Monday, January 26, 2009

Coal in South Asia

Over at Salon, Joseph Romm has a column today explaining the deep credentials of the current Administration team that will be addressing the global warming issue, and more particularly the controls on coal-powered electricity generation that they can expect to bring with them. This post is not however about the arguments that make up that decision, but rather to suggest that if the Administration is going to address this as a global problem, then they need to talk to many more countries than just China.

Consider, if you will, just two parts of the world – Southern Asia (and I will include India, Pakistan and Bangladesh in this) and Southern Africa. For these countries, none of whom yet have full rural electrification, the rising price of oil and gas is already causing serious impacts on their ability to function. When load shedding is more common than load supply then running a plant/factory/restaurant that relies on electricity becomes more difficult and more expensive, and the entire economy suffers in consequence. If fuel is not available for the irrigation pumps needed for the rice harvest, then the national ability to feed itself becomes threatened. But if the cost of importing fuel exceeds the ability of the country to pay, then domestic alternatives, and in these cases that means coal, become more attractive.

It is becoming grimly clear to the three Asian countries that I listed above that they can no longer afford the rising prices the world is being asked to pay for oil and natural gas. Bangladesh is facing a 30% shortfall in electricity as it goes into the growing season for rice, Pakistan can no longer pay the bills to provide oil for its power stations, and India is looking at a shortfall of 25% between electricity demand and affordable supply. India and Pakistan are hoping for pipelines to bring natural gas from Iran and Turkmenistan, since India can only produce 60% of the natural gas that it needs, but the tensions with Pakistan, through which both pipelines would have to run, are making their viability less certain.

The problem only gets worse as those nations that are exporting natural gas, such as Turkmenistan, have now persuaded the Russian government to pay the “going price” for their product. This is, in part to stop competing pipelines, such as Nabucco, that bypass Russia, from cutting the Russians out of their deal with the West. But in the process this price rise is making it harder and harder for other countries to compete in this marketplace for a viable quantity of fuel. There is no pipeline as yet to carry Turkmen gas into South Asia, and while talks still continue, the price for the product, in the end, may be more than the recipients can afford.

Domestic supplies of natural gas are insufficient to meet demand, and what then is left? Certainly nuclear energy can play a part, but the remaining cheap alternative (and these are generally poor countries) is increasingly seen to be coal. And so Bangladesh is biting the bullet, and going forward with a national policy on coal. It is also building coal-fired power stations, since at present it only has one mine and one power station and gets less than 5% of its energy from coal. The problem now comes for the mines that are planned on the surface, since while the existing underground mine has little surface impact, surface mines can be expected to displace all those currently living on the site. This has previously led to riots but in the need for fuel politicians are changing to see coal as being something, perhaps the only something, that can meet their needs. The coal that they have is of good quality, and production is planned to increase to over 20 million tons/year within the decade.

India already gets some 53% of its electrical energy from coal , and has estimated reserves of 264 billion tons, with a proven reserve of 102 billion tons, 80 years at current rates of consumption. Coal India Limited (CIL) mines 84% of India’s coal feeding 72 of the 75 thermal power stations in the country (64,285 MW) with the 380 million tons they mine. Their sales brought in $9.69 billion of which $1 billion went in tax.

Because of growing demand, expected to rise to 730 million tons by 2011-2012, CIL will increase its production to 520 million tons, rising to 664 million tons by 2016-2017. At present 84% of the coal is mined at the surface, though this may only last some 30 more years. It is not of very high quality. CIL recognize that mining will thus have to focus more in the future on underground production. Indian coal needs to be cleaned to meet international standards at higher prices, and so the company will also invest in larger coal washeries. It has planted 69 million trees as part of land reclamation after mining. With 473 mines and 424,000 employees, CIL claims to be the largest coal producing company in the world. However because it currently can’t meet demand, India is increasing coal imports to more than 8 million tons.

As for Pakistan, coal has fallen considerably in grace from earlier years, and now only supplies 7% of the fuel, and 0.2% of the electricity to the country from a single power plant. Natural gas has largely come from Balochistan, but increasingly unrest in that region of the country, the poorest region in the country, is making the supply less reliable, and demand is outstripping supply, leading to load shedding. Pakistan has very large deposits of coal (it claims the fourth largest reserves) and the Chinese are interested in helping them exploit these.

Space limits my comments on Southern Africa today, but it should be noted that the Chinese are helping Botswana exploit their coal deposits and build new power plants, and, after the debacle over power shortages last year Eskom in South Africa is expanding their coal and power production to try and catch up with demand, and the new power stations may be coal-fired, rather than the original plan for a nuclear plant.

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