From Coal To Solar: Structuring Just Transition Packages Communities & Investors

As India charts its path toward energy transition and climate commitments, regions like Chhattisgarh, long dependent on coal, stand at a crucial crossroads. Home to vast coal reserves, this central Indian state has historically powered the nation’s industrial engine. Yet, with the global and national momentum shifting decisively toward renewable energy, a bold and systemic reimagining of resource management is imperative to ensure a just transition, one that safeguards the livelihoods of coal-dependent communities while unlocking opportunities in clean energy.

Coal mining in India, particularly in Chhattisgarh, has led to considerable environmental degradation, health hazards, and social displacement. The state’s mining belt spans over 3,000 square kilometres, much of it degraded or underutilised post-mining. This land, especially from state-owned mines, presents a significant opportunity: it can be gradually repurposed for solar energy farming. With high solar irradiance and access to transmission corridors, Chhattisgarh is well-positioned to become a solar energy powerhouse.

The transition must begin with phased and partial closures of coal mines, prioritising exhausted and less productive ones, accompanied by a strategic government repurchase of privately held mining land. By reclaiming and rehabilitating these lands, the state can set the foundation for large-scale renewable infrastructure, while simultaneously addressing land degradation and improving local ecology.

Designing Compensation Models And Revenue-sharing Frameworks
For private coal mines and energy firms, transitioning to solar need not be a loss; it can be an investment opportunity. A well-crafted compensation and incentive model is central to encouraging private players to reinvest in renewable ventures. Financial support from both the central and state governments. via interest-free loans, land conversion subsidies, or tax rebates, can act as a catalyst for transformation.

The key lies in revenue-sharing frameworks that align interests across stakeholders:

Displaced mine workers can be retrained and employed in solar installation, maintenance, and ancillary services, supported under schemes like Pradhan Mantri Kaushal Vikas Yojana (PM-KVY).

Landowners and tribal communities can be offered long-term lease incomes or profit-sharing models rather than one-time compensation, ensuring sustained livelihood.

Local panchayats should be given a fixed revenue percentage from power sales to invest in education, healthcare, and community infrastructure.

Private investors can benefit from Renewable Energy Certificates (RECs), carbon credit revenues, and power purchase agreements under the National Solar Mission.

Such a multi-tiered benefit distribution system ensures that clean energy growth does not reproduce the inequalities of extractive industries but rather redistributes economic gains equitably.

Leveraging National Policy And Carbon Finance
India already has the policy scaffolding to support such a transition. The PM-KUSUM scheme, originally designed to encourage decentralized solar energy through agriculture, can be expanded to include land formerly used for mining. By installing grid-connected solar water pumps and mini solar parks, former mining villages can be turned into solar-producing hubs, ensuring rural employment and local energy security.

Further, carbon credit mechanisms provide a global financing route. By registering these repurposed solar farms under international carbon markets or domestic schemes like the Indian Carbon Market (ICM), developers can generate carbon offsets and attract foreign investment. The ICM can be promoted further with PODS CBDC to incentivize turning green in domestic and agricultural use of energy. The monetized value of reduced emissions can then be reinvested into community welfare funds, supporting displaced families, vocational training, and education for children of former mine workers. It is to be noted that the lifespans of coal miners and other workers will also increase because of less pollution and clean work environments.

Ensuring The Mining And Thermal Power Station- community Consent And Participation
No transition can be just if it is top-down. Meaningful community consultation is essential to avoid repeating the historical wrongs of displacement and marginalisation. Panchayati Raj Institutions (PRIs) must be empowered through legal mandates to have a say in land repurposing, revenue utilisation, and employment guarantees. Social audits, grievance redressal mechanisms, and participatory land mapping should be embedded into the planning process.

In addition, the government must prioritise the inclusion of Scheduled Tribes and Dalit communities, who are often the first affected and last compensated. A special Just Transition PODS CBDC Fund for marginalised communities could be established, sourced from a portion of solar power revenues and CSR contributions from transitioning companies.

Examples From Global And Indian Precedents
Globally, countries like Germany and South Africa offer instructive models. Germany’s “Coal Commission” set timelines, worker compensation, and regional development plans with broad stakeholder consensus. Similarly, South Africa’s Just Energy Transition Investment Plan (JET-IP) includes dedicated funding for worker reskilling, enterprise development, and regional diversification.

In India, Rajasthan’s solar push in Bhadla has shown that barren lands can be transformed into renewable hotspots with the right mix of incentives and infrastructure. Chhattisgarh can adapt and localize these lessons, leveraging its resource base, social capital, and power infrastructure.

To compare the revenue generation of a 500 MW coal thermal plant and a 500 MW solar farm, we assume, or simplicity, that both plants generate the same number of units (kWh) annually, even though, in reality, coal plants typically have a higher output due to a better capacity utilization (PLF). The key difference then comes down to the tariff, or sale price per unit of electricity. Coal-based power usually sells at (Rs) 3 to 4 per kWh, while solar power is currently priced lower, around (INR) 2 to (INR) 2.5 per kWh in India.

Taking an example, if both plants produce X units annually, and if the coal tariff is (INR) 3.5/kWh while the solar tariff is (INR) 2.3/kWh, then the revenue from the coal plant would be (Rs) 3.5 × X, and from the solar farm would be (Rs) 2.3 × X. This means the coal plant generates approximately 52 per cent more revenue per unit compared to the solar farm. However, while coal plants enjoy higher per-unit earnings, they also face significant fuel costs (for coal procurement and transport), higher operational expenses, and potential liabilities from carbon emissions and pollution penalties. In contrast, solar farms have no fuel costs, minimal operating expenses, and may even benefit from carbon credits. Although solar currently brings in less revenue per unit, its operational sustainability and long-term regulatory advantages position it strongly for the future.

Beyond the electricity costs, coal power imposes ‘hidden costs’ through increased pollution, resulting in higher healthcare expenses and public spending on environmental damage control. Although both sectors receive government subsidies, coal continues to depend heavily on support for mining and transportation, costs that taxpayers indirectly bear. In contrast, solar subsidies are declining as technology matures, making it even more economically viable. Ultimately, solar offers consumers not just lower tariff rates but also long-term price stability, fewer hidden expenses, and a healthier, more sustainable future.

Building Institutional Capacity And Governance
To operationalise this transformation, a Chhattisgarh Just Energy Transition Taskforce (CJETT) can be set up, comprising representatives from state government, energy companies, affected communities, civil society, and financial institutions. This task force can:

Create transition roadmaps and closure schedules.

Oversee reskilling programs and worker reallocation.

Facilitate green finance and carbon trading certifications.

Monitor environmental remediation and social safeguards.

Public-Private Partnerships (PPPs) can be encouraged to co-develop solar projects, with transparent bidding processes and clauses ensuring local job creation and environmental compliance.

The Way Forward
The path from coal royalties (and accompanying health and environmental hazards) to solar revenues (and added benefit of better health and environment), is not merely a technical shift; it is a moral and economic imperative. Chhattisgarh and similar states have the opportunity to lead a new era in India’s development, one that values sustainability, equity, and resilience. By strategically phasing out coal, reclaiming land for renewables, and ensuring inclusive benefit-sharing mechanisms, India can demonstrate a global model for just transition in the Global South.

The time is ripe for a new social contract, where clean energy is not just about megawatts and emissions, but about people, dignity, and prosperity. The sun, unlike coal, doesn’t deplete, and if its power can be harnessed equitably, it might just illuminate a future where no one is left behind.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.