How states like Punjab can help power plants use crop residue and reduce stubble burning

The conversion of crop waste is most economical if it is done in small plants near the crop waste collection points in a cluster of villages, as transporting crop waste would be far more expensive than transporting pellets

The harvesting of the rice crop is around the corner and would be followed by widespread burning of the crop residue. Air pollution levels would again shoot up in Northern India, especially in Delhi and the National Capital Region. This in turn would create the annual health crisis around Diwali. The public outcry would dominate headlines. Schools may have to be closed on days when the pollution levels are too severe. We have been unable to make a dent in this annual crisis till now, but not for want of trying. Burning of crop residue was banned and made a criminal offence. This provision was never really used as sending farmers in large numbers to prison was never a feasible option. One of the first concessions made to farmers during their long agitation against the farm laws was the withdrawal of the penal provisions for crop burning.

The government separately decided to subsidise the Happy Seeder which ploughs in the crop waste into the soil increasing the nutrients in the soil. Notwithstanding the large subsidy being given by the government over the last few years for these machines and good promotional work in some pockets, most farmers do not yet see the extra cost of ploughing in the waste being worthwhile and giving commensurate returns. Should we just wait for the many years that it may take for the promotional efforts to succeed? The answer would be a clear no from all those suffering from air pollution.

Changing cropping patterns is an idea that also keeps coming up. This is certainly a necessity as the groundwater being used for rice cultivation is more than the annual replenishment from rainfall. But this would take even more time and effort. An alternative cropping pattern which gives a higher return with minimum support price (MSP) in lieu of rice would need to be promoted. This is a major transition and needs the creation of some consensus among farmers and the political class, and will take time. This cannot be the immediate solution needed to overcome the annual air pollution crisis.

Pellets From Crop Residue

The one solution which has worked and is being pursued is the conversion of the crop waste into pellets and burning these as a partial substitute for coal in thermal power plants. NTPC has done this and established its technical feasibility. Based on this successful experience, the power ministry has mandated the substitution of five percent of coal with pellets to be increased to seven percent in thermal plants. Conversion of all the crop waste into pellets and using them in thermal power plants would, in theory, solve the problem.

The scale of the problem is too gigantic. Punjab alone is generating over 19 million tonnes of rice crop stubble this year, all this needs to be converted into pellets. The transition needs to take place in a year or two to prevent the annual health crisis. In the present scheme of things, individual thermal plants are inviting bids for the supply of pellets. Public procurement processes take time. In case the lowest bid price varies for neighbouring plants, as is likely unless there is cartelisation, it may become difficult for contracts to be awarded. Potential bidders would need to make assumptions about the price at which they would buy crop waste from farmers. Farmers, being rational economic agents, may want a higher price once they know that the successful bidder has a contractual obligation which he must fulfil. This creates supply-side risks. The conversion of crop waste is most economical if it is done in small plants near the crop waste collection points in a cluster of villages, as transporting crop waste would be far more expensive than transporting pellets. For potential bidders, difficulties in getting land and its price would function as a disincentive.

MSP Approach For Crop Residue

Is there some other way forward? There is. A state like Punjab needs to treat the challenge as a war-like situation and use the exceptional instruments that are used in wartime. It should extend the MSP approach to buy all the crop waste at a remunerative price. It should provide land on a license fee basis for storage and conversion of crop waste into pellets to private parties at a reasonable rate. It should settle the price of pellets to give pellet-making plants a reasonable return. Private players may be given this work on a first-come first-serve basis. It should also be ensured that the work is equitably allocated amongst willing parties. Pellets so made may be allocated to thermal plants in Northern India in an optimal manner to minimise transportation costs. Thermal plants would then get pellets at a price that is already settled. This cost would be a pass-through in the price of electricity as is the case with coal. The entire process could be undertaken without any pecuniary loss or government subsidy. Only working capital is required, which the state would have to provide.

This approach would spare us the annual air pollution crisis after Diwali within a year. However, it would require states to assume responsibility in a radically different manner from what they normally do. The health emergency that we experience every year needs the states to think out of the box and use their full capacity. Without it, we will continue to suffer.

Ajay Shankar is a Distinguished Fellow at The Energy and Resources Institute (TERI), and former Secretary, Department of Industrial Policy and Promotion, Government of India. Views are personal, and do not represent the stand of this publication.