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The benefits and threats of the growing use of coal for energy projects

The power sector in Pakistan is a mix of hydel and thermal units dominated by two vertically integrated public sector utilities that are Water and Power Development Authority (WAPDA) for all of Pakistan except Karachi, and the K-Electric (formerly KESC) for the city of Karachi and its surrounding areas and as well there are a number of independent power producers that contribute significantly in electricity generation in Pakistan.

For years, the matter of balancing Pakistan’s supply against the demand for electricity has remained a largely unresolved matter. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity. Due to an unrealistic power tariff, high inefficiencies, low payment recovery and the inability of the government to manage its subsidies mechanism that lead to a serious ‘circular debt’ issue which is becoming a barrier for future energy sector investment.

The economy is badly affected by electricity crisis with loss of huge capital. The solution to the current crisis lies in energy conservation at all levels in the country. The use of alternate energy such as wind and solar power could be utilized to immediately reduce the shortages, while electricity projects from coal and large dams could provide a long-term solution to the electricity shortage.

Pakistan produces 64 percent of its energy from oil, gas and coal based operations. Hydro power is also a cheap and clean alternate source of energy through which 34 percent of energy is produced. Another option is to switch from oil-based to coal-based energy.

Coal is globally considered as one of the most important source of energy. Pakistan is said to have about 185 billion tons of coal deposits located in Sindh, mainly at Thar. It is unfortunate that a viable national coal policy yet remains to be evolved. Coal-based energy projects require mining facilities and supporting infrastructure. In the absence of a feasibility report and a consensus on tariff, the Thar project is being unduly delayed. An early use of domestic coal reserves also seems a distant possibility as the requirement of cement sector is being met through import from Indonesia.

Pakistan’s ‘biggest’ coal power plant is being constructed near Port Qasim in Karachi. The coal power project is part of the China-Pakistan Economic Corridor (CPEC) infrastructure. Once operational, it could significantly decrease the level of electricity shortfall in the country. Work on the project is currently underway on the new power plant, which is expected to be completed by March 2018. The coal power plant will have two units each with a combined capacity of 1,320MW. One unit (holding 660MW capacity) is expected to be completed by the end of 2017 and the other by March 2018. Around $2.08 billion will be spent on this project, which is just one of the 21 energy projects which will be constructed under the CPEC. The project has been deemed high-priority under the CPEC.

PROSPECTS

According to the National Electric Power Regulatory Authority (NEPRA), the country is facing energy shortfall to the tune of 6,000MW. The demand reaches about 22,000MW in the summer season, putting more strain on the national grid and leading to load shedding across many parts of the country. This project is expected to reduce the shortfall by around 20 percent. It will not only provide relief for thousands of families in their daily life but will also help provide jobs to hundreds of thousands of people by restarting industries that were shut down due to power shortage. Once the coal power plant is completed, it will be managed by the Port Qasim Electric Power Company. The project’s yearly electricity production will stand at 9,000 Gigawatts, enough to provide 4 million families with electricity for a year. It is hoped that CPEC projects are completed as required and within the project timeline. It is also hoped that they don’t meet the same fate as other government-led projects, which face delays and other issues that increase the cost of the projects.

 

Chinese companies and their partners are expected to spend around $15 billion over the next 15 years to build close to a dozen coal power plants of varying sizes around the country. Hefty investment under the CPEC project has held out hopes of significantly spiking domestic power generation by around 6,000 megawatts by the end of 2018. Combined, the projects will eventually generate 16,000 Megawatts (MW) of electricity.

About three-quarters of the newly generated power will come from coal-powered plants and the government insists on the green credentials of the planned coal power plants, which will use the latest ‘supercritical’ emission-reducing technology that is used in China itself and elsewhere. The latest coal power plants will be as clean as gas-based power generation. They require less coal per megawatt-hour, leading to lower emissions, including carbon dioxide and mercury, higher efficiency and lower fuel costs per megawatt.

CONSEQUENCES

Part of the motivation for building coal-powered plants lies in the availability of the fuel within Pakistan. But environmentalists and energy experts have lambasted the plans for coal-fired plants as a waste of money that will badly damage the environment and tarnish Pakistan’s image as one of the lowest-carbon emitters.

Pakistan currently ranks 135th in the list of global emitters of carbon on a per capita basis, accounting for less than one percent of total global carbon emissions, according to World Bank data. According to the report submitted by Pakistan to the UN Framework Convention on Climate Change last year, the country’s emissions in 2015 stood at 405 metric tonnes of carbon dioxide equivalent (MTCO2 eq.). However, emissions are increasing at a rate of 3.9 percent (16 MTCO2 eq.) annually.

Pakistan is also considered one of the countries most vulnerable to the impacts of climate change, from worsening floods and scalding summer temperatures to erratic rainfall that can kill crops. Planned renewable energy projects under CPEC include a solar park, four wind farms and three hydro plants that together would generate around 3,900MW, at a cost of about $7.5 billion.

According to the Pakistan Alternative Energy Development Board, Pakistan has the potential to generate annually 2.9 million MW of clean energy from solar, 340,000MW from wind and 100,000MW from hydropower. While the country can generate millions of megawatts of solar, wind and hydroelectricity, the government’s inclination towards coal-based power is raising serious questions.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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