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The News

Published Date: May 7, 2014

Coal power policy to expose Pakistan to more vulnerability

Pakistan should abandon the existing coal power policy, due to highly inefficient
coal power plants and high tariff, a policy paper written by Arshad H Abbasi, an energy expert associated with the Sustainable Development Policy Institute (SDPI), revealed on Tuesday.

The government needs to adopt a policy based on the state-of-the-art technology to set benchmark in South Asia as a model of clean coal development, it showed.

The government needs to encourage independent power producers (IPPs) to install state-of the-art coal power plants with the efficiency of more than 45 percent with zero Mercury emissions, using less than 320 grams of coal to generate one unit of electricity, the paper said.

All such coal-based power plants must qualify and should be admissible under the joint implementation and Clean Development Mechanism (CDM) rules to earn carbon credits, it said.

However, under the existing policy, the coal-based power plants with less efficiency and high tariff
will not only expose the country to the huge degradation of the environment but will also provide electricity to consumers at higher rates, it said.

The government has asked the National Electric Power Regulatory Authority (Nepra) to relax key parameters that
include efficiency, project cost, O&M (Operation & Maintenance)
expenses to lure investment, mostly from China but ignoring all latest international regulations.

“This will increase vulnerability of the country on the Climate Change Index. Coal consumption would increase carbon emissions, water requirement and tariff for more than 24.5 million electricity consumers,” the paper said.

It highlighted that Nepra approved an attractive upfront tariff for the coal-based power plants, which is applicable to June 30, 2019. The regulator approved on June 6, 2013 upfront tariff for
the coal-based power plants up to 9.60 cents per unit for imported coal
and up to 9.64 per unit for local coal for 200MW, 600MW and 1,000MW generation capacity of coal-based power projects.

This coal-fired electricity tariff determined by Nepra is more than the average tariff of most South Asian countries.

to a recent World Bank report, the average electricity tariff in Bangladesh is US cents 7.70 per unit (one kilowatt-hour), US cents 7.03 in India, US cents 7.63 in Nepal and US cents 3.21 in Bhutan and in Afghanistan US cents 9.18 per unit.

Besides granting high upfront tariff without valid reasons, Nepra has failed to formulate regulations, illustrating the most important parameter of coal-fired thermal power plant, particularly the heat-rate, measure the efficiency of power plants to convert a fuel (coal) into heat, and into electricity, it said.

Higher efficiency of the thermal power generation has become increasingly vital from both environmental and economical perspectives. Higher efficiency translates into less consumption of coal to generating a single unit of electricity, reducing
carbon dioxide emissions, mercury and local air pollutants, releasing less local air pollutants, mercury, consume less water and have a smaller environmental footprint but above all offers less tariff for the
consumers, according to the paper.

The policy paper also mentions that the ministry and Nepra did not learn the lesson from the past. Using imported RFO as fuel for thermal power plants with low efficiency of thermal power has plunged the country into this unprecedented power crisis.

Dependence on imported coal will again be subject to international market prices for coal as was the
case with fuel oil and the government would have no control on coal pricing, it said. For instance, the fuel cost component in case of 1,200MW AES-coal power project was approved in 2009, with tariff having fuel component Rs2.16/KWh.

The paper says that the project
has so far failed to break the ground but as in 2013, the revised tariff was approved with Rs3.69 as fuel component, thus, making 44 percent of the total tariff, which is 42 percent higher than the tariff approved in 2009, which is still open and subject to rates in the international market.

Besides, the tariff for gas-based thermal power plants has not indicated any significant increase due to the use of indigenous gas resources.

Other than tariff, the environmental impact of power generation from coal is being completely ignored in the most fragile region of the globe, the paper revealed.

In South Asia, the total coal consumption in 2012 remained around 685 million tons, of which 98 percent was used in India, with the highest share consumed in the power sector.

share of electricity generated by coal in India is 71 percent, the highest in the region. The coal-based thermal power plants are the single biggest source of air pollutants, causing trans-boundary fog in winter, change of weather pattern, including monsoon rainfall but the devastating impact of coal-based thermal electricity generation directly
impacts glacial melting.

Direct human interference in Siachen and Gangotri Glacier have exacerbated the environmental impact, although the natural phenomenon in other Karakoram Glaciers in the north
of Pakistan shows glacial growth and stability, the paper revealed.

should be noted that Pakistan, as a signatory to the Minimata Convention on Mercury, needs to ensure that any policy does not adversely impact human life. Article 8 of the convention specifically mentions controlling and reducing emissions of mercury and mercury compounds from point sources, including coal-fired power plants.

coal-fired power plants are the largest contributors to mercury emissions worldwide, UN data shows that the mercury concentrations in India and China are to anthropogenic reasons such as coal-fired power generation.

The economic costs of coal-based electricity were evaluated in Europe. The study found that the cost of producing electricity from coal would double over its present value, if the costs of damage to the environment and to human health, from the airborne particulate matter, nitrogen oxides, chromium VI and arsenic emissions produced by coal, were taken into account.

This paper covers policy recommendations on coal to meet the aims of energy security in Pakistan. Firstly, it is integral for Pakistan to explore low-cost fuel options such as hydropower at Rs0.08 KWh.

suggest that run-of-the-river projects can be completed in three years.
Coal power plants will take an estimated 40 months for completion, at $1.5 million/MW, with time and cost comparable to hydropower. There is a
huge shale oil and gas potential in Pakistan, which is another avenue that has not been taken into account by the Ministry of Water and Power and Nepra.

The country can unlock shale gas within three years to generate cleaner energy, at 60 percent efficiency in a combined
cycle gas-fired thermal power plant, with a tariff of around Rs4 per unit. The global trend is towards high efficiency and low emissions, as exemplified by some of the most efficient power plants such as the 858MW
Coal Power Belchatow in Poland with an efficiency of 42 percent.