Our energy strategy (Part – II)

The first part of this article talked about Pakistan’s heavy reliance on gas-based power. Thar coal is a major energy source in the country. This tried and tested technology can be liquefied to produce gas (SNG). There are more than 125 coal gasification plants, out of which 75 percent are in China.

The Asian giant has been taking interest in coal gasification proposals, and it is being assumed that under grave circumstances, it may be convinced to cooperate with Pakistan in building coal conversion plants to gas and diesel. One may have to convert the existing imported coal-based power plants to Thar coal-based plants, at least 20 percent. Major industries including the cement industry also rely on imported coal. Custom duties on coal imports can make the local substitute even more attractive.

With regard to climate change and the ‘net-zero’ issue, in the mid-term (after 2030) Pakistan could add carbon-capturing facilities to its coal plants to satisfy climate expectations and requirements. Coal gasification may be converted to produce the so-called blue hydrogen, which is produced by fossil fuels like gas and coal but with added carbon capturing. This is the path that many advanced nations like Japan and Australia are adopting, partially for now. The difficult issue is timing and probable stranding of energy assets and investments during, and after, transition. It is highly likely that after achieving some progress towards the net-zero target by 2030, advanced nations may introduce a carbon tax or trade-restrictive practices in the form of tariff and non-tariff barriers on countries which may not achieve the imposed net-zero targets.

The Bangladesh Council of Scientific and Industrial Research (BCSIR) has installed a pilot hydrogen plant to produce hydrogen; another one is on the way. The plant is based on gasification of household waste with an output of 5.8 kilogramme per day which can go up to 29 kilogramme. It cost the country an amount of $6 million (540 million Bangladeshi taka). India plans to play a major role in the hydrogen sector aiming to be the world’s cheapest producer and exporter. The country plans to meet 10 percent of the oil refineries hydrogen requirement by 2024 – and to 25 percent in the next five years. Leading Indian companies have plans to go into smaller hydrogen facilities. Reliance Industries Limited wants to install an electrolyser and a fuel cell manufacturing facility along with a solar PV panel manufacturing unit.

The Indian Oil Corporation (IOC) has announced a green hydrogen plant at its refinery in Mathura, UP. The IOC wants to install another facility in Kochin, Kerala where hydrogen-fuelled buses would run at the airport. India is also experimenting with mixing hydrogen in natural gas pipelines in one of its districts. Green hydrogen is quite expensive, and it also has some supply and infrastructure issues. It costs $4 per kg ($34.8 per MMBtu) and above in the US, based on the latter’s low gas prices. Grey hydrogen, based on cheap natural gas in the US, is, however, available at $1.5 per kilogramme ($13.05 per MMBtu). There were targets to bring down the price of green hydrogen to $2 per kilogramme by 2030. These targets have been, however, revised by the United States Department of Energy to one dollar per kg by 2030.

This kind of targeting appears to succeed ala solar PV prices. A Norwegian company ‘NEL’ has announced to produce green hydrogen at $1.5 per kilogramme as early as 2025. These are, however, based on renewable energy inputs of 2 USc/kWh, something that other countries may not be able to achieve easily. The Glasgow Conference has softened its stand on coal under Indian and Chinese pressure. Pakistan may also re-examine its earlier announcement of not building coal-based power plants anymore. Coal gasification should be pursued with urgency due to LNG prices and availability issues which may occur cyclically again.

Coal gasification could be converted to hydrogen production easily – when required, and carbon capture could be installed in the long run, avoiding stranded asset possibilities. There is, however, a big ‘if’ of China’s readiness for such projects. Expanding Thar coal output is also required to indigenise the coal requirement of the cement and other industrial sectors which can reduce the import bill by one billion dollars. Thar coal can be mixed up to 20 percent in new imported coal-based power plants. Solar, wind and hydrogen will remain to be long-lasting and sustainable energy sources. Green hydrogen is based on solar and wind.

This means that we must focus on developing solar and wind power. Electric vehicles will reduce some oil consumption from the transport sector. The prices of solar and wind power have been coming down for some time now. Efforts should be made to bring down the existing local prices to the same level as that of the international prices of 2-3 USc per kWh.

There are other options like biogas and solar water heaters which can fill the gap significantly – up to 20 percent. Bio-CNG and community biogas plants could be attractive options. Oil refineries can act as initial markets for hydrogen as they would need the commodity for desulphurisation. Fertiliser plants would be the next candidate for on-site hydrogen production. Karachi-based oil refineries should be chosen for such a venture. The domestic and industrial sectors would require dedicated transmission and distribution infrastructure, although up to 10 percent of hydrogen can be mixed with natural gas in the existing system. Municipal solid waste could be utilised in hydrogen production improving the economics of both hydrogen and MSW disposal.

It seems that hydrogen may not be market-relevant in Pakistan before 2030. However, it would be an essential part of Pakistan’s energy security in the mid- to long-term. All of the aforementioned would require research and development and pilot-scale hydrogen facilities to increase the local know-how and local content when hydrogen is inducted into the system. Eventually, international oil companies and others would be handling hydrogen as they do oil now, drawing upon both local productions and imported one.

Energy transformation would need a lot of capital which is not being provided by advanced nations. It is almost half a century up to 2070 and 29 years up to 2050. Taking a dim view, the coal-to-renewable energy conversion would be forced upon us by unavoidable circumstances, and we would end up importing hydrogen – as we import oil and gas today. But electricity cannot be imported. Saudi Arabia has already started making big investments in hydrogen. Our long-term infrastructural planning should have an eye on these indicators.

Concluded

The writer is a former member of the Energy Planning Commission and author of ‘Pakistan’s Energy Issues: Success and Challenges’.

Email: akhtarali1949@gmail.com