Why Is China Funding Unsustainable Coal Projects In Pakistan?

On April 16th, Chinese investments in Pakistan through the much-vaunted China-Pakistan Economic Corridor (CPEC) were revised upwards, from $46 billion to a whopping $62 billion. The project, part of China's ambitious Belt and Road initiative to invest in trade routes from Asia to Europe, has huge implications for Pakistan's development prospects. As part of CPEC, Beijing plans to build new industrial parks, railways, and roads to link its Xinjiang region with Pakistan's port city of Gwadar. But instead of giving cause for celebration, the colossal Chinese investments heading to Pakistan have sparked massive protests from locals and environmentalists. Why? Because of Beijing's senseless decision to use part of the funds to build outdated coal power plants.

Since Pakistan boasts more than 175 billion tonnes of coal (equal to Saudi Arabia's oil deposits in terms of heating value), harnessing its energy reserves is crucial to ensure the country's economic development. Currently, Islamabad only generates 0.1 percent of its energy needs from coal, relying on expensive coal and LNG imports, as well as 4 nuclear power plants and substantial hydroelectric dams to power its economy. However, instead of opting for cutting edge technology, the Chinese decided to build 10,000 MW worth of subcritical coal-fired plants (sub-CPC), an obsolete way of burning coal that ranks among the most polluting ways of generating energy.

Make no mistake, with Pakistan's energy crisis reaching a tipping point - with a shortfall estimated at 4,000 MW and over 140 million Pakistanis lacking reliable access to electricity - China's intervention couldn't have come at a more opportune time. The majority of rural households in the country still lack access to conventional energy sources and power their homes and businesses with unreliable materials like kerosene, firewood and plant waste. This causes frequent blackouts, which in turn impact quality of life and are estimated to shave up to 2 percent off GDP growth every year. Related: The Bullish Case For Oil Is Fading Fast

Some have questioned the rationale behind Pakistan's embrace of coal when it could be turning towards renewable energy solutions like solar panels. But India's experience with bringing electricity to its rural communities shows the limitations of this approach. The government has met 77 percent of its target to connect villages to power grids, but has only met a dismal 14 percent of its goal for villages designated for off-grid power like solar. Many villages that, for a short time, enjoyed life on the grid have now plunged into the darkness once again as solar panels, wind turbines, and the like fell victim to theft, damage, and disrepair. It's understandable that India has prioritized clean coal technology rather than unreliable renewables as part of its goal to increase power capacity. And it's logical that Pakistan, too, is prioritizing coal as a way to expand access to electricity.

Not only are coal-fired plants more affordable and reliable than other energy sources, Beijing's projects could generate over 1.3 GW of electricity annually when fully implemented. However, this is where the leaders of CPEC have made their critical misstep, by opting to build sub-CPC plants instead of their more technically advanced relatives, the supercritical power plants. The distinction here is important, since subcritical plants use greater amounts of lower-grade coal, which is then burnt at lower temperatures and pressures, thereby emitting far more carbon dioxide (CO2), sulphur dioxide (SO2) and nitrogen oxide (NOx).

Again, this is where Pakistan should have taken a leaf out of India's playbook. India has already made significant headway in addressing the need to balance its reliance on coal with concerns about pollution by successfully blending fossil fuels with its climate change commitments. Late last year, New Delhi announced that it would be phasing out all old, inefficient power plants to replace them with supercritical ones over the next five years as part of its plan to reduce emissions. Piyush Goyal, the country's Energy Minister, argued that upgrading 40GW of sub-CPC plants would generate savings "far greater than possibly the 100,000 MW of solar power that we will be generating." Related: Space Mining: The Final Frontier For Oil Countries

The government has also been exploring how the use of homegrown carbon capture technology can help it square the circle of increasing power capacity while minimizing emissions. Carbon capture and storage (CCS) technology, for example, can store up to 90 percent of carbon dioxide emissions from electricity generation and other processes in allocated reservoirs, such as depleted oil and gas fields and un-mineable coal seams. Its sister technology, carbon capture and utilization (CCU), uses the same principles but instead puts the captured carbon to work. China has been pursuing the same clean coal solutions at home, as well, such as the Waigaoqiao No 3 plant, one of the most energy efficient in the world. If the average global efficiency of all coal plants were to increase from the current 33 percent to 42 percent by using technology like CCS or ultra-supercritical boilers, this would reduce annual carbon dioxide emissions by a whopping 2 billion tons.

It's clear that Beijing recognizes the importance of leveraging the latest advancements in clean coal technology. However, they should be using their expertise and cash to push Islamabad in the same direction - not funding the construction of outdated, subcritical plants. With Beijing breaking new ground with several new energy plants in Pakistan, it should use its clout and know-how to bring power to the people in the most sustainable way possible. Otherwise, Pakistan could end up with an inefficient short-term solution to a long-term question.

By Richard Talley for Oilprice.com

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