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Criticality of coal

Coal is a combustible black or brownish -black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as metamorphic rock because of later exposure to elevated temperature and pressure. Coal is composed primarily of carbon along with variable quantities of other elements mainly hydrogen, sulphur, oxygen and nitrogen. Coal is a fuel of the past, the present and future. With the growth of technology and impact of carbon emission much of its direct use in transportation, industry and power has been taken over by electricity, much with coal as fuel. Today, coal provides over 30 percent of global primary energy needs and generates over 40 percent of the world’s electricity. It is also used in the production of over 70 percent of the world’s steel and around the same for cement. The total coal production (including hard coal and lignite) stands at over 8000 metric tonnes as against 4677 metric tonnes in 1990. The 10 largest coal producers include China (largest), the US, India, Indonesia, Australia, Russia, South Africa, Germany, Poland and Kazakhstan.

In spite of the threat of carbon emissions coal continues to be used as preferred fuel in all parts of the world with USA (38 percent), Germany (44 percent), Japan (21 percent), Australia (69 percent) and China (80 percent). Pakistan is at the crossroads and rather confused on the subject of fuel mix it should adopt to generate affordable electricity. Presently, the thermal power plants in Pakistan are largely based on furnace oil, HSD and natural gas. With the depleted availability of natural gas, the fuel is largely limited to oil which is considered as expensive. A substantial reduction in oil price has provided some timely relief. The government of Pakistan is considering going for a cost effective energy mix and the introduction of coal and LNG in the energy mix are the two options being perused by the government. Both these fuels offer cost advantage, but, the infrastructure required for handling coal or LNG at the port and its transportation to the site of use requires heavy investment and time to complete the required infrastructure.

Coal supply chain and the impact of coal on environment are the two most important challenges which need to be addressed for the successful use of coal as a cost effective and reliable source of fuel for Pakistan. To start with, the coal is required to be imported. The supply chain of coal comprises its sourcing, its receipt at the port, its unloading and loading at port and its transportation to the power plants and industrial sites spread over Pakistan. The infrastructure required for the same is investment intensive and its completion requires a couple of years.

The Chinese government had offered to support ‘Gadani Power Park’ near Karachi, largely based on coal power plants, with the government of Pakistan made responsible to complete the coal handling at port and transportation infrastructure within a given timeframe. The government of Pakistan could not meet its obligation, whereupon, the Chinese opted to withdraw its offer of support. Gadani Power Park stands abandoned. This is how important the coal supply chain is to introduce coal as a fuel in Pakistan.

Last week, a two-day seminar was organised in Lahore by leading stakeholders involved in the supply, handling, testing and use of coal for industry and electricity generation. Over 400 delegates participated in the event. Local and global experts from leading organisations like SGS, Hubco, Oracle Coalfields PLC, SECMC, HMS Bergbau AG, PNSC, Pakistan Railways, DG Coal Exploration Indonesia, functionaries from the federal and government of Sindh and Punjab and other eminent leaders in the field, presented the papers and debated on the global use of coal for electricity generation with focus on Pakistan. The presence of the government functionaries to gain knowledge from such a high level of coal experts on the very subject which is under their top consideration was much lacking. Preparing energy policies in isolation and devoid of knowledge is not an option for a country confronted with so acute an energy crisis. The conclusions drawn from the coal experts were meaningful to the extent that it made transparent the global and local dynamics of use of coal for industry and electricity.

Although the G20 countries are advocating the world to move out of coal, they continue to use coal as their major source of energy although there is much development on the green renewable energy. The coal experts argue that with the rapid increase in power demand coal will continue to enjoy its importance. The issue is CO2 emissions, in which the Carbon (C) is un-healthy component, whereas, Oxygen (O2) is a healthy one and both can be separated and utilised without environment impact. The question is at what cost. A great optimism was expressed about the early use of Thar Coal for power generation. The ambition level expressed was generation of 10,000MW electricity from Thar Coal by 2020. A realistic figure based on ground reality appears to around 1000MW at best.

While hydro was rated as the first choice of Power Generation in Pakistan the second choice was rated as coal in view of local coal potential and ready availability from Indonesia, South Africa and Australia. Financing for coal based power plants is only possible from China as G20 countries are no longer willing to finance them.

As to date power plants with a total capacity of 7500MW based on imported coal and 3600MW based on RLNG are planned. The plants based on imported coal includes Shahiwal (2 x 660MW), Jamshoro (600MW), Port Qasim (2 x 660 MW), Lucky (660MW), Siddique Sons (350 MW), Hubco (2 x 660 MW) and others. The timeframe for them to be on the grid is between 2018 to 2020. And around 960MW on local coal is planned to be on the grid by 2019. The biggest challenge to make all of it happen is the availability of coal handling infrastructure at ports and its transportation to sites. These targets appear far too optimistic. The ground realities are that this is not likely to be ready to meet the above targets. One option cited is to have is to have all the power plants near port and the power wheeling arrangements be made for its transmission to the sites on the national grid. The challenge of the environment in Karachi then multiplies and needs to be addressed to the satisfaction of the civil society The government, as to date, has not been able to comprehend the challenges and does not appear to have a defined roadmap to implement the challenge. Confusion persists.

Farhat Ali, "Criticality of coal," Business Recorder. 2015-12-02.
Keywords: Economics , Technology transfer , Industrial sites , Energy policy , Civil society , Globalization , Electricity , Transportation , China , India , Indonesia , Russia , South Africa , Poland , Kazakhstan , Japan , Germany , Australia , Pakistan , US , LNG , HSD , PLC , SECMC , AG , PNSC , MW