19th April 2021
EP Report

Energy experts have underscored the need for taking a political decision as soon as possible on extraction and utilization of domestic coal to get electricity at an affordable price. In a recent webinar, they argued that there is no alternative to set a right kind of fuel mix and diversified sources of energy to get an affordable and sustainable power system. In this case, the huge reserve of high-quality domestic coal should not be ignored. The country cannot afford to leave unexplored such a huge asset worth US$ 300 billion.

Energy & Power magazine in collaboration with M2K Technology and Trading organized the discussion on “Future of Coal Power in Bangladesh” on April 11 as part of its series titled “EP Talks”. EP Editor Mollah Amzad Hossain moderated the webinar.

Mr. Abul Kalam Azad, former Principal Secretary and special envoy to Climate Vulnerable Presidency, was present as the chief guest and Dr. Ahsan H Mansur, Executive Director, Policy Research Institute (PRI) of Bangladesh was present as the special guest of the virtual program.

Eng. Belayet Hossain, Chairman of BPDB, Nurul Alam, Additional Secretary of Power Division and others participated in the discussion. International energy expert Engr. Khondkar Abdus Saleque presented the keynote paper.

Abul Kalam Azad, former Principal Secretary and former Power Secretary, said the question is whether we need coal-based power generation and if we do, whether we should use local coal and what should be the share in the power generation mix. And what are the challenges involved with the coal-based power? Whether local coal to be extracted or not. The logic against coal uses is it causes carbon emission. How much contribution do we have to carbon emission? Out of total global emission, our contribution is only 1/1000; 0.33%. If we set up 5-7 more coal-based power plants, the contribution to global carbon emission will be very negligible; the emission reduction effort will also have negligible impacts. Where China, the USA, India, Japan, and Brazil are making a huge amount of carbon emission, then Bangladesh’s contribution does not make any impact on the global carbon emission level.

It would not be wise to be dependent on a single fuel for power generation. We have to make the right mix of fuel. Power has to be made available at affordable costs and there needs to be competitiveness. If underground mining of coal costs US$160 per tonne and if import cost is lower, then why we will go for mining. But if we go for open-cut mining, the costs will be much lower and there is the opportunity for open-cut mining here. The responsibility of technical persons and bureaucrats is to place logical information before political leaders in a simple way for their understanding. So far, we have failed to convince the political leaders. So, we must speak in the language that is fit to make the political leaders understand. I request the experts, let’s work in that line. 

Now the question is whether we need local coal or not. What is stated here, will we leave our coal resource of 300 billion dollars’ worth, equivalent to the national budget beneath the ground? Then comes the question of extraction. We need to make the right balance of fuel mix and if we do that and bring the share of coal-based power even down from 35% to 25%, still we need to extract our local coal. Because here the question comes how much coal will be required to feed 25% of coal-based power and whether we can transport this huge amount of coal. It is often discussed about carbon neutral situation. That means, the amount of carbon is being released is absorbed by the natural environment. There are technologies to achieve this. We would also be carbon neutral and at the same time will make the right fuel mix.

We are talking about 100 special economic zones. If we cannot ensure energy and water at an affordable and competitive price, we would not be able to attract investment.

Power generation has been increased significantly, from 5,000MW to 20,000MW since 2009. We need to generate 40,000 to 60,000MW in the future. And it cannot be achieved without coal. The USA plans to be carbon neutral by 2035; does it mean they will move completely away from coal?  Not that at all. Therefore, we must go for the right fuel mix eyeing on coal.

Dr. Ahsan Mansur, Executive Director at Policy Research Institute, observed that the gas or coal reserve does not dictate the technology of the world; rather technology dictates energy uses. The fact is, we just need to provide energy security to people at an affordable cost and also to diversify our sources of energy. There will be coal, gas, solar, renewables, import, and all of that must be part of our basket. We must maximize what we have in-ground realities; and have to realize what is cost-effective today and for the next 10 years. So, we need to use the cheapest source of primary energy in Bangladesh. It is unfortunate rather I must say if we truly have 7.5 billion tonnes of coal in our soil that is equivalent to US$ 525 billion of asset and 50% of our whole GDP. But we are not using it, that is a huge loss of wealth. If we do not use it now, we can forget about it altogether. But can we afford US$ 300 billion of assets not being exploited in Bangladesh? That is the question we need to put forward. However, I acknowledge, if it is technologically or economically not cost-effective then the issue is different. But If it is cost-effective and if we kick those out, we should keep in mind, there will be a lot of employment, industrial development around that place, which have other secondary benefits that come with that kind of massive investment. We need to think carefully and seriously about it. If we are to sacrifice this huge resource just for the sake of dislocation of few villages out of 65/70 thousand villages in Bangladesh, then this has to be forgotten forever. This is a choice and should put forward to our politicians who are mentally not ready to make the decision. The second thing I would say, we must go for coal and have to rush it. We lost a lot of time. From 2010 to now, we have only one completely operational coal-based power plant. We should do a few more. This is urgent because the global atmosphere is changing. There will be no financing in the future, and we must decide before that kind of situation arises. Finally, I would say, this is a political and economic issue and If we do not extract now, will lose it forever.

Engr. Khondkar Abdus Saleque in his Keynote presentation mentioned that the government tried to formulate a policy on coal after 2008 but not finalized yet. At that time, we had two studies: one with the Phulbari coalfield, a wonderful study done in line with the contract to develop Phulbari coal resource. But the government has neither accepted nor cancelled the study. There are also studies with the Dighipara coalfield, but no decision is taken yet. After many debates and discussions with coal, the government formed a technical committee ‘Mosharraf committee’ to formulate a clear policy on this. One of the members of the committee, Mollah Amzad, is present here in this discussion. The committee suggested developing a small open-cut mine in Barapukuria and review the existing studies. Those are also not done yet.

The PSMP (2010) states, 50% of power will come from coal by 2030, and out of that 29% will be based on domestic coal. But the whole scenario has completely been changed in PSMP 2016. The contribution of coal in the fuel mix for power generation has been brought down to 35%, where domestic coal will only provide 1% and the rest from imported coal. This is how domestic coal is being ignored. The PSMP also states that 60,000 MW of power will need to be generated by 2041, where 20,000MW will be based on coal. To support coal power generation, annually 55 to 60 million tonnes of coal will need to be imported. The present contribution of coal-based power is only 8% of the installed power generation capacity of the country. 

We have about 7,600 million tonnes of coal in 5 discovered coal fields. 10,000MW to 20,000MW of power can be generated for the next 30 years if we can extract 50% of the resource. There are no such technical challenges involved with the extraction of our coal resources. But for some unknown reasons, the government is making delay in taking political decision. If we become dependent on imported fuel, supply could be hampered due to regional geopolitics. I do not understand why we could not use one of our discovered coal reserves, which is well assessed, within 150m to 300m depth, and has also good quality coking coal.  

There has been debate over coal in Bangladesh. Ultra-supercritical power plant technology has little impact on the environment. Our future generation will not forgive us for ignoring coal. They may have branded us as ‘Coal Razakar’. Therefore, coal extraction must be started now.

Eng. Belayet Hossain, Chairman of BPDB, said the world coal reserve is around 1,054 billion tonnes. At the present rate of use, the reserve can last for the next 200 years. This amount is four times the gas reserve of the world. Therefore, the role of coal in support of our power sector needs to be assessed. The cost of power generation using the own 2,700 MMCFD gas blended with imported 1,000 MMCFD LNG is around Tk 1, and the cost would be Tk.5 using imported LNG in the future. Adding the capacity cost of Tk.2 in the gas-based power plant, the generation cost would be around Tk.7. Against this, the current generation cost of coal-based power is Tk. 2.6 and per unit capacity payment is around Tk.4. In the oil-based power plant, the unit generation cost is Tk.12, and capacity payment is Tk.2. So, comparing generation costs with different fuel sources, the cost of coal-based power generation is now cheaper for Bangladesh. We used to generate 90% of power from gas, which is now brought down to 50%. In the future, the plan is to bring it down to 35% where the share of coal will also be 35%. As gas, coal, oil, or electricity are all needing to be imported, we should look for a cheaper fuel source and coal should be that fuel. As we started with gas, coal would be the best option along with gas. I would give preference to that. But worldwide almost all the investors whom we are dependent, are not interested in coal. It is a big challenge. Ultra-supercritical power station technology is now a preferred option worldwide. But renowned manufacturing companies have moved away, and we are to rely on Chinese and Indian technology. So, it is an issue of consideration how long those will be sustained, and the answer will not get without uses.

As the world is gradually moving away from coal, the price will not be increased, even in the future. So, Bangladesh can take this opportunity. We must keep coal in our uses. 

Abul Kashem Khan, Chairperson at Business Initiative Leading Development (BUILD), said he believed in the potential of coal. It is a national asset, and we must create the opportunity to use it for future generations. I strongly believe that a large part of our energy security depends on domestic coal – do not know how realistic it is, but as a Bangladeshi I believe in that. The foundation of the opportunity that has been created under the leadership of the Prime Minister to become a developed nation by 2041 lies in energy. Bangladesh is very strategically located – between two economic giants, China and India, that leads our rapid economic growth. A new window of opportunity is being created for the economy of Bangladesh. However, energy is the precondition for realizing those potentials. I am not a technical person, but my understanding is that we have enough primary energy resources to support power generation for the next 50 to 70 years. But the resources need to be utilized within a certain time limit, otherwise, we would not be able to use them. Therefore, the question needs to be asked whether we would lose this opportunity for our future generation. Coal is still being used in developed countries. Now industrialized nations are talking about emissions, but they have a significant contribution to increasing global emissions for their development for the last 200/300 years. They have made their first, second, and third industrial revolution based on coal. Why suddenly they want to move away from coal? Because they can afford other alternatives. I am sure they would not go for alternatives if they could not afford it. But we are still a developing nation and need affordable energy. As a businessman, my suggestion, in that case, is to use domestic coal. If you go for open-cut mining how many people will be affected? You cannot deprive 17 crores of people, for the sake of some people. Relocate 100,000 to 200,000 affected people elsewhere but do not let 16-17 crore people of Bangladesh miss this huge opportunity.

Dr. Sultan Ahmed, former Power Secretary, sad the SDG7 states to provide electricity at an affordable cost. The country is going to achieve a higher status by 2030 and to do that electricity has to be affordable. There are some environmental concerns with coal-based power. I think the price of coal will remain low in the next 50/60 years. Using this opportunity, we should set our strategy to provide electricity at maximum affordable costs using imported and own coal. The government can also invest in this sector if foreign investors do not come forward. Our rate of carbon emission will still remain below the level in South Asia.

Dr. Firoz Alam, RMIT of Australia, said coal is still a dominating primary energy source of the world. Last year, 37% of power has been generated from coal. Developed and developing countries still produce a large share of their electricity from coal. Coal and gas will be the major source of fuel for power generation for the next 50 to 60 years. Therefore, coal has to be given due importance in the power system master plan of Bangladesh.

Dr. Mushfiqur Rahman said that we could not maintain continuity in coal sector development. We always do things on an ad-hoc basis. There need to be preparation and continuity in the development of the coal mine industry. Our experience in Barapukuria is not good. These projects are not taken with due consideration, and that makes the whole sector suffer. Import-dependent fuel would never provide affordable energy security, rather gives the opposite

Prof Dr. Kamrul Alam of Queensland University said the coal or non-coal debate should come to an end immediately. Competitiveness, one thing we will not get back once lost. Long-term planning needs to be taken for coal use. It seems Bangladesh does not lack experts, but they could not give proper suggestions to the government. 

Nurul Alam, Additional Secretary of Power Division, said that If we consider coal, there may have a financing problem. We even could not secure funds for power evacuation from the coal-based power plant. There is pressure from the development partners to move away from coal.

Welcoming the guests, Mollah Amzad Hossain said coal and coal power have been in discussion for the last two decades. Coal extraction and power generation based on imported coal have now become an issue of political debate ignoring its technical and economic considerations. Changes have also been made in the coal-based power generation master plan in the last 10 years. Undoubtedly coal is still a major source of getting affordable power. Moreover, experts opined that mine-mouth power generation using domestic coal is about 30% cheaper than that of imported coal. It is high time to make a decision. The country has reached this far under the leadership of our politicians and it is only the politicians who are to take the decision. We have a keynote presentation on this issue.

 


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