India's just transition will have to balance growth, coal, and climate commitments

Indian Express

11-06-2025

Written by Bhaskar Vira and Shashi R Singh
India, poised to become the world's fourth fastest growing economy, stands at a crucial intersection. The dual challenges of development and decarbonisation are central to India's political economy. As the nation aspires to position itself as a global power, it must do so while navigating the climate emergency that is no longer distant—it is here, and it is urgent.
The recurring heatwaves and extreme rainfall across the country are not isolated incidents; they are signalling that climate disruption is now a lived reality. The question is: How can India sustain economic growth while advancing toward its climate commitments? This dilemma is particularly acute in the context of the country's coal-bearing regions, which have historically powered the economy but now face the brunt of transition pressures.
Energy security and the coal equation
India is the world's third-largest consumer of fossil fuels, and coal continues to dominate the country's energy mix, contributing roughly 55 per cent of total energy and 74 per cent of domestic electricity production. The fiscal year 2024–25 marked a milestone as India crossed the 1 billion tonne coal production threshold — a 5 per cent increase over the previous year. This milestone came with substantial gains: Reduced coal imports by 8.5 per cent, forex savings of Rs 42,315 crore, and revenue contributions exceeding Rs 70,000 crore.
Coal also sustains over 2.4 lakh formal jobs and supports millions more indirectly in the coal-bearing districts. Despite India's commendable renewable energy (RE) capacity — over 220 GW installed — coal remains the critical base load provider. India plans to add another 90 GW of coal capacity by 2032, highlighting the complex interplay between meeting industrial demand and adopting cleaner energy technologies.
Beyond the mines: Just transition imperatives
But this production milestone is also a signal — it's time to prepare for what comes next. The coal-bearing districts that have supported national development for decades must now be positioned for an inclusive and sustainable economic future. Since 2015, District Mineral Foundations (DMFs) have addressed the immediate socio-economic needs of mining-affected communities. However, District Mineral Foundations lack long-term vision — particularly around inter-generational justice. Models like the Alberta Heritage Fund or Alaska Permanent Fund show how early financial planning can prepare regions for post-extraction futures.
Coal-rich districts need more than short-term compensation. They need comprehensive policy packages — tax incentives, investment stimuli, and strategic repurposing of mining infrastructure. Currently, many of these regions lack both renewable energy (RE) potential and renewable energy manufacturing investments. None of the top 15 solar component manufacturing units are in these states or districts. This geographical disadvantage has left eastern and central India behind, while renewable energy-related jobs and infrastructure flourish in the southern and western states.
Regional inequality and federal dynamics
Roughly 77 per cent of India's coal reserves are concentrated in 35 districts of Madhya Pradesh, Chhattisgarh, Jharkhand, and Odisha — states that have long fuelled national growth but remain economically fragile. Many of their coal districts rank high on the multidimensional poverty index as per Niti Aayog and are home to large Adivasi populations. These regions are economically dependent on coal and deserve procedural and distributive justice in the energy transition.
These districts cannot be expected to undergo an energy-to-energy transition alone. Instead, the shift must be systemic. One promising idea is to transform these areas into Special Economic Zones (SEZs) with a focus on green industrialisation, not just energy. India's 2005 Special Economic Zones policy largely benefited IT sectors, but the potential for manufacturing led growth — especially in post-mining zones — remains untapped. Repurposing unused mining land for environmentally and socially aligned industries can create sustainable jobs, reduce land acquisition pressures, and maintain local economic dynamism. Global examples abound, and India must tailor such transitions to its own context.
Managing mine closures and skill transition
India must also prepare for the lifecycle end of coal mines and thermal power plants. Decommissioning offers valuable lessons but India needs to craft its own pathway. It impacts local ecosystems, public health, employment, and land use. Frameworks like the Coal Bearing Act, Mining Closure Guidelines, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR) and Forest Conservation Act already offer regulatory scaffolding, but they need clearer implementation pathways focused on repurposing land for public good.
New skills must be cultivated to support emerging sectors. A smooth employment transition requires retraining and education tailored to regional strengths — not just green energy but broader manufacturing, logistics, and services.
Justice across scales
India's energy transition must be seen through multiple lenses: Global (developed vs developing countries), national (wealthy vs poor regions), social (rich vs poor communities), and generational (current vs future citizens). Per capita emissions don't capture these nuances; policy must instead recognise differentiated responsibilities and capacities within Indian society. States like Jharkhand have already formed dedicated Just Transition Task Forces. Others must follow suit, integrating social safeguards, revenue substitution models, and regional industrial strategies into broader state development plans.
Financing the transition
Climate finance will be critical. Domestic funding windows through CSR, Compensatory Afforestation Fund Management and Planning Authority (CAMPA), and District Mineral Foundations, are more in control and dependable sources. The last 10 years of CSR and District Mineral Foundation collections have shown impressive contributions of approximately USD 17 billion and USD 11 billion respectively. The existing challenges remain with the 56 per cent unspent District Mineral Foundation funds. Unlocking their potential, alongside mechanisms like environmental fiscal transfers and blended finance, can catalyse regional transition plans. The 16th Finance Commission could play a transformative role by aligning transfers with climate and environmental performance.
International finance must also play its part. South Africa's Just Energy Transition Investment Plan, backed at COP26, serves as an example of the scale of external support needed. India will require similar commitments, particularly for its coal belt transformation. The Indian government's taxonomy for climate finance could bring focused interventions. Linking it to sectoral policies will further embed just transition into the national development agenda.
Road ahead
India's 2070 net zero target is the larger backdrop. But the pathway to Viksit Bharat 2047 depends on how the country manages its energy shift today. The transition must balance the four Es: Economy, Energy, Environment, and Employment. For this, state governments must be empowered as transition architects. They are best placed to lead stakeholder engagement, land-use planning, and region-specific economic diversification. Planning for this transition is now a necessity. India's coal-bearing districts have long powered the nation's rise. Now, they must be empowered to reimagine their own future.
Vira, is pro vice chancellor for Education & Environmental Sustainability at the University of Cambridge and professor of political economy at the Department of Geography. Singh is fellow at the Department of Geography, University of Cambridge, and works actively on land governance, just transition and socioeconomics issues in coal-bearing states