Just Transition Pathways for a Net-Zero Telangana
Case Studies from the Coal-Dependent Districts of Peddapalli and Mancherial
Deeksha Pande, Sandeep Pai, Rishi Kishore, Sriram Kolasani, Sai Chandra R | December 2024
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Executive Summary
As the world moves towards a net zero future–a prerequisite for limiting the rise in average global temperatures to 1.5°C above pre-industrial levels–coal phase down has become inevitable. India’s net zero target year is 2070. However, some coal-rich states like Telangana are setting an even more ambitious target of going net zero by 2047, that is, 23 years before the national target. As Telangana, which produces 7%
of the total coal in India, actively plans its net-zero future, it seeks to ensure that workers and communities are protected from the aftereffects of coal phase down.
To contribute to the understanding of Telangana’s net zero future and just transition prospects, we conducted a study to examine its current levels of coal dependence and economic diversification potential. For this, we focused on two key coal-dependent districts in Telangana: Mancherial and Peddapalli. Currently, these districts collectively produce 45% of the state’s coal. Furthermore, these districts are
home to several coal-based thermal power plants, fly ash units, and coal-dependent MSMEs. Notably, Ramagundam, located in Peddapalli district, stands out as a significant hub for thermal power generation in India.
We conducted a mixed-methods study that included household and enterprise surveys in both districts to quantify coal dependence and unpack aspirations for understanding economic diversification. Additionally, we conducted multiple focus group discussions and semi-structured interviews to capture the nuanced realities, opportunities, and challenges related to diversification in these areas. Finally, we
aligned our findings from field work with the existing policy landscape to identify potential support for new sectors.
Key insights and recommendations are summarised below:
1. Household dependency
a. Employment: In Mancherial, approximately 26% of households rely on coal mines or thermal power plants for their livelihoods, while in Peddapalli, this figure is slightly higher at 28%.
b. Infrastructure: In Peddapalli, 13% of sampled households live in housing provided by Singareni Collieries Company Limited (SCCL) or the National Thermal Power Corporation Limited (NTPC), 12% use SCCL electricity, 7% rely on company-supplied tap water, and 13% access healthcare services at SCCL dispensaries or hospitals. In Mancherial, 5% of households live in SCCL housing, 8% use SCCL electricity, and 11% make use of tap water facilities supplied by SCCL.
2. Industrial dependency
a. Business dependence on coal: In both districts, 3 in 10 local enterprises are dependent on the coal sector for their businesses; and the majority of these enterprises are involved in coal transport or providing services to the coal sector.
b. Infrastructure: In both districts, industrial dependence on the coal sector for infrastructure is minimal. Only 2–7% enterprises are dependent on the coal sector for either water or electricity. Additionally, only 2% manufacturing-based enterprises in Peddapalli and 5% in Mancherial use coal-based boilers.
3. Diversification
a. Aspiration: There are several sectors that people and industries in Peddapalli and Mancherial aspire to diversify into as the state strives to achieve its net zero target. In each district, at the sub-district or block level, there are comparative advantages for different sectors identified by this study
(Table 1).
Table 1: Potential sectors for diversification by district and block
Based on household and enterprise surveys, interviews, policy assessments, and an evaluation of the comparative advantages of each block, this table outlines potential sectors for diversification, along with the identified blocks. In both districts, solar manufacturing and
assembly, textiles, and food processing have the highest potential.
b. Challenges for diversification: Despite the aspirations and the potential for diversification, these districts still face significant challenges. Apart from sector-specific challenges related to land, infrastructure and policy, key challenges include reliance on coal and the absence of a long-term district level diversification strategy.
Recommendations
1. The government, NGOs and other key sectoral stakeholders should engage extensively with local communities in coal districts through targeted plans to solicit ideas for economic diversification in orderto ensure that the transition towards a low-carbon economy is ‘just’. Although conversations on net zero and just transition have become mainstream nationally and internationally, they are yet to capture the imagination of the people and industries in the coal communities of Telangana. Without the support of the people and communities, implementation of net zero and just transition plans would face stiff local resistance.
2. Strategizing for economic diversification, a key element of just transition, needs to be done at the sub-district level in coordination with district- and state-level stakeholders. This requires the initiative on the district administration’s part for creation of sectoral sub-district roadmaps. To effectively plan for economic diversification, it’s essential to focus on governance at the sub-district level, taking into account the comparative advantages and impending challenges of each block (“mandal”). A long-term strategy should be developed at the sub-district or block level, identifying potential sectors that can anchor future growth and job creation. These sectors for diversification may encompass one or more blocks at the same time. Throughout the process, the district administration, municipal corporations, chief planning officers, private sector, industry associations, and civil society must be actively engaged.
3. State and district governments should leverage existing financing options for pilot projects in alternative sectors for economic diversification. To effectively finance economic diversification into new sectors, district and state governments should utilize existing locally available resources, such as District Mineral Foundation (DMF) and corporate social responsibility (CSR) funds.
Coal-mining and power companies like SCCL and NTPC Ltd., in collaboration with the district administration, can allocate CSR resources to provide skill training to workers and seed funding to local entrepreneurs for diversification into new sectors. This approach will not only help bridge skill gaps and promote entrepreneurship but also attract investments for other sectors.
4. The state government in collaboration with district authorities and industry bodies should plan for attracting large-scale investments into the sectors identified for diversification. Given that the state government is seeking investments in the state, it should consider routing domestic and foreign investments to coal-bearing areas. It can also host district-level investor meets to showcase investors potential sectors for diversification.
5. The government should initiate targeted large-scale re-skilling of locals in the matching sectors identified for economic diversification. Coal communities are primarily trained in traditional sectors such as coal mining, textiles, or agriculture, and often lack professional training in other new economic sectors.
Therefore, considering the aspirations of households and enterprises, skilling in alternative sectors is required. In the short term, both central and state government schemes such as the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) and the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) can be leveraged. By aligning training programs with future industry needs, the district 4 Just Transition Pathways for a Net-Zero Telangana government can better prepare the workforce for emerging sectors and facilitate a smoother transition to clean energy.
6. Just transition must be institutionalised. Implementing just transition is a massive task which involves institutional coordination, financing, public acceptance, and planning. The creation of a three-tier task force on just transition was recommended by NITI Aayog in March 2023, the three levels being the centre, state and district. To this end, the Ministry of Environment, Forest and Climate Change, Government of India created a task force this year, and Jharkhand formed a state level-task force in 2023. On similar lines, Telangana’s state
government should also consider forming a task force to promote an equitable energy transition. If Telangana forms a task force in the state and in the districts of Mancherial and Peddapalli, it will be the first of its kind in the country.