Coal for sugar production: economic and policy issues

Abstract

Use of bagasse for paper and newsprint making has long since been emphasized in India. Since a major portion of bagasse has been used as fuel by the sugar industry, coal has been suggested as an alternative source of energy. The shift has also been practised to a limited extent. The limited experiences indicated that the industrial users of surplus bagasse, emanating from substitution with coal, were faced with uncertainties regarding availability of desired quantities at expected prices. The situation was not expected to improve due to strong perceptions of coal scarcity and disproportionate rise in its price. Some issues pertaining to demand-supply management and prices of coal have also been discussed. These and the experiences indicated that coal usage for sugar production may to be sustainable within the foreseeable future, and a reversal of the current policies in that regard can be expected if economic rather than financial price of coal was considered.