Background
Under China’s belt-road initiative, Pakistan has occupied a central position where the investments are at least double that of the country next on the list. Of the initially proposed $46 billion investments, 74% are allocated for energy-based projects [1]. Initially, the government of Pakistan was very optimistic about coal projects under CPEC since it proposed to encounter the issue of energy economics. However, recently the economists have observed the risk of overcapacity from thermal energy sources and since coal plants are prioritised for base loads, it also threatens a long-term locking of financial reserves. Eventually, the Prime Minister of Pakistan at the Climate Summit announced the closure of two coal-based power plants, thus strengthening the aim of Pakistan for achieving its Nationally Determined Contributions (NDCs) [2]. Furthermore, no new coal power plants will be approved by his administration while the country is making a transition towards achieving 30% of renewables by 2030.
Implications of coal-based power in Thar
Thar coalfield contains lignite which has a lower heating value (10-17 MJ/kg) as compared to bituminous coal (around 24 MJ/kg) and hence more coal must be burned to produce a unit value of power. Further, chemical processing of coal releases even 3-4 times larger emissions than oil or gas-based processing [3]. This adversely impacts the environment in the form of global warming and GHG emissions. Coal contains a significant amount of Sulphur compounds that are released during combustion resulting in air, water, and land pollution. These products are mainly released in uncontrolled power plants. CH4 and N2O are released from power plants with a CO2-equivalent factor of 21 and 310 respectively [4]. These emission rates are twice their consumption in the transport or industrial sector.
Apart from coal combustion, there are numerous impacts on the environment from coal mining as well. Pyrite present in Sulphur bearing rocks reacts with air and water to form Sulphuric acid which then flows with water to streams that are mixed with residential storage that makes it unusable for households. This water can further wash into nearby streams and rivers. Further, coal dust is stirred both during the process of transport as well as mining. This causes severe and deadly respiratory problems. Coal fires also occur in abandoned mines and waste piles. Dependence on coal as a national energy source puts a significant amount of labourers in high-risk conditions. This includes inhalation of toxic components, exposure to mercury, fumes, gases, UV radiations, hearing loss due to high noise, and prolonged exposure to the mining environment. Coal mining significantly alters the landscape of the area that reduces the value of surrounding land until it is reclaimed. The nearby residents must migrate to far-off places leaving their agricultural lands that are rendered useless due to contaminated flow. Other agricultural activities such as livestock, farming of food and vegetables are also interrupted [5]. Cumulatively, the above-mentioned factors account for a loss of 9.36 cents/kWh to 26.8 cents/kWh and the major share of this cost is from the public health burden.
Emission cost and financial risks of not moving into Green
A detailed economic assessment indicates that in the long term, fossil fuel investments are not cheap. It has a more direct cost which tends to be higher than renewables, and even its indirect cost has transitional risk and accelerated threats from climate change. Reducing coal dependency in Pakistan will free up massive financial resources. Coal imports in Pakistan have increased almost 6 times between 2013 and 2020 from less than 3 billion to almost 18 billion tons now. It constitutes about 2.75% of total import that is 1.4 Billion US dollars every year. This 1.4 billion is equal to the insulation cost of 1.4 GW of solar power. Hence, there is a need to realise how much coal we import and how much it increases our dependency.
Furthermore, based on NEPRA tariffs the cost of coal-based power is around PKR 8.7/kWh with a capacity factor of 85% [1]. However, this calculation does not include the social costs, and most of the plants under CPEC, especially the ones that use subcritical technology emit a large quantity of CO2. Hence, by incorporating the emission cost based on the average cost from OPEC countries, the LCOE turns out to be higher than the one expected as shown in figure 1.

Hence each coal-based CPEC project contributes to an increase in total CO2 emissions. As per the current scenario, CPEC is expected to add an average of approximately 51 million tons of CO2 annually. Figure 2 depicts the emissions from different coal-based CPEC plants.

However, despite the above-mentioned statistics, it should be realized that coal does provide energy security and self-reliance to Pakistan. Many economies have built their energy portfolios by initially relying on coal and using it to make a pipeline for renewable investments. So, what makes economic sense highly depends on the policy objectives. If the overall cost of the plant or the debt burden is the most significant aspect, then the current structure of CPEC with high dependence on coal makes sense. Even natural gas in that sense provides a good alternate. But this investment in no way should be considered green. However, in case the goal is to keep the value of LCOE (incl. emission value) low in the long term, then cheaper and greener options can be explored.
The coal investments produce the maximum amount of generation based on at least the upfront cost, this does not mean the cost of electricity to a common citizen would be necessary that cheap. The prices in Pakistan are driven by demand. As the demand increases, the cost of electricity increases as well. To promote the lesser use of energy, the government then has to cut subsidies while providing it to the lower class (which represents the major share of the population). This price offsetting also comes at a cost for the government calling for a need for decentralised energy systems such as solar and wind.
Key Messages and Policy Recommendations
Following key messages and policy actions are recommended for a sustainable transition from coal to clean energy sources:
Power plant emission control can be supported by “Tradable Certificate Schemes” in which each generator can purchase or sell a set of certificates typically awarded for each unit of emissions. This must also be supported by strictly penalising non-compliance.
Sustainable land management practices must be adopted to control land degradation caused by mining activities to enhance the productivity of other ecosystems and services such as crop production.
Climate adaptation and mitigation strategies must be part of the planning and development initiatives of mining projects. This includes the use of green technologies, exploring development projects that make little use of natural resources, disaster risk reduction programmes and supporting technological innovations and best practices implemented in other regions.
The local and international institutional capacity to enable effective monitoring and enforcement of environmental laws and regulations must be strengthened. This would also include raising awareness among local people and households to increase advocacy of pro-poor economic growth.
Both Pakistan and China must formulate environmental policies related to the foreign investments in energy projects of CPEC. Lessons learned on coal development in China and successful models of green development can be incorporated into the development policies of the Belt and Road initiative (BRI). Capacity building with research institutions to implement environmental assessments is also needed for better environmental planning and conservation purposes.
The scale-up and economic viability of clean energy resources can be increased mostly by bringing changes through technology and system-wide innovations in the field. This includes research programs, forming Energy transition coalitions, and cooperation with international programs.
The socio-economic structure and frameworks of the country must be aligned with the green and climate-friendly transition.
References
[1] M. K. Chattha, “Financing Structure of CPEC projects,” 2019.
[2] IEEFA, “Pakistani prime minister says country will not approve any new coal-fired power plants,” 2020. .
[3] A. Korre, S. Durucan, and Z. Nie, “Life cycle environmental impact assessment of coupled underground coal gasification and CO2 capture and storage: Alternative end uses for the UCG product gases,” Int. J. Greenh. Gas Control, vol. 91, p. 102836, 2019.
[4] B. Fabiano, F. Currò, A. P. Reverberi, and E. Palazzi, “Coal dust emissions?: From environmental control to risk minimization by underground transport . An applicative case-study,” Process Saf. Environ. Prot., vol. 92, no. 2, pp. 150–159, 2013.
[5] J. Gasparotto, “Energy Geoscience Coal as an energy source and its impacts on human health,” no. xxxx, 2020.