The Flue Gas Desulphurization FGD Exemption Policy introduced by the Indian government in July 2025 has stirred a nationwide debate over the future of environmental regulation in India’s thermal power sector. As per the latest notification from the Ministry of Environment, Forest and Climate Change (MoEFCC), nearly 78% of India’s coal-based thermal power plants, classified as Category C, have been exempted from the mandatory installation of FGD units. This decision has been met with mixed reactions, with industry bodies welcoming the move for cost savings, and environmental activists raising concerns about long-term impacts on air quality and public health.
Understanding FGD and Its Role
Flue Gas Desulphurization FGD Exemption Policy is a pollution control technology used to remove sulphur dioxide (SO₂) from the exhaust flue gases of fossil-fuel power plants. SO₂ is a major contributor to acid rain, smog, and respiratory illnesses, particularly in urban and industrial regions.
India’s commitment to environmental norms under global climate treaties and Supreme Court directives had previously mandated FGD installations across most thermal plants by 2025. This policy reversal, therefore, marks a sharp pivot in regulatory approach.
What Does the FGD Exemption Entail?
Under the new notification:
- Category C power plants — mainly older plants located in areas with relatively better air quality — are no longer required to install FGDs.
- Category A and B plants, situated in critical and polluted regions, must continue with FGD compliance.
- Plants under exemption must instead adhere to alternate pollution control protocols, which remain undefined in concrete terms as of now.
The move effectively means that only about 22% of India’s thermal capacity will actively use FGD systems, despite earlier national targets covering the entire coal fleet.
Rationale Behind the Exemption
The government cites multiple reasons for this policy shift:
- Cost Burden on Utilities: FGD systems cost between ₹5–6 crore per MW to install. Many older power plants are nearing the end of their operational lives, and such investments are seen as financially unviable.
- Electricity Tariff Pressure: Rising costs from FGD installations could increase electricity prices by ₹0.30–0.40 per unit — an unwelcome burden on consumers and industries amid economic recovery.
- Grid Reliability Concerns: Several plants raised operational challenges in retrofitting FGD units without disrupting power supply during peak demand seasons.
- Localized Pollution Data: The MoEFCC asserts that the exemption is based on real-time data suggesting relatively clean air in regions hosting Category C plants.
Industry Reaction: Relief and Support
Power producers, especially state-owned and independent power producers (IPPs), have largely welcomed the decision:
- They argue it saves billions in capital expenditure, allowing them to invest in cleaner technologies or maintain affordability.
- Private sector players believe the exemption offers breathing space to plan gradual energy transition strategies without risking operational continuity.
- Some states like Jharkhand, Madhya Pradesh, and Chhattisgarh—which host a large number of Category C plants—have backed the move citing fiscal constraints.
Environmental Concerns: Air Quality at Risk?
However, environmental watchdogs and public health experts have expressed serious reservations:
- India already ranks among the worst globally in air pollution, with SO₂ emissions being a key component.
- Exempting 78% of plants may undermine the country’s clean air commitments, especially under the National Clean Air Programme (NCAP).
- Critics argue that older power plants are often the most polluting, and exemptions weaken accountability.
- There is concern that the lack of clarity on alternate pollution control measures creates a regulatory gray area that may be exploited.
Some experts have called the move “short-sighted,” claiming that it prioritizes cost-saving over sustainable development and public health.
Possible Middle Ground and Future Outlook
To balance the dual goals of energy security and environmental sustainability, several suggestions are being discussed:
- Time-bound alternative emission norms could be enforced on exempted plants.
- Transition incentives may be offered for retiring old units and replacing them with renewable energy sources.
- Investment in technology-neutral emission control methods like sorbent injection or hybrid scrubbers is under review.
- Real-time pollution monitoring and public disclosure of emissions data could increase transparency and regulatory compliance.
The Central Electricity Authority (CEA) and MoEFCC have also hinted at periodic reviews of exemption status based on regional air quality trends.
Conclusion
The FGD exemption policy of July 2025 reflects the Indian government’s attempt to balance economic practicality with environmental responsibility. While the move offers much-needed relief to power producers and may help stabilize electricity tariffs, it also raises fundamental questions about the nation’s environmental priorities.
As India navigates its development journey, long-term environmental and public health impacts must not be sidelined. A clear roadmap for cleaner energy production, stricter emission monitoring, and phased transition to renewables will be critical in ensuring that today’s cost savings do not become tomorrow’s climate debt.
