Reliance Industries Plans ₹2.73 Lakh Crore Coal Gasification Project In Andhra Pradesh

In August 2026, Reliance Industries Ltd. proposed an investment of ₹2.73 lakh crore to develop what could become India’s first integrated underground coal gasification (UCG) complex in Andhra Pradesh. The proposed project will focus on coal blocks in the Eluru district, which RIL acquired through government e-auctions. The company also plans to use underground coal gasification technology to access deep coal reserves that may be difficult or uneconomical to recover using conventional mining methods.

Although the proposed investment will span approximately 30 years, RIL plans to develop the project in phases. The company expects to initially invest up to ₹3,000 crore between Q3 2026 and Q4 2027. This initial phase will also focus on exploration and pilot-scale testing. These activities will further help RIL evaluate the geological conditions of the coal blocks, assess UCG technology performance, and determine the project’s commercial viability. Based on the results, the company could subsequently move towards larger-scale development and investment.

Reliance’s initial focus on exploration and pilot testing reflects a phased approach to a large and technically complex project. By evaluating geological conditions and technology performance before committing to full-scale development, the company can assess the project’s technical and economic feasibility and refine its plans accordingly. If successfully developed, the proposed UCG complex could highlight a significant step in India’s efforts to utilize deep coal reserves and develop alternative sources of industrial feedstock.

Impact on the Chemical Market

UCG converts coal into synthesis gas (syngas) underground, removing the need for traditional mining before processing. The produced syngas can be used as a feedstock in various industries like fertilizers, chemicals, and other downstream products. By implementing UCG technology, RIL aims to access previously difficult coal reserves and promote integrated industrial growth.

Beyond gasification, the complex could foster downstream industry development in Andhra Pradesh and enhance domestic supply chains. Locally produced syngas could serve as feedstock for fertilizer, chemical, and other industries, reducing reliance on imported raw materials. This project could establish an integrated industrial ecosystem around underground coal gasification, adding value to India’s domestic coal resources.

Impact on the Coal Gasification Market

The global coal gasification market size was estimated at USD 258.59 billion in 2025 and is predicted to increase from USD 288.10 billion in 2026 to approximately USD 733.77 billion by 2035, expanding at a CAGR of 10.99% from 2026 to 2035.

According to Precedence Research, the demand for hydrogen gas is expected to propel the growth of the coal gasification market during the forecast period. Hydrogen is increasingly becoming popular as a clean energy carrier with various applications. The market has witnessed the increasing utilization of coal gasification for the production of hydrogen gas. The coal gasification process has significant potential to produce hydrogen with reduced emissions and contribute to a more sustainable energy system. Hydrogen is also being widely used to generate electricity, power vehicles, and power industry and heat, as well as reduce dependency on fossil fuels.

Governments all around the world seem to be directing investments in clean energy production, which is likely to boost the adoption of coal gasification technologies for power generation and the industrial sector. Supportive government investment, policies, subsidies, and incentives are positively influencing the growth of clean energy technologies and resulting in the rise in coal gasification plants. Moreover, the environmental benefits of UCG technology can assist in mitigating the impact of coal utilization on the climate. Underground coal gasification (UCG) has the potential to lower greenhouse gas emissions compared to conventional coal combustion methods. Thereby driving the market's growth in the coming years.

Impact on the Coal Power Generation Market

The global coal power generation market demand is worth around USD 17.86 gigawatts in 2025 and is anticipated to reach around USD 70.64 gigawatts by 2035, growing at a CAGR of 3.14% over the forecast period 2026 to 2035.

According to Precedence Research, increasing government focus on supporting coal power generation, along with effective policies and regulations, is considered to drive the growth of the global coal generation market. Governments around the world are offering subsidies to coal power generation companies; with this, tax incentives by governments help to reduce the cost of producing electricity from coal. Governments are investing in research and development of new technologies that can improve the efficiency and environmental performance of coal power plants, such as carbon capture and storage technologies.

With increasing global pressure to reduce greenhouse gas emissions, regulations are increasingly being implemented to limit CO2 emissions from power plants. CCS technology can help power plants comply with these regulations, allowing them to continue operating and avoiding potential penalties or shutdowns. With CCS technology, coal-fired power plants can be more competitive with other forms of energy generation that emit fewer greenhouse gases. CCS technology helps to capture carbon dioxide (CO2) emissions from coal-fired power plants and stores them underground, preventing them from entering the atmosphere and contributing to climate change.