SC Pauses NGT Order Amid Industry Push For Coal Flexibility

The Supreme Court (SC) has put on hold a recent order by the National Green Tribunal (NGT) that had cancelled a government decision that allowed thermal power plants to change their coal source without getting fresh environmental clearance (EC). This stay temporarily allows power plants to continue switching coal sources, without new ECs. The issue has been under scrutiny for the past five years.

The Ministry of Environment, Forest and Climate Change (MoEF&CC), through a series of office memoranda (OMs), allowed thermal power plants to change their coal source without seeking fresh clearances. However, the NGT has questioned this move at least twice.

Most recently on April 28, the NGT’s Southern Bench quashed the MoEF&CC’s OMs, stating that such exemptions from regulatory review could lead to increased emissions due to varying coal quality, blending practices, or operational inefficiencies — “none of which are evaluated prior to the exemption taking effect”, the Tribunal noted and criticised the absence of any methodology to assess or verify pollution load differences before such exemptions are granted.

Following this ruling, two state-owned companies, NTPC Limited and Damodar Valley Corporation (DVC), approached the Supreme Court, seeking interim relief. The apex court granted stay orders to the two appellants on May 7 and May 14, respectively. The stays will remain in place until the next hearing.

In its appeal, NTPC Limited contested the Tribunal’s decision, calling it an “erroneous interpretation” of the OM’s scope and argued that the judgment ignored “conditional safeguards,” including compliance with emission norms related to particulate matter, SOx, NOx, fly ash utilisation, coal quality, specific water consumption, and public reporting standards.

NTPC Limited further claimed that the ruling would have “cascading public consequences,” including threats to its power generation capacity, breach of power purchase agreements, depletion of coal stocks, and risks of large-scale energy shortages. The company stated that these issues were presented to the NGT with supporting data, but were not considered in the final judgment. “Such omission undermines energy security and jeopardizes the larger public interest,” it claimed.

DVC made similar arguments. The corporation, while requesting a stay on the NGT’s judgment, said its operations “will be significantly impacted by the suspension of the OM, which disrupts its ability to procure coal through flexible arrangements and threatens the uninterrupted functioning of its thermal power plants.”

Environmentalists, however, criticised the interim relief. Durga Moorthy, a Chennai-based researcher on coal issues and a volunteer with the Save Ennore Creek campaign, said it was not obligatory for the NGT to hear thermal power companies in this case.

“To comment on whether NTPC is a necessary party to the case, we should first look at what is under challenge. An office memorandum issued by the MoEF&CC is under challenge. The ministry is the author of the instrument; they are the only ones who can defend the validity of the instrument. The beneficiaries of the instrument are not necessary parties in deciding the validity of that instrument. This has been the long-time concept of a necessary party in courts. In this case, MoEF&CC was the only necessary party, and they were heard,” explained Moorthy.

Blending convenience with compliance

At the centre of the legal dispute is a three-page OM issued by the MoEF&CC in 2020. The document outlines a simplified procedure for thermal power plants that wish to change their coal supply source without undergoing the process of obtaining an amended environmental clearance.

Under the new procedure, thermal power plants are no longer required to seek amended clearances before switching their coal source. They must simply comply with six default conditions after the change. These conditions include providing details about the new coal source, such as quantity, quality, and transportation method, as well as adhering to emissions standards for pollutants and managing fly ash by existing regulations.

Before the OM was issued, such a change required regulatory approval, typically taking two to three months. After the OM came into effect, power plants were allowed to procure coal from any domestic or international source without delay.

While the OM itself does not reference any specific case, documents obtained under the Right to Information (RTI) Act, accessed by Mongabay India, suggest that its genesis lies in a request submitted by NTPC’s Vindhyachal Super Thermal Power Plant in Singrauli, Madhya Pradesh. The plant sought an amendment to its existing clearance to shift its coal source from the Pakri Barwadih mine in Jharkhand to the Northern Coalfields mine located within 20 kilometres of the project site.

The proposal was examined by the MoEF&CC’s expert appraisal committee (EAC) in 2019, which also sought input from the Madhya Pradesh Pollution Control Board. The Board reportedly concluded that the change in coal source would not increase the pollution load, reasoning that since the type of fuel (coal) remained the same, emissions would not vary significantly.

Following these clearances, the amended EC was granted to NTPC Limited. This case effectively set a precedent.

Soon after, the ministry decided to formalise the process through a generalised office memorandum. A senior official noted during internal deliberations in late 2020 that such requests were increasing and could rise further. This was partly in response to a policy advisory issued by the Ministry of Power in April 2020, which encouraged all thermal power plants using imported coal, either partially or fully, to shift to domestic sources wherever feasible.

Policy triggered by domestic coal surplus

Ministry of Power issued its 2020 advisory as part of an effort to promote coal import substitution. At the time, domestic supply was high, and the ministry was encouraging thermal power plants to rely more on Indian coal.

Thermal power producers had traditionally imported coal to blend with domestic supply and manage shortfalls. However, an internal note written by Subhash Chand, a ministry official, in April 2020, pointed out that Coal India Limited (CIL) had begun the financial year with its “highest pithead stock of around 75 million tonnes (MT).” He argued that the country’s coal requirements could be met through domestic production alone, reducing the need for imports. Chand recommended that the ministry advise all thermal power companies using imported coal to eliminate imports, as domestic availability was expected to be sufficient.

Consequently, on April 28, 2020, the Ministry of Power issued an advisory encouraging all thermal power generators using imported coal to shift to domestic sources as far as possible.

This thinking appears to have influenced decision-making within the Ministry of Environment as well. In an internal note on October 19, 2020, then Environment Secretary wrote, “This is basically an economic issue and not an environment issue. So we shall freely permit change of source including domestic to imported along with imported to domestic and one domestic to another domestic source. The conditions stipulated in OM shall apply to all.”

However, this approach would later come under criticism. Contrary to the view that coal source change was purely an economic matter, the NGT repeatedly flagged environmental concerns in multiple orders responding to a petition filed by K. Saravanan, an environmentalist in Chennai. Since 2023, the Tribunal has issued at least two interim orders directing the ministry to revise the OM. In response, the ministry amended the document in December 2023 and again in January 2025, adding what it described as “environmental safeguards.” However, the NGT found these revisions insufficient.

The April 2025 judgement is the latest in a series of NGT rulings critical of the MoEF&CC’s OM.

“The environmental risks associated with changes in coal source are not theoretical. The variation in coal grade, ash content, sulphur content, moisture level and calorific value can significantly affect emissions, thermal efficiency and ash generation,” it noted. “It is specifically pointed out that imported coal often has lower ash content but higher sulphur content. Whereas domestic coal on the other hand can lead to increased particulate emissions and greater fly ash volumes. The exemption provided under the OMs failed to account for the scientific realities,” it noted.