The coal conundrum: Are we really moving away from dirty energy?

After a decade of ruthlessly pursuing the world's dirtiest fuel, the Ministry of Power, Energy and Mineral Resources (MoPEMR) is contemplating closing down 13 of the 18 previously approved coal-based power projects around the country and apparently switching to "cleaner" alternatives. On the onset, that seems like good news—perhaps the government has finally realised its folly and decided to put the environment at the top of its agenda to match its grandiloquent claims in international climate conferences. But is that really the case?

Environmental activists, both at home and abroad, had long pointed out that coal was an unviable option not only environmentally, but also economically, thanks to increasing competition from renewables, market reforms and overcapacity in the sector, but those warnings unfortunately were dismissed by the government as ramblings of madmen. The GoB's Revisiting Power System Master Plan 2016 (PSMP) set a target of producing 60,000 MW by 2041, of which 35 percent was to come from coal. A report published by Transparency International Bangladesh, Bangladesh Poribesh Andolon et el on November 2019 highlighted that Bangladesh had at least 29 coal-fired power projects with a total capacity of 33,200 MW in the pipeline which, if built, would increase the country's coal power capacity by 63 times, and cost an estimated USD two billion annually to import the large volumes of coal to power the proposed plants. At a time when coal is being phased out around the world—the number of new coal plants that began construction worldwide fell by 84 percent between 2015 and 2018 while countries such as the UK, France, Canada and New Zealand have committed to phasing out coal power by 2030—Bangladesh ranked sixth globally for the amount of coal in pre-construction and construction stages in 2019, according to Global Energy Monitor.

But now the government is being forced to reconsider. The decision to move away from coal seems less to do with environmental concerns than an astoundingly late realisation that the projects it had overzealously approved over the decade simply could not get backing from financiers. The State Minister for Power and Energy Nasrul Hamid admitted as much to The Daily Star when he said that they are only considering shutting down the plants which are "taking too much time to… [secure the funds and]… start the construction work even after getting approval from the government." As it turns out, despite our eagerness, global financiers and even insurers are not as keen on coal anymore—they are facing increasing pressure from regulators and climate campaigners to turn their back on the fossil fuel industry, particularly as cleaner fuels become cheaper. In 2019, over 100 globally significant financial institutions divested from thermal coal, including 40 percent of the top 40 global banks and 20 globally significant insurers, according to the UK-based Institute for Energy Economics and Financial Analysis (IEEFA). The International Energy Agency meanwhile predicts that investment in coal supply will fall by one-quarter this year because of Covid-19.

Source: CPD. Graphic: Shaer Reaz

This is embarrassing given that Bangladesh is now chair of the Climate Vulnerable Forum, a group of 48 countries most vulnerable to climate change which have vowed to meet

"100 percent domestic renewable energy production as rapidly as possible". It is well and good for Bangladesh to play the victim card when it comes to asking for funds for adaptation and mitigation measures but when it comes to actually taking responsibility for destructive and dirty energy policies, it is apparent it could not care less.

For years, the government has touted how it "had no other option" but to aggressively pursue coal to meet the country's burgeoning electricity needs. That argument simply doesn't hold anymore, given that we are barely even using half of what we are currently producing. We are producing 23,584 MW but consuming a maximum of 12-13,000 MW during summer and 7,000 MW during winter, according to the Power Division. In fact, the government is having to pay Tk 5,000 crore every year to private rental and quick rental power plants as "capacity charge" for the surplus electricity, according to Power Distribution Board, which means that over the last 10 years, Tk 50,000 crore of the taxpayers' money has been wasted simply because our planners did not have the foresight to know—or care to find out—how much electricity we'd need and what we should sacrifice to reach that goal.

After decades of impulsive and illogical investments in dirty energy, can we hope for a well-considered, cleaner future? One fears not. MoPEMR is reportedly suggesting replacing coal with LNG (liquefied natural gas), which essentially means we will be replacing one dirty fossil fuel with another. The greenhouse gas emissions of LNG are more or less equal to that of coal, if the whole product lifecycle is considered. On what possible basis is the government claiming LNG to be a "clean" alternative? As a recent report by The Global Energy Monitor notes, "Methane, the chief component in natural gas, is responsible for 25 percent of global warming to date. Measured by global warming impacts, the scale of the LNG expansion under development [globally] is as large or greater than the expansion of coal-fired power plants, posing a direct challenge to Paris climate goals." Meanwhile, from an economic perspective, the report also points out that expansion of LNG infrastructure faces the same risk of stranded assets and long-term financial viability as that of coal, due to falling costs of renewable alternatives.

In Bangladesh, transition to LNG would require huge capital expenditure, which would make electricity more expensive compared to renewable alternatives. Besides, current overcapacity in the power sector indicates that LNG plants too will be a drain on the ministry's budget. As it stands, we are already spending huge amounts on importing LNG—USD 115 million in 2019—and this amount would increase significantly if additional LNG-power plants are included. A study by the Centre for Policy Dialogue, which assesses the government's recent initiatives regarding abandoning coal-based power plants, highlights that the unit price cited by the ministry to argue that LNG is cheaper is misleading—"unit price of LNG is presented as blended with gas; but unit price without blended with local gas would be much higher (Tk 12-21, based on a study)." It further warns that shifting to LNG would completely change the energy-mix in the power sector "from a moderately diversified to overwhelmingly dependent on single source LNG (70 percent)."

As the chair of the Climate Vulnerable Forum, Bangladesh has committed to producing 100 percent of its electricity by renewable energy by 2050. But the Ministry does not seem to have plans to invest in renewables in any meaningful way—as per the current plan, a total of 1,552 MW of renewable energy has been targeted, constituting only 2.8 percent of the total capacity of 2041. There has been very little progress on existing renewable projects—four projects are currently in operation while 11 projects are in the process of implementation and 19 projects are still at the planning phase. Rather than turn the abandoned coal plants into LNG plants, CPD has recommended turning them into solar power plants, which would then be able to generate 4,779 MW of electricity—a recommendation which the ministry ought to take seriously.

MoPEMR has reportedly initiated working on revising the current masterplan in light of the widening gap between the country's demand and supply, which is a welcome move. However, it has appointed TEPCO as the review consultant, a decision that has been criticised by local and international environmental organisations, since the organisation also did the environmental impact assessment and engineering consultancy for the Matarbari 1,200 MW coal-fired plant and the Anowara-Matarbari 400 KV transmission line project, and as such there is serious conflict of interest.

Even if coal is abandoned altogether, we would still have a reserve margin of 27.7 percent by 2025 (considering the demand gap in the post-Covid period, the margin would be much higher, according to CPD's calculations), which gives us ample time to experiment with and invest in renewables and a more balanced energy-mix in the power sector. Environmental activists have long been advocating that we move away from destructive energy policies and design one that is pro-nature and pro-people. The National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, for instance, have presented an alternative power and energy plan for Bangladesh that can meet the demands of the population without jeopardising natural resources, which would actually cost USD 19 billion less over the next 25 years than the government's masterplan. The government has never taken these proposals seriously, but it is high time that it listens to various stakeholders, rather than just lobbyists and foreign investors, and comes up with a plan that reflects the commitments it has made in the global arena.

Sushmita S Preetha is a journalist and researcher.