CPD backs renewable energy, not LNG, as alternative to coal

The Centre for Policy Dialogue (CPD) yesterday welcomed the government’s move to abandon coal-based power plants as it would help the country save $3.3 billion in import payment annually and protect the environment.

The think-tank, however, opposed the plan to replace the to-be-abandoned coal-based power plants with liquified natural gas (LNG) and recommended the country adopt renewable energy instead.

“The recent initiative of the Ministry of Power and Energy to abandon coal in power generation is a right move. However, the alternative of the coal should not be LNG,” said Khondaker Golam Moazzem, research director of the CPD, while making a presentation during a virtual media briefing.

“Shifting from coal to LNG will be a move from one form of fossil-fuel to another form of fossil-fuel use, which is also environmentally polluting.”

The power, energy and mineral resources ministry has recently sought approval from the Prime Minister’s Office to abandon the use of coal in power generation, according to the CPD.

Twenty-two coal-based power plants, both public and private, have been identified with a total generation capacity of 23,236-megawatts.

These include the plants that are currently under implementation, have received letters of intention and no objection certificates or are at the planning stage.

The government would keep three coal-based power plants in Paira, Rampal and Matarbari.

Now 525 MW power is generated from three units at Barapukuria in Dinajpur using local coal and another 622 MW from the first unit of Paira coal-based power plant, which uses imported coal.

The CPD, however, did not appreciate the ministry as it is still not targeting clean energy-based power generation.

“Given the over-generation capacity, there is no need to rush to select LNG as an alternate for power generation.”

According to the Power Sector Master Plan 2016, electricity generation would stand at 24,000 megawatts in 2021, 40,000MW in 2030 and 60,000MW in 2041.

Gas or LNG would account for 35 per cent of the energy-mix in 2041, coal 35 per cent, import or renewable 15 per cent, nuclear 10 per cent and oil 5 per cent.

Curiously, the CPD said, the ministry raised the logic of LNG-based power plants as an alternative to coal-fired power plants.

Two floating storage regasification units (FSRUs) for LNG power plants with a capacity of 1,000 million cubic feet of gas per day have been established and the super-chilled power is being imported accordingly.

Ten LNG-based power plants with a capacity of 12,155 MW of electricity are being implemented.

The LNG-based power plants have been considered by the ministry as environment-friendly. The low price of LNG in the global market has been presented as a major argument.

The arguments made in favour of LNG as alternate sources are weak and one-sided, the CPD said.

Huge capital expenditure would be required for regasification terminals that could soon be supplying very expensive electricity compared to renewable alternatives.

LNG has about the same carbon emissions as coal when taken into account fugitive methane emissions from fracked gas and the energy costs involved in liquefaction and regasification, the CPD said.

“Solar is the best option in all accounts compared to that of LNG in terms of replacing coal except that of the requirement of land.”

If the government decides to abandon coal-based power plants it would have major budgetary implications.

Without any allocation disbursed after June 2020, Tk 25,650 crore could be saved. If the decision is made after June 2021, the total amount of savings would reduce to Tk 20,535 crore.

Abandoning coal would help reduce import payment.

Bangladesh spent $381.3 million in FY2019 to import coal for the 1,320-MW Payra power plant in Patuakhali.

Without abandoning the coal, increased generation of electricity by coal would increase import payment to as high as $3.3 billion, the CPD said.

If 10 out of 18 ongoing projects are abandoned, it would save public investment by Tk 25,651 crore.

As per the current plan, 4,495 MW of LNG-based power plants will be established by 2025. It will increase to 11,645 MW by 2037.

The CPD paper said import payment of LNG has been increasing and would sky-rocket in the coming years if the additional LNG-based power plants are undertaken.

In 2019, an amount of $114 million was spent for importing LNG. This would increase significantly in the coming years.

Replacing coal by LNG would mean that the super-chilled fuel would account for 70 per cent of the energy mix.

The unit price of electricity from LNG-based power plant (not blended with domestic gas) would be much higher and it would not be the cheaper option.

The ministry should refrain from setting up LNG-based power plants in the sites of abandoned coal-fired power plants, the think-tank said.

Despite all the potential, renewable energy has never got adequate attention from the ministry.

About 1,482 MW renewable energy would be generated by 2025. And there is no plan to add renewable energy after 2025.

Overall, a total of 1,552 MW renewable energy has been targeted, which will be only 2.8 per cent of total capacity in 2041.

If the would-be-abandoned coal-based power plants are shifted to solar power plants, they would generate a total amount of 4,779 MW of electricity.

Together with the existing and other renewable energy projects, a total of 6,331 MW of electricity could be generated by 2041. This amount of electricity would increase the share of renewable energy in the energy mix to 10.6 per cent by 2041.

Bangladesh wants to meet its entire electricity demand from renewable energy in 2050.

The government has less interest in investing in renewable energy projects, said the CPD.

Out of 36 projects, only eight projects are being implemented by the government and the rest 25 by the private sector.

The government should renegotiate with the Japan International Cooperation Agency for setting up renewable energy projects on the sites of coal-fired power plants as the development partner has provided loans for two coal-fired projects.

Similar negotiations should be made with China, Singapore, South Korea and India which have planned to set up coal-fired power projects.

When asked whether the country would incur a loss if it moves away from under construction coal-based plants where a huge amount of money has already been invested, Fahmida Khatun, executive director of the CPD, said: “When we talk about the environment and sustainable development, we don’t just keep in mind the interest of a single generation.”

“We keep in mind the generations after generations. If an investment is made today that is polluting, all generations would bear the brunt.”

So, one should not think that it would be a waste if they retract because the impact of today’s investment on life, health and long-term economic development would be deeper, she said.

Mustafizur Rahman, a distinguished fellow of the CPD, said the government would not be able to do much about the coal-based power plants that are nearing completion, but it can take appropriate decisions about the future plants.

He said if the investments that are being made today are not of high quality, they would get stuck up.

“We have to plan now so that we can reduce the sunk cost because once these investments are made, we become hostage to them.”

Rahman said fiscal incentives to bring in transformational change to renewable energy are very important.

“Policy support is very important to promote renewable energy. Here will come the question of powerful lobby groups and the political economy. We have to make the political economy right first in order to prepare strategies.” 

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