[EXPLAINED] Why has PM Imran Khan Decided to Cease Coal Powered Plants in Pakistan?

Avoiding overcapacity will assist Pakistan in reducing its power tariffs significantly.

Prime Minister Imran Khan has recently announced that Pakistan has decided to eliminate coal-based power in the country. This declaration was made at the Climate Ambition Summit hosted by the United Nations, France, and the UK.

Previously, it was the government’s intention to reach 38,000MW of power generated through coal by 2047, using Pakistan’s domestic coal resources, through the Indicative Generation Expansion Plan (IGCEP). The government has not yet released details surrounding the decision and its effects on existing coal schemes. It has also not been clarified whether the current development pipeline would include coal-related proposals.

The Reason Behind The Decision

Currently, Pakistan has reached its surplus capacity peak even though its thermal power plants have operated at only 37 percent during 2019 and 2020. This overcapacity is only expected to exacerbate in the future as the supply of electricity is the main issue Pakistan is facing.

The original plan for coal power production under the IGCEP was the provision of 27GW of power between 2030 and 2047. As the current overcapacity is likely to aggravate, Pakistan’s 5.3GW power plants which run on imported fuel are speculated to offer a total utilization of only 14 percent.

At this rate, Pakistan’s thermal power plants will be rendered inoperational without ample capacity payments. Also, The IGCEP is far exaggerating the expected demand growth in the future. The expected-case demand forecast is according to the annual growth in the GDP, hitting 5.5 percent in 2025, and staying at that rate till 2047. This is so even though the  GDP was only 3.3 percent in 2019 before the effects of Covid-19 fully compounded.

Therefore, any aims to increase coal power should be dropped. The IGCEP’s overestimated future demand will be met through its coal additions, which will result in further surplus capacity.

Evading Overcapacity and Coal Expenditure

Avoiding overcapacity will assist Pakistan in reducing its power tariffs significantly. This will greatly decrease the detrimental impact of expensive coal power generation and substantial tariffs on consumers and local businesses.

Alternatively, using Solar and Wind power will prove highly advantageous for the nation due to their inexpensiveness and technically advanced nature.

The PM also stated at the Summit that Pakistan is intending to attain a 60 percent renewable energy capacity by 2030. Reportedly, he also implied that a major hydropower project is also under process.

The declared plan to utilize local coal for coal-to-liquid (CTL) and coal-to-gas (CTG) was a minor cause of concern. Huge costs would be raised if the energy sector aims to acquire and store carbon during the procedures. Conversely, if the carbon is not stored, carbon emissions will not reduce as much compared to coal-fired power.

Coal as Related to The CPEC Trade Belt

While moving towards CTL and CTG will be financially burdensome, the PM’s goal to end coal power in the country will entail many consequences, considering the importance of CPEC, which is mainly responsible for the undergoing development of coal power plants in the country.

The China-Pakistan Economic Corridor is vital to the Belt and Road Initiative (BRI) that has been targetted for insisting on the development of outdated coal power plants within Asia and Africa. If coal power loses weight within CPEC, the same can happen all over the BRI program.

Pakistan may potentially move into solar and wind energy generation if the goal to abandon coal power is finally achieved.

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