including 15-year tax holidays, customs duty waivers, and sovereign guarantees to facilitate capital cost recovery.”
“The prospects for coal gasification in developing countries vary according to several factors: availability of the raw material, favorable political and legislative environment, including the need for energy self-sufficiency, mastery of the technology, financial instruments, market opportunities, etc. However, the number of developing countries for which these factors align favorably is quite limited. Given the increasingly frequent disruptions to energy supply chains due to the multifaceted crises facing the world and their related dilemmas and consequences, one might be tempted to consider coal gasification as an attractive, viable, and more climate-friendly alternative. Despite certain advantages in terms of energy and chemical product offerings, economic profitability and its less polluting nature compared to direct combustion, coal gasification is not the critical issue for most developing countries. The development of renewable energy should represent their real challenge and agenda. Unlike the limited availability of coal, access to renewable energy sources is more widespread. The development of innovation has universalized technology with solutions adapted to each context. National and international policy and financing frameworks exist. Considering the climate emergency, whose increasingly recurrent and devastating effects are borne first by developing countries, it is imperative to prioritize less polluting and cost-effective energy solutions accessible to all rather than more polluting technologies accessible to a limited number of countries.”
“On the advantages side, it helps strengthen energy security by leveraging often abundant domestic coal resources, thereby reducing dependence on imports of gas, fuels, and fertilizers. It also supports accelerated industrialization by enabling the local production of key inputs (such as ammonia and methanol), with positive spillover effects across value chains. Finally, its flexibility allows production to be adjusted (power generation, chemicals, agriculture) according to national needs, enhancing economic resilience to external shocks. However, the drawbacks are significant. Investment costs are very high and risky for budget-constrained economies. More importantly, gasification remains highly CO₂-intensive, conflicting with climate pathways defined by the Intergovernmental Panel on Climate Change (IPCC). Coal gasification also requires complex technologies, creating external dependency. Lastly, the risk of stranded assets is real in the context of the global shift toward renewables, as highlighted by the International Energy Agency. While potentially useful in the short term, coal gasification is only viable if embedded within a well-managed energy transition strategy.”
“In my country, Indonesia, which is a developing country, coal mining causes a lot of environmental and social problems, such as air pollution, water pollution, and deforestation. Besides environmental issues, this extractive industry encroaches on community lands because these operations require vast geographical areas to operate. Numerous agrarian conflicts occur in Indonesia because mining companies routinely evict local communities and indigenous peoples who have inhabited those lands for generations. Regarding coal gasification, from my perspective, coal gasification only has a negative impact on communities and the environment, because this process adds value to the mining product. It means that coal mining will continue operating, although the coal mining process is already threatening the sustainability of the environment and community livelihoods. The good impact will only be felt by the companies and other parties who will get a profit from these industries. Developing countries should find other options to support their energy needs, such as clean energy from renewables, and most of all, respect for the communities’ rights.”
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