An inter-ministerial committee has pitched for setting up a dedicated non-lapsable 'Green Energy Transition India Fund' to help coal-bearing regions deal with the impact of the closure of mines.
The committee has also recommended that coal-bearing states should prepare a broad framework and plan for a post closure future in these regions based on consultations with the local communities.
"The coal mine closures in short and long term is likely to adversely affect the finances of coal bearing regions that are already typically resource-starved.
"Therefore, the Centre should support the just transition process in coal mines by providing requisite financial assistance beyond the means of the project proponent and the concerned state government," the committee said in its report posted on NITI Aayog website.
India is the second largest consumer of coal.
"... a dedicated non-lapsable 'Green Energy Transition India Fund' could be established for the explicit purpose of aiding communities, regions and states to chart an alternative development path," it said.
The committee has suggested that resources for the fund may be raised from various sources such as issuance of bonds, special levies or cesses, fines collected from polluters and clean energy cess.
"A well-defined mechanism for utilisation of such funds should also be developed to ensure accountability of funds usage," it said.
The 14-member committee, headed by BP Pati who is the joint secretary in the ministry of coal, was set up last year under the India-US sustainable growth pillar of the strategic clean energy partnership.
According to the report, while the transition away from coal is going to be set over a multi-decadal timeframe, some coal mines may close down due to exhaustion of reserves, safety reasons and viability issues.
The committee said it is recommended that the Centre should develop a coal just transition policy.
The government should set up a three-tiered task force that will be responsible for the operationalisation of the proposed just transition policy, it added.
"The task force should ensure that closure related activities are carried out in accordance with the stipulated policy while firming up a redevelopment and re-purposing plans for each coal asset closure," it said.
Further, the report said that coal consumption in the country is likely to peak somewhere between 2035 and 2040 and may undergo gradual tapering thereafter.
The committee noted that closure of coal-based assets while an integral part of the transition in the long run, is going to be disruptive to the sector in general and the local communities in particular.