Between coal and clean energy

Pakistan is not only one of the most vulnerable countries to climate change but also amongst the only three that are continuously impacted. It remains perilously caught in the eye of the climate storm.

While being a minimal (less than one per cent) contributor to this global issue, it is unjustly bearing the carbon excesses of the global climate polluters as it distressingly faces up to ravaging floods, unliveable heatwaves, uncontrollable forest fires and expanding droughts.

Climate change also continues to exacerbate the country’s spiraling economic meltdown, primarily triggered by the high and continuously rising energy costs of scandalously negotiated power projects, mostly running on imported fuel. The escalating fuel bills are ripping apart the national fabric and playing havoc with the lives of ordinary citizens already overburdened beyond their means.

At the heart of this unforgiving situation, lies the country’s ‘coal dilemma’ which is compelling it to make some stark choices on its energy front.

On the one side, Pakistan has just started to reap the benefits of its large coal reserves in the Thar desert. At 180 Bton they are the world’s seventh largest coal reserves and are estimated to be enough to potentially fuel 100,000MW of energy for 200 years. This purely indigenous source remains mostly untapped and promises to be a cheap energy source that can also offset the burgeoning fuel import bill. Moreover, it embeds the benefits of providing a reliable base load necessary for the stability of the energy generation system in the country.

At the global level, despite the large chest-thumping announcements of phasing down coal, it still predominantly fuels the global economy. The ongoing Ukraine war ironically prompted a return to coal in a number of countries that had previously vowed to stop using this fuel. These global trends clearly evidence that immediate national economic interests, as always, continue to override longer-term global climate change benefits.

On the flip side, there is no doubt that climate change is proving to be the real weapon of mass destruction, unleashing its impacts with rising ferocity and increasing frequency across the globe and coal remains the villainous dirty fuel exacerbating the issue. All countries now understand, and accept this, and have been struggling to initially phase down and then eventually, phase out this fuel.

What is becoming clear is that expanding coal-based power generation will increasingly come with associated costs in the future. These may range from lending banks refusing to finance this expansion to setting up tariff and non-tariff trade barriers such as the recent EU-based Carbon Border Adjustment Tax, to global carbon pricing mechanisms that will aim to curtail this coal expansion.

Pakistan has always endeavoured to be a part of the solution to climate change, and not add to the problem. While facing its dilemma on coal, it is also fortunate to have the luxury of possessing cleaner fuel options available in the country, including abundant solar and wind channels and a huge untapped hydel energy potential along the Indus cascade.

Pakistan’s existing coal generation is 14 per cent of the energy mix – still much lower than the global utilisation average, but this could rise very quickly in the future. The quandary it faces is whether to address its urgent low-cost energy needs using the cheap local indigenous coal or put this on a low priority owing to global climate concerns. There is no easy way out of this predicament.

Within this contradictory context, Pakistan announced its ‘INDC’ (Nationally Determined Contribution) at COP26 in 2021 which gave a clear roadmap for its future development pathway. It was globally acclaimed as being one of the most unambiguous visions as, by 2030, it targeted a shift to 60 per cent renewable energy, which included large hydro projects, as well as a transport shift to 30 per cent electric vehicles.

In addition, it announced a massive carbon sequestration vision, backed by nature-based solutions including the ‘10 Billion Tree Tsunami’ (now termed ‘Green Pakistan’) and expansion of its protected areas network under the ‘Protected Areas Initiative’. It was estimated that with these shifts in place, Pakistan could offset all of its carbon emissions of around 500 MT and even go ‘carbon negative’.

Alongside this vision was the big and bold announcement of halting all future expansion of coal power, based on imported coal, and to only employ the best available technologies including underground coal gasification, for local coal utilization.

The INDC also laid out two emission reduction pathways. Pakistan would shift its emissions pathway 15 per cent below BAU (Business as Usual) using its own resources and could also make the much larger shift of taking this 50% below BAU contingent to attaining associated climate finance – to the tune of $100 billion till 2030. In doing so, Pakistan has tried to address the coal dilemma. The country has signaled a willingness to shift towards a lower carbon growth trajectory but made it conditional to climate finance.

A local research institute (PRIED) has just done a very useful comparison of the future coal expansion options for Pakistan and deduced that the incremental costs, of shifting to the cleaner coal gasification technology from the existing coal burning, is more than three times (Rs11/kWh to Rs36/kWh) while this shift could avoid and reduce carbon emissions by more than 70 per cent.

An even bigger green jump can be made by deploying carbon capture and storage which drops the carbon emissions to ‘net zero’ but escalates the incremental cost almost 18 times (Rs178/kWh). The message is very clear. Pakistan’s clean energy transition out of coal comes with an incremental cost. This transition becomes equitable and just – only if this extra cost is matched with additional and concessional climate financing.

The good news is that innovative financing mechanisms for such a transition are now fast evolving, and becoming available, for countries willing to think and act out of the box. The Asian Development Bank announced the ETM (Energy Transition Mechanism) in 2021 intending to shift country projects out of coal towards renewable and ensure revenue neutrality for the investors through concessional financing.

Pakistan came forward and became one of the initial five countries chosen to pilot this innovative climate financing instrument. However, since then, we have failed to fully capitalise on this opportunity towards a green shift while others, including Indonesia, have worked towards early retirement of their carbon-emitting projects.

Similarly, the JETM (Joint Energy Transition Mechanism) is an instrument where many countries jointly pool to financially facilitate a clean energy transition. South Africa ventured to lead this by announcing its transition out of coal while managing to raise $8.5 billion through JETM for that shift. The coming COP29 will provide a forum to shape many such opportunities.

Pakistan has laid out its green vision and a well-researched pathway to make a just and equitable energy transition, which would include early retirement of polluting plants, a shift towards renewables and the deployment of lowest-emission coal technologies.

Financing is available and the instruments are in the market. What is lacking is a commitment to action backed by accessible finance, which can translate this vision into a reality. A green energy transition will be good for the fight against climate change, good for Pakistan, and good for the world.

The writer is a former minister of climate change and former vice president of the IUCN. He tweets/posts @aminattock and can be reached at: amin.attock@gmail.com