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Working Paper #193
Prospects of Coal Investments and
Potential of Renewable Energy
Transition in Thar Region of
Pakistan
Authors
Hina Aslam1, Ahad Nazir, Ubaid ur Rehman Zia
1 Corresponding Author, Email: [email protected]
All rights reserved. No part of this paper may be reproduced or transmitted in any form or by
any means, electronic or mechanical, including photocopying, recording or information storage
and retrieval system, without prior written permission of the publisher.
A publication of the Sustainable Development Policy Institute (SDPI). The opinions expressed
in the papers are solely those of the authors, and publishing them does not in any way constitute
an endorsement of the opinion by the SDPI.
Sustainable Development Policy Institute is an independent, non-profit research institute on
sustainable development.
First edition: June 2021
© 2020 by the Sustainable Development Policy Institute
Mailing Address: PO Box 2342, Islamabad, Pakistan. Telephone ++ (92-51) 2278134, 2278136,
2277146, 2270674-76 Fax ++(92-51) 2278135, URL: www.sdpi.org
Acknowledgements
This working paper is the outcome of a research on Thar coalfield prospects and the potential
of renewable energy transition in Pakistan. The study has been carried out by Sustainable
Development Policy Institute (SDPI), Islamabad and funded by European Climate Foundation.
The policy recommendations are based on insightful discussions with various policy
stakeholders from public and private sectors, Civil Society Organizations, academia, and some
other institutes. The paper has been peer reviewed by Prof. Dr Muhammad Shahid Khalil
(former Dean and Chairman, University of Engineering and Technology, Taxila), Dr. Bilal
Ahmed (University of Lahore), and Dr Imran Shah (NUTech).
SDPI would like to thank all the development partners, respective federal and provincial
agencies, private sector, and representatives from Civil Society Organizations for their input and
feedback, including assistance in data collection, data analysis, participation in Public Private
Dialogues (PPDs) and Focus Group Discussions (FGDs) and individual interviews, and their
written comments.
Table of Contents
Acknowledgements ............................................................................................................... 3
List of Figures ........................................................................................................................ 6
List of Tables ......................................................................................................................... 7
List of Boxes .......................................................................................................................... 7
Executive Summary ............................................................................................................... 1
1.1. Scope and Objectives of the Study .......................................................................... 5
Chapter 2: Thar Coalfield: Prospects and Challenges ........................................................... 7
2.1 Thar Coalfield: Location and demographics ............................................................... 7
2.2. Financing Structure of Coal-based Power generation projects ................................ 13
2.3. Risk Assessment ....................................................................................................... 17
2.3.1 Power Locking and Unaffordability ................................................................. 17
2.3.2 Debt Sustainability ............................................................................................ 17
2.3.3 Environmental and Social Impacts of Coal ..................................................... 18
Chapter 3: Trends in Energy Investments in the global Market .......................................... 21
3.1 Prospects of Coal and energy shift ............................................................................ 21
3.2 Prospects of Renewable Energy ................................................................................ 24
Chapter 4: Methodology and Model Development ............................................................. 27
4.1 Preliminary scoping appraisal-Ranking and prioritization of environmental
parameters using Multi-Criteria Decision Analysis (MCDA) tool: (AHP method) ........ 27
4.1.1 Identification of key Environmental parameters ............................................. 28
4.1.2 Application of Multi-Criteria Decision Analysis (MCDA) tool: (AHP
method) ....................................................................................................................... 29
4.2 Levelized Cost of Energy (LCOE) based Energy Model .......................................... 30
4.2.1 CO2 estimations and projections ...................................................................... 32
4.2.2 Scenario-based modelling of energy alternatives ............................................ 32
5. Result and Analysis ......................................................................................................... 33
5.1 Quantitative assessment of Environmental and social impacts ................................. 33
4.2 LCOE based Financial Model for coal power plants ................................................ 38
4.2.1. Comparison of Thar based LCOE with Non coal thermal plants ................ 40
4.2.2. Comparison with Renewables ......................................................................... 40
4.2.3 CO2 emission Profiles under different scenarios of capacity addition ................... 42
Chapter 5: Discussion .......................................................................................................... 46
5.1 Prospects of Coal vs RE Investment.......................................................................... 46
5.2 Role of Financing and Policy Making ....................................................................... 46
5.5 Technology Transfer and Innovation ........................................................................ 50
5.6 Prospects of other clean energy sources .................................................................... 50
5.7 Greening CPEC ......................................................................................................... 51
Chapter 7: Conclusion ......................................................................................................... 53
References ........................................................................................................................... 54
Appendix 1: Expert Interviews, FGDs, and PPDs .............................................................. 58
Appendix 2: Questionnaire for Interviews .......................................................................... 59
Appendix 3: Likert Scale Questionnaire for Surveys and Feedback forms ........................ 70
Appendix 4: Preliminary Scoping appraisal ........................................................................ 75
Appendix 5: Assessment of surface mining technologies ................................................... 78
List of Figures
Figure 1: Coal production and Imports in Pakistan ................................................................. 4
Figure 2: Conceptual Framework of the Study ........................................................................ 6
Figure 3: Location map of Thar coalfield: a) Map shows Sindh province located in south east
of Pakistan, b) location of Tharparkar district in the province, c) Thar coalfield area
highlighted with black dotted line.: .......................................................................................... 8
Figure 4 Gantt Chart of Coal based projects under CPEC .................................................... 14
Figure 5: Change in global CO2 emissions due to transition from coal to gas or renewables .. 19
Figure 6 Ecological Impacts of Coal ..................................................................................... 20
Figure 7 Total energy mix and share of renewable energy in 2019 ......................................... 25
Figure 8: Research Methodology and Data Collection Process .............................................. 31
Figure 9 Assessment parameters of Levelized Cost of Energy (LCOE) ................................. 31
Figure 10 Prioritization of environmental parameters using criteria and alternative ............... 35
Figure 11 Reference Tariff values of Power plants (NEPRA proposed) ................................ 38
Figure 12 Levelized Cost of Energy of Thar coal power plants excluding emission cost ....... 39
Figure 13 LCOE of Thar coal power plants excluding emission cost .................................... 39
Figure 14 LCOE of NG, RLNG, and RFO plants at 85% capacity factor ............................. 40
Figure 15 LCOE of some renewable energy projects under CPEC before 2018 tariffs .......... 41
Figure 16 Average LCOE of wind and solar projects as per NEPRA tariffs after 2018 ......... 41
Figure 17 CO2 emissions from different CPEC coal-based power plants .............................. 42
Figure 18 Net capacity additions as per IGCEP 2047 and the share of local coal .................. 43
Figure 19 Total CO2 emissions from electricity power generation and emission intensity ..... 44
Figure 20: CO2 emissions under base case and renewable transition scenario ........................ 44
List of Tables
Table 1: Status and development of Thar coalfield, number of blocks and description ........... 9
Table 2: Legal, regulatory and policy frameworks in environmental and socio-economic
dimensions (Source: Information retrieved from ESIA, 2012) .............................................. 10
Table 3 Techno-financial aspects of Coal Projects under CPEC [17]–[19]............................. 15
Table 4: Coal phase out of different countries and the policies for Just energy transition ...... 22
Table 5: Possible impacts of coal mining activities on environmental parameters in Thar Coal-
field ...................................................................................................................................... 28
List of Boxes
Box 1: Plans and Provisions under Pakistan’s ARE Policy 2019 for Green Energy Transition
Box 2: Political Economy of Coal in Pakistan: Evidence from interviews with Key informants.
Box 3: Coal to Liquid (CTL) and Coal to Gas (CTG) Conversion technologies: Implications
for Pakistan
Box 4: Focus areas around the world for Renewable Energy Transition.
Box 5: International Renewable Energy Agency (IRENA) report on Renewable’s readiness of
Pakistan.
Nomenclature
AEDB Alternate Energy Development Board
AHP Analytical Hierarchy Process
AMD Acid Mine Drainage
ARE Alternate and Renewable Energy
BRI Belt and Road Initiative
CAPEX Capital Expenditure
CFA Coal Fly Ash
CHP Combined Heat and Power
CI Consistency Index
CMEC China Machinery Engineering Corporation
CPEC China-Pakistan Economic Corridor
CPP Capacity Purchase Price
CPPA Central Power Purchasing Authority
CR Consistency Ratio
CTG Coal to Gas
CTL Coal to Liquid
DISCOs Distribution Companies
EIA Energy Information Administration
EPA Environmental Protection Agency
EPP Energy Purchase Price
FIPs Feed in Premiums
FITs Feed in Tariffs
FGD Focus Group Discussion
GDP Gross Domestic Product
GHGs Greenhouse Gases
HUBCO HUB Power Company
ICBC Industrial and Commercial Bank of China
ICMM International Council on Mining and Metals
IEA International Energy Agency
IFC International Finance Cooperation
IGCEP Indicative Generation Capacity Expansion Plan
IMF International Monetary Fund
IPPs Independent Power Producers
IRENA International Renewable Energy Agency
IWRM Integrated Water Resources Management
LAA Land Acquisition Act
LCOE Levelized Cost of Energy
LNG Liquified Natural Gas
LOI Letter of Intent
MCDA Multi-Criteria Decision Analysis
NDCs Nationally Determined Contributions
NEPRA National Electric Power Regulatory Authority
O&M Operation and Maintenance
OECD Organization for Economic Co-operation and Development
PPD Public Private Dialogue
PPCA Powering Past Coal Alliance
RFO Residual Fuel Oil
RI Random Index
RPSs Renewable Portfolio Standards
SDGs Sustainable Development Goals
SMART Self Monitoring and Reporting
WHO World Health Organization
1
Executive Summary
Developing Thar coalfield is the economic priority of Pakistan, and the coal-based energy
projects are the major energy projects being carried out under China-Pakistan Economic
Corridor (CPEC). These projects are expected to contribute to the local, regional, and national
development. On the contrary, there are strong public concerns about the impacts of coal mine
power generation on environment. The communities under scrutiny are highly susceptible to
climate change, living under high levels of poverty, and there is high dependency of household
livelihoods on natural resources. Although there are guidance frameworks and international
laws for developing these projects, there are existing gaps to identify and manage the potential
risks and impacts for the long-term energy planning and economic development of Pakistan.
This study provides an in-depth assessment of socio-economic impacts of coal-based energy in
Pakistan and evidence-based framework through which the upcoming investments under
CPEC can be diverted towards clean energy sources.
The major uptake of coal in Pakistan was started in 2017 after discovering vast reserves of lignite
in Thar region of Sindh. Coal development under CPEC was made through both “a push from
China” and similarly a “pull from Pakistan”. However, where coal provided energy security, it
raised serious concerns of environmental and financial burden for energy sector in 2019 when
Pakistan was facing the issues of capacity payments and power surplus. All coal power plants
under CPEC were structured as IPPs, and with more capacity to be added in the coming years,
the payments could reach an unpayable amount of $9 billion. The recent electricity demand of
Pakistan even before COVID-19 pandemic was less than expected. After and during pandemic,
the situation is expected to get even worse which will clearly increase the risk of Pakistan being
burdened by locked capacity. So, given the typical economic lifetime of coal fired power stations
at around 40 years, this infrastructure will lock high emissions and financial sources into an
energy system that needs urgent decarbonization.
To overcome these challenges and look for a just transition pathway, this study provides an in-
depth analysis of the issue based on literature and desk review, expert consultations, and
quantitative/qualitative analysis. The quantitative analysis is used for analysing the
environmental implications of coal-based energy through Multi Criteria Decision Analysis and
Economic-Environmental assessment models of coal-based plants. The qualitative analysis has
been done by conducting a series of Focus Group Discussions and Public-Private Dialogues on
different topics linked to clean energy transition.
2
The LCOE based financial model in the study depicts that without considering the cost of CO2
emissions, LCOE of Thar coal on average is around PKR 8.7/kWh (C.F of 85%). However, if
average values of emissions cost are incorporated, this value goes beyond PKR 11.7/kWh.
Among different thermal fuels, natural gas is currently the cheapest source of generation
(including the emission cost) followed by coal. After 2018, tariffs for power generation through
solar and wind have drastically changed with an average wind power expected to be produced
at a rate of $0.0486/kWh and an average solar power at $0.034/kWh. These values provide a
much cheaper alternative than both local and imported coal.
Further, the study also projects the country’s environmental profile due to adoption of Thar
coal as indicated in NTDC’s first draft of IGCEP 2047 plan. However, the results of both
sections should be carefully interpreted. 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. 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 long-term, then cheaper and greener options can be
explored.
Based on both qualitative and quantitative analysis, RE investments will provide long-term
benefits considering many social, economic, and environmental benefits. Considering that
Pakistan is already facing financial constraints, the investments in fossil fuels for ensuring energy
access to all will fall short. For being on track with Paris Agreement, the share of investments
for renewables should be around 65% (global average). For Pakistan, this shift will require
massive step-in policies and measures. Pakistan needs to encourage a state level market outcome
by putting its focus on technology build-up for renewables. It could be through tax breaks for
producers and consumers, or it could be in the form of Chinese subsidies like low electricity
rates or government-set pricings. However, understanding what role such investments have
previously played in other countries will also explain the impact these policies can have. Just
creating a pool of funds might not solve the major problems of RE penetration.
Pakistan needs to come up with RPSs, tradable certificate schemes, reliable framework for FITs,
auctions, framework for decentralized systems, financial models, and some non-regulatory
policies to work along with it. This includes providing tax incentives, capital grants and
subsidies, attractive loans, and mitigation of associated risks. Private sector will play a major role
in providing a country-wide access and infrastructure build-up of decentralized systems. Hence,
for a rapid energy transition, Pakistan must answer whether the current environment is
attracting private investment? More importantly, is it providing an equal opportunity?
3
Therefore, Greening CPEC thus provides a more economical way forward for Pakistan if it is
to build upon its climate goal of becoming a carbon neutral economy.
Chapter 1: Introduction
Pakistan has a very critical role in China’s “Belt and Road Initiative” where the latter has
allocated around $34 billion to build energy infrastructure so as to untap both thermal and
renewable energy resources [1]. The Government of Pakistan is very optimistic about the
projects under China-Pakistan Economic Corridor (CPEC), which are supposed to be the
backbone of building energy economy [2]. More than half of the energy projects under CPEC
revolve around the Thar coalfield that is envisioned to have around 200 billion tons of coal
reserves. Pakistan is keen to untap these reserves for reducing its reliance on imported fuels for
power generation and made a shift towards coal-based energy majorly in 2017 after the
discovery of Thar coal reserves making the country 4th largest coal assets in the world [3]. As
compared to other conventional sources, coal is relatively cheap and Pakistan has made
significant efforts to compel coal utilization through Annual Energy Development Plans,
CPEC, Vision 2025 [4] , Vision 2035, and NDCs to boost energy economy. For a country like
Pakistan that with per capita energy consumption of 460 koe (kg of oil equivalent) [5], which is
one fifth of Chinese consumption, it is a clear indicator that the country must improve its
indigenous production for increasing the living conditions and lifestyle of its citizens. Energy
experts and international observers believe that Thar coal could provide a very cheap alternate
for an energy deficient country and Pakistan must capitalize on it [6].
The cost of Pakistan’s heavy dependence on oil for power generation had previously been
absorbed by the government in the form of power subsidies and later passed on to consumers
in higher electricity prices. Electricity shortages and its price escalation became the main issue.
In 2018, Pakistan continued to face power shortage of up to 3500 MW [7] in some areas. Over
the years, power shortages have severely impacted Pakistan’s annual output, exports and
employment. China-Pakistan Economic Corridor (CPEC) which promises projects in energy
and infrastructure worth $62 billion, with investment in energy projects of $35 billion, is
expected to bridge the capacity shortfall along with ensuring energy security [8].
Although the current use of coal in Pakistan is majorly through imported coal, the country is
expecting to increase energy security by relying on indigenous coal-based projects. Realization
of these goals soon followed in the form of CPEC, which envisaged an addition of 11 GW of
energy to the national grid through 22 priority projects. Along with power sector, coal is further
4
consumed in brick kiln, cement, steel and other industries. Total coal consumption has increased
from just 6.56 million tons in 2014 to 21.3 million tons in 2019. The major shift has been
observed in power sector, whose share has increased from 2.5% to 27.4%. Pakistan has a share
of 7.7% coal in total power generation with capacity standing slightly above 5000 MW. Although
the current global share of coal from Pakistan is just 0.2%, this value increases to 1.4% in share
of global pipeline [9]. Figure 1 represents the coal production and imports in Pakistan.
Figure 1: Coal production and Imports in Pakistan
Pakistan has long been seeking the utilization of these vast reserves of coal in Thar region. These
reserves were largely unexploited due to lack of technology, finances, and infrastructure. Thus,
majority of coal projects under CPEC are due to both a push from China and a pull from
Pakistan. Along with energy generation, socio economic development of Thar region along
with this process is also a key objective of CPEC. These projects will transform Thar from an
entirely rural to a partially urban economy, that will create a number of job opportunities for
local residents. A coal project of 1000 MW can create approximately 2200 direct job
opportunities. Further, 2% of before tax earnings will be spent on improving socio-economic
indicators of the area [8].
Until recently, when the Prime Minister announced coal moratorium, Pakistan was trying to
bring in coal while other countries were moving away to cut GHG emissions. NEPRA was even
expecting to increase coal fired generation to 20% by 2025 [8]. Still, as previously mentioned,
Pakistan possesses a significant share in total coal capacity under the pipeline. Although these
coal projects provide cheap energy in a short term, they have considerable environmental
implications. Even China, despite being the centre of global green energy transition, is the major
contributor to GHG emissions, with coal consuming the major share [10]. So, this should be
0
5
10
15
20
0
1
2
3
4
5
6
2014 2015 2016 2017 2018 2019
Co
al I
mp
ort
s (m
illio
n t
on
s)
Co
al P
roduct
ion
(m
illio
n t
on
s)
Balochistan Punjab Sindh KPK/FATA Coal Imports
5
implicitly realized that although Thar based coal projects will reduce demand supply gap, they
will have harmful environmental impacts in the long run. Notwithstanding the fact that many
policy documents suggest the use of clean combustion and carbon capturing technologies, and
that both countries (China and Pakistan) are fully aware of the environmental repercussions of
coal base generation, the use of sub critical power generation technology puts environmental
sustainability under threat. Therefore, many policy makers, academics, researchers, and civil
society representatives have raised their concerns about environmental implications of coal-
based generation.
Secondly, although coal appears to be cheap while looking at the tariffs, its financial and debt
sustainability also needs a critical analysis since China’s lending in support of infrastructure
development may lead to an increase in debt and power locking causing a significant economic
loss, while Pakistan is already seeking debt relief from China. So, this long-term collaboration
between Pakistan and China on coal projects demand policy makers to ensure their decision-
making process is well analysed and inclusive.
1.1. Scope and Objectives of the Study
This case study analyses the likely impacts and challenges associated with the development of
Thar Coalfield and to explore the potential of renewable energy investments for long-term
sustainable growth of Pakistan. The study highlights the prospects of renewable energy in Thar
which could be a far-off better alternative to meet the energy demands of Pakistan on the one
hand. On the other it would push the country towards an inclusive economic growth. This
study attempts to provide social, economic, and environmental implications of Thar coal
development and how it might push Pakistan off the track to meet NDCs (Nationally
Determined Commitments) and SDGs (Sustainable Development Goals or UN Agenda 2030).
The specific objectives are:
1. To analyse the likelihood impacts of coal and its implications for long-term planning of
economic growth.
2. To determine the potential of renewables to lead the country towards clean energy
transition pathways in order to meet the NDC commitments and targets of SDG 7.
Figure 2 provides a conceptual framework of this study.
6
Prospects of Thar Coal under CPEC
Energy/Financial Portfolio
• Demographics of Thar• Coal projects under CPEC• Coal Reserves• Global Trends in Coal
investment.• Economic considerations of
CPEC projects
Challenges
• Off Track SDGs.• Risk of power locking &
economic burden.• Circular and Chinese Debt.• Environmental Impacts. • Social Impacts.• Other Ecological impacts.
Need for Inclusive Policy Making.
Environmental benefits
Economic benefits
Green Economy buildup
Indigenization
Assessment Criterion and Methodology
Literature/Desk Review
• LCOE based comparison of Coal with RE plants
• Environmental Impacts of Coal under Base and RE transition scenario.
• Assessment of Social Impacts due to Thar based power generation.
Survey based Qualitative Assessment
• Expert opinions regarding future CPEC investments
• Perceptions of future transition pathways.
Shaping New Norms
Policy and
Sustainability for RE
transitions in Thar
Figure 2: Conceptual Framework of the Study
7
Chapter 2: Thar Coalfield: Prospects and Challenges
2.1 Thar Coalfield: Location and demographics
The Thar coalfield is located between latitudes 25 45 °N and longitudes 69 45 °E, Tharparkar
district (Thar desert), in the south-eastern part of Sindh Province of Pakistan. Province of Sindh
is home to around 24% of Pakistan’s population. Tharparkar district is in the south-eastern arid
zone of Sindh Province with India on its eastern side [11]. The area is spread over 19,638 km²,
of which most land lies within Thar Desert. Most of the population is rural and scattered across
the district. There are over 2,300 villages, ranging in size from 50 to over 2,000 people. The
urban population (approximately 4.5% of the total) is in three main towns: Mithi, Islamkot and
Diplo. According to the last census carried out in the district in 1998, the total population of
the district was 914,291 and 163,147 households. An estimate of the population for 2012 has
been made based on an overall growth rate of 3.13% per annum and that was 1,407,585.
According to 1998 census (secondary data, census reports), the literacy rate was 18.3%.
Tharparkar district is amongst the most under- developed areas, marked with highest incidence
of poverty (47%). However, , the discovery of 7th largest Lignite reserves in the early 90s may
be a game changer for the area.
According to revenue record, the total land of Tharparkar district is 4,791,025 acres, out of
which 613,374 acres are cultivable, while 2,315,229 acres are un-cultivable. 20 acres of land is
kept under city survey and 33,882 acres are reserved for common purposes. 230,324 acres of
land is declared as forest and the remaining 1,598,195 acres of land is with private landowners.
According to socioeconomic survey, overall 23.15% respondents had their own land (secondary
data, census reports). According to livestock census carried out in 1996, the total number of
animals was 3.8 million that increased to 4.5 million in 2006. Thar desert is considered as one
of the most densely populated deserts in the world. It has extreme climatic conditions
characterised by hot temperatures during summer (up to around 48 °C), dry conditions, but
relatively mild winters (9–28 °C). The primary source of income is agriculture (crop farming)
and livestock rearing. The location map for the Thar coalfield is shown in Figure 3 below.
8
Figure 3: Location map of Thar coalfield: a) Map shows Sindh province located in south east of Pakistan, b)
location of Tharparkar district in the province, c) Thar coalfield area highlighted with black dotted line.:
Thar region is classified by geomorphological characteristics into agricultural fields, sand dunes
and plains. Agriculture fields are the dominant habitat, constituting 56% of habitats of the study
area. There is only one cropping season in the summer (called kharif season) in which a variety
of summer crops are grown. Sand dunes are the second dominant habitat, constituting 35% of
the total habitat. They vary in height, ranging from a few meters to over a hundred meters.
Plains constitute 9% (including 2% of the area covered by settlements) of the total habitat of
the study area. An established tradition of preservation of trees contributes to maintaining the
vegetation cover in the Thar Desert. Grazing pressure, however, is significant and the ground
vegetation in terms of grasses, scrubs and bushes can be considered as uniformly degraded. As
on January 2013, the Government of Sindh had identified 13 potential coal development blocks
towards the south of the coalfield area where the seams are thickest and nearest to the surface,
with two more blocks nearby at the development stage and one in operational phase [12]. The
details of Thar coalfield blocks are given in Table 1.
9
Table 1: Status and development of Thar coalfield, number of blocks and description
Block
Exploration License Surface Area
(km2)
Reserves
(million
tonnes)
I Sino Sindh Resources Ltd – Global
Mining Company (SSRL-GMC)
122 3566.91
II Sindh Engro Coal Mining Company
(SECMC)
96,00 2240
III Cougar Energy (UK) Under Ground
Coal Gasification Project 400 MW
82.23 2008.04
III B Available 76.80 1453.18
IV Available 82.00 2571.51
V UCG Project, Government of
Pakistan
63.51 1394
VI
Sindh Carbon Energy Ltd (SCEL) (a
subsidiary of Oracle Coalfields plc)
66.01
1655
VII, VIII,
IX, X, XI,
XII
Available 100.00
Table 2 further describes some regulatory and policy frameworks in different dimensions at
both national and international levels.
10
Table 2: Legal, regulatory and policy frameworks in environmental and socio-economic dimensions (Source: Information retrieved from ESIA,
2012)
Legal, Regulatory, and Policy Frameworks
Dimensions National International
Land
The Constitution of Islamic Republic of Pakistan 2010; Land
Acquisition Act (LAA) of 1894; Draft National Resettlement Policy,
2002; Sindh Land Grant Policies; Policy for Grant of Enemy Land
Provincial rules: Illegal Disposition Act 2005: Sindh Land Revenue Act
1968: Evacuee Trust Properties (Management and Disposal) Act 1975:
Sindh Tenancy Act 1950: Registration Act 1908: Easement Act 1882:
Constitutional Provision 2010; Land Acquisition Act 1894;
World Bank Operational Policy 4.12 on Involuntary
Resettlement.
IFC’s Performance Standard (PS) 5 (2012) on Involuntary
Resettlement.
International Convention to Combat Desertification –
with an objective to combat desertification and mitigate
the effects of drought.
Water
National Water Policy 2003.
Canal and Drainage Act 1873 and Sindh Irrigation Act 1879; Sindh
Water Management Ordinance 2002; Pakistan Environmental
Protection Act 1997; Pakistan Environmental Protection Agency Review of
Initial Environmental Examination and Environmental Impact Assessment
Regulations 2000.
Transboundary Agreement with India known as The Indus Water
Treaty. The treaty set out the provisions for water-sharing between the
Republic of India and Pakistan, brokered by the World Bank.
Convention on Wetlands of International Importance
1992 Declaration on Environment and Development
(or ―Rio Declaration
Mining
Labor and Health and Safety Legislation: Mines Act 1923; Provincial
Employees Social Security Ordinance 1965; and Workmen ‘s
Compensation Act 1923.
Voluntary Principles on Security and Human Rights. National Mineral
Policy 2013; Sindh Coal Act, 2012; Sindh Mining Concession Rules
International Council on Mining and Metals (ICMM)
Sustainable Development Framework.
Good Practice: Sustainable Development in the Mining
and Metals Sector.
11
2002; Mines Act 1923; Mines and Oil-fields and Mineral Development
(Government Control) Act 1948; Sindh Mining Concession Rules 2002.
Climate
change
Pakistan Environmental Protection Act 1997; Pakistan Environmental
Protection Agency Review of Initial Environmental Examination and
Environmental Impact Assessment Regulations 2000
1992 Declaration on Environment and Development
(or ―Rio Declaration.
United Nations Framework Convention on Climate
Change.
Kyoto Protocol to the United Nations Framework
Convention on Climate Change.
Vienna Convention for the Protection of the Ozone
Layer.
The Montreal Protocol on Substances that Deplete Ozone
Layer and associated amendments.
Air and
Noise
Pakistan Environmental Protection Act 1997; Pakistan Environmental
Protection Agency Review of Initial Environmental Examination and
Environmental Impact Assessment Regulations 2000
Waste
disposal
Explosives Act 1884; Self-Monitoring and Reporting(SMART) by
Industry Rules 2001;
Factories Act 1934; Factories Rules; Hazardous Occupations Rules
1963;
International Convention on Oil Pollution Preparedness,
Response and Co-operation.
Stockholm Convention on Persistent Organic Pollutants.
Basel Convention on the Control of Transboundary
Movements of Hazardous Wastes and their Disposal.
Biodiversity Sindh Wildlife Protection Ordinance 1974;
Forest Act 1927;
Pakistan Environmental Protection Act 1997; Pakistan Environmental
Protection Agency Review of Initial Environmental Examination and
Environmental Impact Assessment Regulations 2000
Convention on Biological Diversity – covering
ecosystems, species, and genetic resources and also the
field of biotechnology;
Cartagena Protocol on Biosafety to the Convention on
Biological Diversity; Bonn Convention on the
Conservation of Migratory Species of Wild Animals;
Memorandum of Understanding concerning
12
Conservation Measures for the Siberian Crane;
Convention on International Trade in Endangered Species
of Wild Fauna and Flora; International Plant Protection
Convention (1997); Agreement for the Establishment of
the Near East Plant Protection Organization; Plant
Protection Agreement for the Asia and Pacific Region and
amendments.
Culture and
Heritage
The Antiquities Act 1975 and Sindh Cultural Heritage Act 1994; Convention concerning the Protection of the World
Cultural and Natural Heritage; World Bank Operational
Policy 4.10 and 4.11 on Indigenous People and Physical
Cultural Resources.
13
2.2. Financing Structure of Coal-based Power generation projects
Nearly all the coal power plants are structured as Independent Power Producers (IPPs) that sell
power to the Central Power Purchasing Authority (CPPA). A Special Purpose Vehicle (SPV) is
designated as the project developer that includes stake from both local and international
counterparts [13]. The Chinese entities are organizations such as CMEC or Shandong Ruvi. From
Pakistan’s side, shareholders (as previously mentioned) are IPPs such as HUBCO, NovaTex, etc
along with Sindh government [14]. These project developers then procure loans from Chinese
banks, which require the project to acquire credit insurance from China Export & Credit Insurance
(Sinosure); a state-owned insurance company designed to alleviate non-payment risks against
Chinese exports [15]. The Government of Pakistan and planning ministries strictly believe that the
outflows from CPEC will begin in 2021, and will peak in the coming three years without avoiding
any trap [16]. Planning commission of Pakistan firmly believes that the debt repayment period of
CPEC projects will start in 2021 where 300-400 million will be annually paid, which will increase
to about $3.5 billion in 2024-2025. Total debt repayment shall be completed within 25 years.
Hence, CPEC is not causing any sudden burden to energy outflows and will be overweighted by
the benefits of resulting projects. Chinese government itself has ensured that CPEC projects are
completely on track despite the global pandemic. China’s own input in its BRI projects has
increased, and in the first three quarters of 2020, Chinese investments in non-fiscal sectors has
increased by around 30% [17].
So far, the government has signed MoUs with 53 IPPs, which will yield dividends of PKR 836
billion in the next 10-12 years. If the government further manages to sign MoUs with more IPPs
installed under the 2015 power policy [18], including the ones set up under the CPEC umbrella,
then the country will have huge monetary benefit of Rs10-11 trillion in the next 25-30 years [19].
Recently, an audit was carried out for evaluating the profitability of IPPs in Pakistan, which
reported that CPEC projects (Sahiwal and Port Qasim) had reaped increased allowance of PKR
32.46 billion due to low incurring of financial cost factors by NEPRA [13][20]. Moreover, the
projects had also completed their construction ahead of their schedule. Even Chinese government
reported that more than 70 different projects under CPEC have completed construction before
their scheduled date.
Gantt chart (Figure 4) shows the financial closure and commencement of these coal power projects
under CPEC. However, it should be noted that for Thar Mine Mouth Oracle Power Plant &
surface mine, the financial closure is still at the final stages and current date is just used as a
reference and is also subjected to coal moratorium announcement . Details of various coal plants
under CPEC are summarized in Table 3 [17]–[19].
14
Figure 4 Gantt Chart of Coal based projects under CPEC
Dec 1, 2015 Apr 14, 2017 Aug 27, 2018 Jan 9, 2020 May 23, 2021 Oct 5, 2022
Engro Thar Coal Power Project
SSRL (Shanghai Electric Coal Power )
Thar Mine Mouth Oracle Power Plant & surface mine
Thal Nova Thar Coal Power Project
HUBCO Thar Coal Power Project (Thar Energy)
Sahiwal Coal-fired Power Plant, Punjab
Coal-fired Power Plants at Port Qasim Karachi
HUBCO Coal Power Project, Hub Balochistan
Imported Coal Based Power Project at Gwadar, Pakistan
Thar
Coal
Import
ed
15
Table 3 Techno-financial aspects of Coal Projects under CPEC [17]–[19]
Sr.
No
Project Total
Capacity
Estimated
Cost ($
Million)
Coal Type and
Origin
Technology Lender Borrower Status of
Development
1 Sahiwal Coal fired
power plant,
Punjab
2*660 =
1320
1912.2 Imported Coal Super
Critical
ICBC-led
syndicate
Huaneng
Shandong
Ruyi (Pakistan )
Operational
2 Coal-fired Power
Plants at Port
Qasim Karachi
2*660 =
1320
1912.2 Imported Coal Super
Critical
China Exim bank Port Qasim
Electric
Power Co.
Operational
3 HUBCO Coal
Power Project, Hub
Balochistan
1320 1912.2 Imported Coal Super
Critical
Bank of China,
Bank of
Communications,
CCB, CDB,
China Exim
bank, ICBC
China Power
Hub Generation
Co.
Operational
4 Engro Thar Coal
Project
2*330 =
660
995.4 Thar Coal Sub Critical Bank of China,
Bank of
Communications,
CCB, CDB,
China Exim
bank, ICBC,
Pakistani Banks
Engro Powergen
Thar Limited
Operational
5 Shanghai Electric
Coal Power
2*660 =
1320
1912.2 Thar Coal Super
Critical
- Shanghai
Electric Power
Company
Limited
LoS Issued.
First unit is
targeted
16
6 HUBCO Thar Coal
Power Project
330 497.7 Thar Coal Sub Critical Bank of China,
Bank of
Communications,
CCB, CDB,
China Eximbank,
ICBC
China Power
Hub
Generation Co.
Financial
closure
achieved.
7 Thal Nova Thar
Coal Power Project
330 497.7 Thar Coal Sub Critical Bank of China,
Bank of
Communications,
CCB, CDB,
China Exim
bank, ICBC
HUBCO Under
Construction
8 Power Project at
Gwadar, Pakistan
300 MW 542.32 Imported Coal Sub Critical China
Communications
Construction
Company
(Sponsors)
Under
Construction
9 Thar Mine Mouth
Oracle Power Plant
1320 MW Yet to be
determined
Thar Coal Sub Critical M/s Oracle
Coalfields
SEPCO and
Yanzhou Coal
Under issuance
of LOI.
17
2.3. Risk Assessment
2.3.1 Power Locking and Unaffordability
Pakistan has recently launched its Alternative Renewable Energy Policy (ARE) with the aim of
achieving 30% of total share through renewables [21]. Being the cheapest of source of energy in
Pakistan, renewables also have unmatched advantage of attracting those investors that do not want
to invest in coal. However, despite the ARE policy, Pakistan has recently reached a financial
closure of two coal-based power plants under CPEC, with a combined sum of approximately $2.5
billion [22]. (This was done before Prime Minister’s coal policy announcement.) With more
capacity to be added in the coming years, the payments could reach an unpayable amount of $ 9
billion [23]. On the other hand, the recent electricity demand growth of Pakistan even before
COVID-19 pandemic was less than expected. After pandemic, the situation is expected to get even
worse, which will clearly increase the risk of Pakistan being burdened by locked capacity [23]. This
will further increase the financial issues within the power sector. Large capacity payments due to
power lock in will be even more of a burden, as the amount will be paid to the generators even
when they will not be producing electricity. Research finds that other nations that have built coal
capacities recently have faced the similar issues. In the fiscal year 2018-19, Bangladesh utilized only
43% of their capacity resulting in idle plant payment of $1.1 billion [21].
2.3.2 Debt Sustainability
The economic stability of CPEC projects needs to be carefully analysed since many reports have
mentioned that these projects can raise debt problems for the borrowing countries. Even IMF and
BRI have warned about the financial stability of coal-based projects and urged properly managed
financial terms in countries with an already high public debt [24]. Pakistan has recently appeared
in many reports regarding debt sustainability of its CPEC projects. Pakistan’s debt to GDP ratio
was 70% in 2018, and this value was expected to reach a high value of 80.5% in 2020 [25]. Based
on the research, countries with a ratio higher than this are at greater risk of debt treatment. Now,
the major portion of this Pakistan’s debt is already from China and according to IMF, China’s
bilateral loans are neatly 26% of Pakistan’s $86 billion debt [26].
All DISCOs, on account of transmission and distribution losses and less recovery of electricity
bills, are annually adding Rs150-200 billion to the circular debt. If the status quo continues and no
endeavours are made to bring down the losses and improvement of recovery, current circular debt
that stands at Rs2.3 trillion will soar up to Rs4,000 billion by 2025.
As long as the government has to honour the sovereign guarantees that are present to ensure the
development of CPEC, debt is likely to increase, mainly due to payment obligations of CPPA to
the producers [8]. If the cycle of Pakistan’s circular debt continues, the power producer can set the
plan and recover its investment along with Return on Investment from Pakistan.
In FY 2019-20, approximately $7 billion was allocated to foreign debt payments. Although, no
such amount was mentioned in the next budget, it does mention an increase in interest payment
on foreign debts. Along with domestic debt, this debt servicing will take approximately 41% of the
total budget of $43.2 billion [27]. High-capacity payments of coal plants mentioned above will
make electricity more expensive and will cumulate with Pakistan’s circular debt.
Furthermore, the global investments and support packages of coal are drying up. Most
international banks and aid groups have halted policies in coal investments as well. This along with
18
debt concerns and coupled with the economic loss due to COVID-19 has aggravated the economic
situation, highlighted from the recent request to China on a debt relief on $30 billion for power
generation projects [28].
2.3.3 Environmental and Social Impacts of Coal
Impact of Coal fired power plants
Thar coalfield contains lignite, which has a lower heating value as compared to bituminous coal
and hence more coal must be burned to produce a unit value of power. This further means more
GHG emissions and hence more pollution [29]. Coal is consumed both commercially and
domestically for energy purposes, which contributes to health and environmental degradation even
by following modern controlling techniques. Some reports state that chemical processing of coal
releases even 3-4 times larger CO2 emissions than oil or gas based processing [30]. Combustion of
coal releases both CO and CO2 as a result of oxidation. This adversely impacts the environment
in the form of global warming and GHG emissions. Global warming further raises many climate
concerns, including flooding. WHO reports that coal combustion causes a death of 1.1-1.3 million
people each year (mainly due to malaria). Inhaling hazardous substances from coal powered plants
and its by-products pose serious risk to human health [31]. As per the research, burning of coal is
more pollutant as compared to other sources. Burning 1 TOE of coal emits approximately 4 tons
of CO2, which is highest among all energy resources [32].
Power sector of the world accounts for approximately 67% of total CO2 emissions, with coal
contribution to approximately 85% of the net increase in emissions. In 2018, the emissions from
coal increased beyond 10 Gt CO2 and Asia has been the largest contributor. If the Paris target of
2 °C is to be achieved by countries, then a transition pathway must be adopted to shift from its
use as coal caused a total of 0.3 °C of 1 °C increase in global average temperature above pre-
industrial levels, thus making coal the largest contributor for climate change [33].
Coal contains 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 where they are emitted at twice the rate as compared to the rate in transports and
industries [34]. SOx resulting from coal further travel distances and react to produce sulphuric acid
that causes acid rains. So, high concentration of SOx to population living near power plants expose
them to health disorders that may even be fatal. Along with SOx, coal powerplants also release
NOx and other particulate-matters with highly corrosive properties that also damage both health
and environment. NOx also combines with water and under specific conditions to form nitric acid
that is a major constituent of acid rain. CFA (coal fly ash) also contributes to PM formulation that
pose an underlying threat to human life expectancy [30]. However, as previously mentioned that
although the use of coal has increased in last year, a shift from coal to gas and renewables has
increased in the past years. Figure 5 below shows the emissions that can be averted due to the
above-mentioned switch [35] .
19
Figure 5: Change in global CO2 emissions due to transition from coal to gas or renewables
Globally, 215 Mt of emissions were saved through this transition shown in the figure above.
Although China is a significant contributor to CO2 emissions, this transition was majorly led by it.
In the absence of these policies [36], the total emissions would have been around 50% higher.
Impacts of Coal Mining
Apart from coal combustion, there are numerous impacts on environment due to coal mining as
well. As a result of coal mining, pyrite present in sulphur bearing rocks reach with air and water to
form sulphuric acid and which then flows with water to streams that are mixed with residential
storage that makes it unusable for households [37]. 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 cause severe and deadly respiratory problems. Coal fires also occur in abandoned
mines and waste piles. Emissions from coal fires accounts to approximately 3% of global emissions
[38].
After municipal solid waste from residential and industrial sector, waste from coal combustion is
the second largest waste stream. If this waste is disposed of, it would cause environmental
pollution. Coal sludge is also released by washing coal and spills into underground and surface
water. Women and children living near coal mines or coal plants are at the highest risks due to
contaminated water and soil pollution [39]. It has been globally observed that the poverty rates of
people living within one mile of a coal mine are twice as compared to the national average [31].
Further, dependence on coal as a national energy source puts a significant amount of labours to
high-risk conditions. This includes inhalation of toxic components, exposure to mercury, fumes,
gases, UV radiations, hearing loss due to high noise, and a prolonged exposure to mining
environment.
Coal mining significantly alters the landscape of 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 [30]. Even after the mining is
complete, the land cannot be reused until it is properly treated. Strip mining further destroys the
soil genetic properties and permanently changes the land demographics. Many geophysical features
20
are also destroyed due to continuous disruptive activities like blasting and excavating. These
ecological impacts of coal are further summarized in figure 6 [37].
Figure 6 Ecological Impacts of Coal
As it is apparent from the above-mentioned literature, coal has significant impact on
environmental degradation in all stages of its life. Hence, the energy market needs to carefully
analyse where to divert the upcoming investments of this sector. The next section of the study
deals with major trends in global energy market and the prospects of energy transition from coal.
21
Chapter 3: Trends in Energy Investments in the global Market
3.1 Prospects of Coal and energy shift
As per the global statistics of 2019, coal has been the most dominant source of energy, accounting
for approximately 40% of total electricity generation and was responsible for equal percentage of
CO2 emissions [40]. Although the share of coal had started declining, but the effect rebounded
after 2017 and reached an all-time high. In coming five years, the market of coal is expected to
remain stable due to a resilient Chinese market [41]. However, under the Paris agreement, countries
have pledged to make a considerable shift to divert the fossil fuel investments into cleaner sources
to counter the associated impacts of coal on the environment and natural resources [42].
Global demand of coal in previous two years has declined, however, its share in total energy mix
has increased. In past years, coal has shifted towards Asia led by China and India. Europe and
North America has pushed coal out of system due to environmental policies, economic incentives
of renewables, and by use of Natural Gas (for US specifically) [43]. India’s coal demand increased
strongly in response to their 7% growth in GDP. Europe reported a decline of 2.6% as renewables
took over. In all major European countries – notably France, Spain, Italy, and the United Kingdom
– coal use declined, mainly owing to higher renewable generation. EU and UK alone reported a
decline of 8.3 GW of coal capacity in first half of 2020, and another 6 GW is expected to be
reduced by the end of this year [43]. These reductions were driven by raising the cost of Europe
carbon allowances and strickened emission regulations. Further, the use of cheap natural gas as an
alternate of coal in European Union countries has aided the phasing out of coal. Owing to the
declining profitability of coal plants with time, Portugal also announced closure of two coal
powerplants thus coming on track to be coal free by the end of year 2021 [44]. Even PPCA
(powering past coal alliance) reported that by 2030, 58% of total EU states will be free from coal
[45].
The phasing out of coal as mentioned for the above-mentioned countries has been brought by
making commitments to end public spending on coal, defining approaches for a socially and
economically just transition, most importantly by defining ambitious renewable energy targets.
Table 4 below describes the action plans of various countries to phase out coal [41], [43], [46].
Further, the action plans of other economies for phasing out of coal and enabling a just transition
are provided in Ref-[43], [46].
Despite the evidence that most of the countries are shifting away from coal, the total coal demand
increased in 2020 primarily due to the increased use in Asian countries, led by China. As per IEA
statistics, China’s coal demand is still resilient, and its coal consumption value will reach the
maximum in 2022 after which it will start declining. Even China is expecting a decrease of coal
share from 67% in 2018 to less than 60% by 2024 [41].
22
Table 4: Coal phase out of different countries and the policies for Just energy transition
Sr.
No
Country Commitment for
phasing out coal
Policy for renewables Just Energy transitions Restricting public
finance to coal power
1 Australia Many coal power plants
have been shut down and
no new plants are being
planned
Country does not have
very high ambitious
targets for renewables
but support from
electricity market
participants is driving
down the renewable cost.
Government has taken actions to prevent
the job losses of coal plant workers by
placing them in relevant jobs
Country has restricted
the export of credits in
OECD.
2 Brazil Brazilian development
bank will no longer be
financing any coal project
and only 3.5 GW installed
capacity will be further
added to the system.
Share of non-hydro
renewables will be
increased to 23% by
2030. Solar PV will
increase beyond 13 GW
by 2026.
Brazil’s National Adaptation Plan to
Climate Change, published in 2016,
recognises the need to achieve a just
transition.
National development
agencies and banks have
restricted any more
funding.
3 Canada Coal will be phased out by
2030
Country already has a
very high share of hydro
for electricity generation.
Country has taken substantial for clean
growth economy. This includes
establishment of long-term research fund,
and transition centres, pension
programs for workers.
Country has ensured
restriction of export
credits in OECD and
domestic export credit
agencies.
4 European
Union
Closing of plants by 2030
at the latest.
Aim to achieve 20% of
total energy from
renewables by 2020 and
32% by 2030.
Just transition schemes include retraining or
up-skilling of employees in certain sectors
and,
where needed, social measures at the
appropriate level”.
No such information
available.
23
5 France All plants to be shut down
by 2021
32% renewable energy by
2030 and 100% by 2050.
Plans have been established emphasising
the need to support
affected workers in the short and medium
term. local support schemes have already
been agreed with nine other regions, which
support local mitigation projects or green
start-ups, rather than wholesale industrial
restructuring
Restrictions on bilateral
development finance for
coal.
Restrictions on export
credits for coal plants
without CCS and with
no CO2 storage.
6 Germany Coal phase out at latest by
2030
80% of total energy from
renewables by 2050.
A commission has been established for
“growth, structural change and
employment” to address coal
phase-out. The commission recommended
in January 2019 that €40 billion be provided
to coal-intensive states until 2038, to
compensate and retrain coal workers and
reduce the financial burden on electricity
consumers, industry and utility companies
Restrictions on coal
finance at bilateral
institutions.
KfW-Ipex bank
restrictions still allow
for coal plants under
500 MW and over 500
MW if they meet a
minimum efficiency
standard
Many reports have indicated that just like other countries, the right time for Pakistan is now to make a shift while there is already some push from
international organizations. Although many of the above-mentioned countries have build their economies using coal, however, Pakistan somewhat came
late for coal when renewables are already more cost effective. So, a transition from coal towards clean energy makes both economic and environmental
sense for Pakistan [47].
24
3.2 Prospects of Renewable Energy
To reach the targets of Paris goals and SDG 7, renewable needs to be grown at least six folds
faster as it is growing now (as of 2019). However, to achieve these goals, energy system must
undergo a profound transformation, from one largely based on fossil fuels to one that enhances
efficiency and is based on renewable energy [48]. Now, this global energy transition that is
already been observed in many countries as shown in the previous section can significantly
contribute towards a green economy build-up. Under current and planned policies, the world
would exhaust its energy-related “carbon budget” (CO2) in under 20 years to keep the global
temperature rise to well below 2°C. While different paths can mitigate climate change, renewable
energy and energy efficiency provide the optimal pathway to deliver the majority of the emission
cuts needed at the necessary speed [49].
In 2017, the power sector added 167 gigawatts (GW) of renewable energy capacity globally, a
robust growth of 8.3% over the previous year and a continuation of previous growth rates since
2010 averaging 8% per year. Renewable power generation accounted for an estimated quarter
of total global power generation, a new record. New records were also set for solar and wind
installation, with additions of 94 GW in solar photovoltaic (PV) and 47 GW wind power,
including 4 GW of offshore wind power. Renewable power generation costs continue to fall.
There is ample evidence that power systems dominated by renewables can be a reality, so the
scale and speed of renewable energy deployment can be accelerated with confidence.
The additional costs of the comprehensive, long-term energy transition would amount to USD
1.7 trillion annually in 2050. However, cost-savings from reduced air pollution, better health
and lower environmental damage would far outweigh these costs. The REmap Case suggests
that savings in these three areas alone would average USD 6 trillion annually by 2050 [50]. In
addition, the energy transition would significantly improve the energy system’s global socio-
economic footprint compared to business-as-usual, improving global welfare, Gross Domestic
Product (GDP) and employment.
Cumulative investment in the energy system between 2015 and 2050 needs to increase around
30%, from USD 93 trillion according to current and planned policies, to USD 120 trillion to
enable the energy transition [50]. Investment in renewable energy and energy efficiency would
absorb the bulk of total energy investments. Further, USD 18 trillion that would need to be
invested in power grids and energy flexibility. IRENA reports that in total, throughout the
period, the global economy would need to invest around 2% of the average global GDP per
year in decarbonisation solutions, including renewable energy, energy efficiency, and other
enabling technologies [51].
25
However, this shift as mentioned above for renewables would create more jobs in energy sector
compared to the job losses in fossil fuel industry. The REmap Case would result in the loss of
7.4 million jobs in fossil fuels by 2050, but 19.0 million new jobs would be created in renewable
energy, energy efficiency, and grid enhancement and energy flexibility, for a net gain of 11.6
million jobs [49].
Despite the above-mentioned global transition, the use of renewables in Pakistan has always
been overshadowed, especially after the economic crisis in the late 21st century. Energy structure
of Pakistan has completely shifted towards thermal energy sources causing both economic and
environmental degradation [52]. Pakistan has abundant renewable resources that have not been
carefully mapped out to harvest their true potential. Figure 7 provides a brief overview of
Pakistan’s energy mix. Even as of 2019, the share of non hydro renewables is insignificant [3].
Figure 7 Total energy mix and share of renewable energy in 2019
The major reason behind this was a lack of planning that led to short-term solutions. Pakistan
previously had no clear renewable targets (before RE Policy), despite the concerns raised by
policy makers at various occasions. A political will and a pathway that attracts foreign
investments need a clear-cut target and setting of a portfolio as they are mandated by law.
The “Variable Renewable Energy Planning and Integration” study by the World Bank suggests
that Pakistan’s use of imported and local coal to produce electricity was economically unviable
26
and scaling-up of solar and adding 24,000 MW wind generation could result in savings of up
to one billion dollars per annum2. The potential of Pakistan’s renewable energy sector in
different provinces was also highlighted by World Bank’s another study, i.e. “VRE Locational
Study”.
Box 1: Plans and Provisions under Pakistan’s ARE Policy 2019 for Green
Energy Transition
ARE Policy 2019
• Provisions are made that ensure the development of a sustainable RE market
through gradual and dedicated increase of renewable based electricity.
• Promotion of indigenization of renewable resources by developing local
manufacturing capabilities for conversion technologies.
• Projects under ARE 2019 will be exempted from corporal income tax, and there
will be no customs duty on import of machinery or other equipment to be utilized
in the plant.
• Policy encourages the project developers for precuring carbon credits through
various mechanisms like CDM, NAMAs, etc. AEDB will further assist these
developers in carbon trading with international markets.
• As opposed to previous tariff determination policy (feed-in-tariffs), open bidding
process will be used to select the determinant (lowest evaluated tariff).
• Unlike previous approach of inducting renewable projects on a reactive basis, the
country now intends to have RE generation capacity of 20% by 2025, and 30% by
2030.
Other Government Plans
• Legislation of net metering that has recently been introduced will now allow solar
systems to sell power to the national grid. This further provides an opportunity to
electrify remote villages and power those commercial sectors that have large roof-
tops available.
• In recent “Climate Ambition Summit”, Prime Minister of Pakistan has announced
that the country will focus more on hydropower and two major coal plants (that
were already in pipeline) scrapped, and the country will not further move for coal-
based power.
• Recently approved EV Policy would further strengthen the government’s focus on
climate-friendly sources.
2 At least 6,700MW of wind and 17,500MW of solar photovoltaics (PV) should be added by 2030 to achieve government targets
of ARE policy.
27
Chapter 4: Methodology and Model Development
This study uses a broad methodological approach with both quantitative and qualitative data
analysis. The quantitative analysis is used for analysing the environmental implications of coal-
based energy through Multi Criteria Decision Analysis and Economic-Environmental
assessment models of coal-based plants. The qualitative analysis is carried out by conducting a
series of Focus Group Discussions and Public-Private Dialogues on different topics linked to
clean energy transition. The policy recommendations from each dialogue were then
incorporated by properly mapping the stakeholders.
4.1 Preliminary scoping appraisal-Ranking and prioritization of environmental
parameters using Multi-Criteria Decision Analysis (MCDA) tool: (AHP method)
There is a growing concern about investigating the linkages of environmental impacts and the
question as to how the integration of the concept of ecosystem services could extend and
improve the decision-making process. In this analysis, a three-step approach has been
formulated to link the impacts to the provision of important ecosystem services; 1) An
assessment of environmental and social impacts of coal development using a set of scoring
criteria supported by initial assessment based on field investigations, Focus Group Discussions
and existing literature review, 2) Ranking of measurable indicators using Multi-Criteria Decision
Analysis (MCDA) tool, and 3) Prioritization of Ecosystem Services (ES) using a defined scoring
methodology. It attempts to identify key issues and constraints related to potential
environmental and social issues in Thar coalfield such as relocation of communities, impact on
water resources of the area, potential contamination of soil and water resources from acid mine
leaching, and flora and fauna. The cumulative impact associated with future development may
include those with the groundwater drawdown, dust, ecological system, population influx,
relocation, and economic growth. In addition, the pre-requisite arrangements required for the
detailed assessment also included the relocation and socioeconomic development planning and
its effective and timely implementation and institutional arrangements, community participation
and consultation, disclosure of information, grievance redressal mechanism, community
development program, and monitoring and evaluation mechanism have all been addressed in a
broader context. The data collection included:
• Field visit to the study area, discussions with village groups and interviews with community
heads at household level secondary data.
• Expert opinions and consultations with active community members, project employees and
consultants concerned, relevant experts and institutions, and Focus Group Discussions
from both government and non-governmental bodies, and key researchers from scientific
community around the world.
28
The detail of the actors involved are attached in Appendix 1 along with the questionnaire.
4.1.1 Identification of key Environmental parameters
Based on the environmental impact assessments of Thar coal project (see appendix for details),
the key impacts are summarized in Table 5 below; categorized and evaluated to identify the most
significant parameters which could have major environmental impacts and socioeconomic
implications. These parameters include water, landforms, vegetation, soil, and dust.
Table 5: Possible impacts of coal mining activities on environmental parameters in Thar Coal-
field
Parameter Activities related to
mining
Pollutant and its impacts
Water
Effluent release
from coal related
processes
Brackish water, increased amount of TDS.
Heated effluents containing heavy metals
resulting in thermal pollution.
Acid mine drainage Acidic hard water, drying up wells and lowering
of regional water Table.
Erosion from
dumps and drainage
from mining sites
Soluble components and sediments alter the
drainage pattern of local water bodies and
aquifers and pollute them with acids, dissolved
salts and heavy metals.
Soil
Open pit/strip
mining use of heavy
machinery for
extraction of coal,
burning, gasification,
loading/unloading
Coal dust and ash settles on land, making the
soil biologically sterile. Complete loss of
vegetative cover and topsoil.
Vegetation
open pit/surface
mining, clearing of
top layer and
vegetation.
Clearing up land for mining and related
infrastructure activities causing complete
destruction of vegetation. Loss of plant species
due to lack of photosynthesis, dead and dry
vegetation due to thermal pollution.
Agricultural
land
open pit/surface
mining, loss of land
for mining.
Reduced production of food for humans and
fodder for livestock.
29
Landforms
Surface mining
dumping sites for
waste, Facilities like
haulage, storage, and
transport.
Loss of upper layer of sand dunes. Change in
land use, topography of the region drainage
pattern and so on.
Air/Dust
Drilling, blasting,
and burning of coal
in industries,
transport through
conveyor belts, and
erosion from spoiled
heaps.
Alteration of nutrient content and productive
capacity of the soil as the suspended particulate
matter settles on land surface; reduce
photosynthesis due to decrease in amount of
sunlight. Respirable particulate matter from fine
coal dust results in pulmo-cutaneous problems
in local population.
4.1.2 Application of Multi-Criteria Decision Analysis (MCDA) tool: (AHP method)
The Analytic Hierarchy Process (AHP) is a Multi-Criteria Decision Analysis tool, which is
based on a theory of measurement through pair-wise comparisons and relies on the judgments
of experts to derive priority scales. The method has been applied in a coal-field in India that can
serve as a source of reference to prioritize the impact parameters based on existing knowledge
on impact indicators and respective decision-making. AHP is applicable in such cases where it
is difficult to measure the relative severity of impacts using one particular measure such as
impacts on water with impacts on air as water is also affected by other soluble components.
Therefore, we apply the AHP process based on similar criterion in purpose to derive the priority
scales for the identified impact parameters in the context of coal mining in Thar Coal-field.
These priority scales measure the intangibles in relative terms and are given aggregated weights
to obtain scores for each parameter. The process is applied in the following steps:
Step 1: Development of hierarchical structure based on six identified parameters/criteria (A1,
A2….A6) namely water, soil, vegetation, agricultural land, topography/landform, and air/dust,
Table below. These criteria are further dissolved into decision alternatives (B1, B2…B22)
(Appendix C1).
Step 2: Based on the opinion of experts and stakeholders using questionnaire and field-based
investigations, each criteria of parameter were assigned weight using a nine-point numerical
scale of absolute judgments (See Appendix). These criteria of parameters are arranged in a
form of pair-wise comparison matrix that is reciprocal in nature. Then the Eigen values of all
the six criteria are calculated using a consistency ratio (CR) of the comparison matrix,
determined as the ratio between the consistency index (CI) and random index (RI).
30
CR =CI
RI (5.1)
Consistency index (CI) is defined as:
CI =( λmax− n)
(n−1) (5.2)
λ max = Maximum value of Eigen vector CI and n is the number of factors (n=6 in this case).
RI is the consistency index of pair-wise comparison matrix generated by Saaty and the values
are given in Table B3 (Appendix).
This measured consistency ratio is important to avoid the fact that the assigned weights
and corresponding weights can be subjective at times. A CR value less than 0.1 is considered
as applicable and consistent with the opinions.
Step 3: The calculation of weights for each criterion decision alternative was done using
consistency measures (calculated using equation 1). Their eigen values calculated as are given
in Table C4 (a-f), see Appendix).
The final priority for each criterion is measured using the formula:
Final Priority(P) = ∑(Weights of Bi with Ai ∗ Weights of Ai with respect to ESIA)
Where Ai (i=1, 2, 3…6) are the six criteria chosen to study their impacts and alternatives
Ci (i=1, 2, 2….22) under each criterion.
4.2 Levelized Cost of Energy (LCOE) based Energy Model
To analyse the transition pathway of future investments under CPEC, a scenario-based
modelling approach has been adopted. An LCOE based energy model for both coal and
Renewable Energy projects has been conducted to estimating the Financial and environmental
costs of Thar coal investments.
Based on the datasets available from NEPRA proposed tariffs and other studies on financing
structure of CPEC projects [53][2][54], an LCOE-based model was developed for both coal
based and Renewable Energy projects. The schematics of adopted methodology are depicted in
Figure 8. This Levelized Cost of Energy (LCOE) is generally defined as the lowest amount that
must be paid for electricity generation to only break-even. Another way of describing LCOE is
the electricity tariffs at which the investor would reach break-even after paying debt and equity
and accounting the required rate of return of these investors [55]. It is an important criteria to
31
check the economic feasibility of any alternative by taking into account many factors as shown
in the figure 9.
Figure 8: Research Methodology and Data Collection Process
LCOE
Transport Cost Discount Rate
O&M Cost
Lifetime
Capacity Factor
Investment Cost
Capital ExpenditureAuxiliary Cost
Figure 9 Assessment parameters of Levelized Cost of Energy (LCOE)
32
The tariff schedule of each plant is determined by NEPRA over its lifecycle, which in this case
is taken to be typically between 25-30 years. Now the two main components of LCOE are
Energy Purchase Price (EPP) and Capacity Purchase Price (CPP). EPP is the operation cost,
which is generated an then delivered to the power purchaser, while CPP refers to the fixed cost
of generation that includes O&M, and other equity parameters. The total LCOE of any plant is
the sum of both. the LCOE of any plant is also defined initially by NEPRA in the form of a
reference tariff. These tariffs are however based on constant cost factors are then changed by
NEPRA with time. Along with these cost parameters, LCOE also includes the emission cost
due to environment externalities. Although, we do not have cost values for this factor, the values
here are taken from other OECD countries.
Assumptions and Limitations of LCOE based financial Model
• Plant life is taken to be 25 years3
• Dollar rate for year 2017 is used.
• Median cost of emissions is taken to be $30/tonne of CO2 emissions.
• Discount rate is taken to be 10%.
• For coal plants, plant load factor is taken to be 85%
4.2.1 CO2 estimations and projections
Emissions from a power plant are determined by the plant capacity, the type of coal used and
the capacity factor. Carbon emission factor for plants operating on a specific coal types are
calculated based on its heat rate. Carbon emission factors of these plants were the verified
through a study done by Ref-[54]. The carbon emission factors were then multiplied by annual
electricity production to calculate the annual CO2 emissions.
4.2.2 Scenario-based modelling of energy alternatives
To analyse a transition pathway to guide the future investments under CPEC, the model has
been developed under two scenarios: i). The base or reference scenario- indicating the
environmental and economic profiles generated by performing business as usual scenario, i.e.
further installation and approval of coal-based power plants; ii) The second scenario named
“renewable transition” indicated the same profiles if further investments in Thar are made for
renewable and clean energy transitions. 2018 is used as the base year while other economic and
environmental parameters are same as those taken for calculation of Levelized Cost of Energy
(LCOE).
3 https://nepra.org.pk/tariff/Generation%20IPPs%20Coal.php
33
5. Result and Analysis
5.1 Quantitative assessment of Environmental and social impacts
Although coal has played a key role in human development and industrial revolution, there
is no wide-ranging debate on its social, environmental and health implications. These
implications include permanent change in landscapes, degradation of soil, habitat destruction,
and indirect impacts related to GHG emissions due to coal combustion. The extent of these
impacts occurs regardless of geographical location of type of economic development which may
lead to social, environmental, and health consequences.
The relationships between a given ecosystem, the multiple services it provides, and human
wellbeing are complicated. Experts’ knowledge is one of the most widely used qualitative
approaches which incorporate the perspectives of the different stakeholders into environmental
assessments. Based on the evaluated relationship between the ecosystems, pressures caused by
coal mining activities, land uses impact and stakeholders’ opinions; a prioritization scale of
environmental parameters are established. These criteria-weighted parameters (assessed using
AHP) are assumed to serve as a performance indicator to help assess the ecological components
underlying an ecosystem service. These indicators are specified as “leading indicators” that may
foreshadow changes in the condition of the environment based on potential causes of impacts.
Hence, we adopted an evaluation method to do an explicit analysis to study these flows with
current and predicted impacts on environmental parameters.
Table 6 below shows the prioritized parameters based on the eigen values of criteria and
decision alternatives (Appendix)
Table 6: Pair-wise comparison matrix
Ai
Criteria
Preferences
Aj
Water Soil Vegetation Agricultural
land
Landform Air/dust Eigen
value
Water 1 5 7 8 4 9 0.517
Soil 0.2 1 2 3 3 5 0.175
Vegetation 0.1428 0.125 1 2 3 6 0.127
Agricultural
land
0.125 0.142 0.5 1 2 3 0.076
Landforms 0.25 0.25 0.33333 0.5 1 4 0.076
Air/dust 0.111 0.11 0.16666 0.25 0.25 1 0.027
34
The linkages of potential impacts are conceptualized by considering the dynamic relationship of
biophysical and ecological components to the drivers of change. Figure 10 highlights the
significance of each criteria and parameter and their expected relationship to ES categories
(results are given in Table C6 (appendix), explained as:
1. The highest criteria were placed on “sediment retention and soluble components,” which is
expected to have strong expected relationship changes in provisioning services of freshwater,
regulating (water flow, erosion control) and supporting services (nutrient and water cycling,
biological diversity). Although there is a limited research in arid climates, studies have shown
that mining is of great concern because of possible transport. Coal mining tends to release many
anthropogenic chemicals and metals (such as cyanide, arsenic, lead, cadmium) into sediments
that can be mobilized into the local surrounding environment. In arid regions, this
contamination also occurs from mine tailings and waste rock, causing acid mine drainage
(AMD), transported by wind or over-land flow during storm events. The mobility of these
contaminants is controlled by pH, often dissolute by aqueous transport as well as Aeolian
dispersion in arid climates. Further contamination is dominated by release of arsenic (As) which
is already found in the water samples of Thar.
35
Figure 10 Prioritization of environmental parameters using criteria and alternative
36
This phenomenon of acid drainage influence on the water and sediment quality was
investigated in a coal mining area (southern Brazil) which showed pH between 3.2 and 4.6 with
elevated concentrations of sulphate, As and heavy metals. Hence, the transportation of sediments
in arid and hyper arid regions can potentially impact the biological environment and food web
including the health and wellbeing of plants, animals, and humans exposed to contaminated. These
cumulative impacts of higher sediment and nutrient loads as a result of acid or metal seepage from
mine residues and waste disposal sites could greatly impact the water quality and quantity of the
ground water aquifers, in turn influencing the provisioning ecosystem services of water for humans
and animals. The loss to water related services will eventually disturb the agricultural land of Thar
leading to reduced crop production, exacerbated by expansion of further mine development.
Given the importance of drinking water in the region, the estimation of change in provision of
water are expected under current mining conditions are needed to be measured and valued that
could assess the level of impact on local people and their livelihoods.
2. Removal of topsoil and vegetation lead to loss of erosion control and carbon sequestration
processes (that impacts groundwater quality for drinking, agriculture, crop production, which is a
primary source of interest in Thar region). Disturbance to land surface leads to changes in
hydrological flow regimes causing increased risk of erosion due to removal of natural protective
crust. Land subsidence is another potential issue related to surface disturbance and topographic
changes which could impact climate regulation services due to Soil Organic carbon. These changes
in topography and landform influences the habitats of species which could have an impact on
regulating services. In Thar coalfield, during the EIA studies of Thar Coalfield, a total of seven
nests of Egyptian vulture Neophronpercnopterus were identified in the study area, of which five
were empty and two were occupied. These vultures play a key ecological role in Thar ecosystems
and are placed at the top of the food chain. They are the most efficient defenders of disease
outbreaks and can consume a large amount of dead meat in a very short span of time. Thus, help
earth’s nutrient to cycle by releasing the organic matter to the soil. A survey conducted in 2017
identified that all vultures, including Gyps species, are declining due to multiple threats including
habitat loss, reduced food availability, direct persecution, and emerging threats such as climate
change and loss of habitat in land clearance for mining. During the current survey any big nest
about 1.5 m in diameter was not observed within Thar Coal Block II. May be due to the initiation
of mining work in the block, there is a possibility that the Egyptian vultures Neophron percnopterus
have shifted their nesting site to another area due to the disturbance in land and environment.
3. Another possible impact associated with disturbance of land could be the high levels of fugitive
dust occurring near the mining activity. This has the potential to increase the health and safety
risks for the community at the nearest receptors. Many researchers have asserted that resource
developments often lead to the eradication of a ‘sense of place’ in a socio-ecological system. The
society of Thar region is deeply rooted in their cultural values and ethics. During the field visit,
spiritual and sentimental values were also revealed to break the human bond with their land of
ancestors, which had laid the foundation for their livelihoods in Thar. Possible expansion of mine
development may increase the levels of in-migration which may lead to proliferation of informal
settlements in the region. These land related issues of resettlement and relocation of affected
communities are further likely to increase pressures on natural resources, particularly water and
land, which may affect the current landscape and cultural makeup of society. Makki highlighted
that the locals perceive this phenomenon as being lower social standing (’Rool’ or ‘Landplan’: local
37
slang for immigrant or settler). According to a local respondent of the pre-test survey “We surely
understand the need of mining project in our area, but we are worried about our water sources
and land for livestock and agriculture purpose. We have no rainfall and no other source to get the
fresh water. These lands are of our ancestors, and we have strong affiliation with it. We are happy
to receive services that can meet our local demands for land and water resources which we hope
that can help us to meet at least our primary needs as well as for our future generations, we are
Thari (Thar people in a local context)”. Moreover, loss of vegetation leads to loss of native plant
species that are used to make flutes and mutual instruments for cultural festivals. Considering the
strong expected relationship of these traditional norms and beliefs to be impacted by cumulative
impacts of mine development, aesthetic and spiritual values of land must be accounted to enable
good social cohesion and to enhance the recreational aspect of Thar region.
Box 2: Political Economy of Coal in Pakistan: Evidence from interviews with key
informants
Coal capacity of Pakistan has significantly increased since 2017 after the discovery of Thar coal
reserves. Although the Prime Minister of Pakistan has recently announced the moratorium of
coal-based power, a large capacity is still available in the pipelines. Through our interviews with
experts, we have noted that the substantial expansion of coal and the recent moratorium can be
explained through the following factors:
Large-scale coal adoption
1. A decade ago, the energy generation of Pakistan was significantly below its energy
demand resulting in power outages. Hence, the sector was to be liberalized to ensure
that sufficient power is available. This was made possible through IPPs and then coal
projects under CPEC.
2. Since the support from renewables at that time along with technical/financial data and
feasible studies was very limited, its financial models, investing schemes, and grid
capability was not appropriate to penetrate it at a very high level. Further, since reserves
of natural gas were also declining, coal appeared to be the answer for meeting power
requirements.
3. The recent focus of Pakistan government’s inclination towards coal-based power is
mainly due to the reason that currently the economic stability seems to be prioritized
against the environmental stability. Pakistan came late for coal while most of the
countries had already built their economies using this fuel.
4. Representatives of Pakistan government believe that the country is heavily relying on
coal due to large indigenous reserves, which means self-reliance and energy security.
This has been made possible through Thar development via China-Pakistan Economic
Corridor (CPEC). There is a need for long-term base load fuel, and since we were
running out of gas, indigenous coal (although not of very high quality) served as a good
alternative.
Moratorium of Coal-based Power
1. While energy sector of Pakistan was going through an overhaul, the need for penetrating
renewables into the energy mix of Pakistan was constantly increasing. National as well
as international researchers were pointing out the merits of replacing fossil fuels with
38
RE alternatives since they offer both economic as well as environmental benefits.
Further the coal power was expected to de-track Pakistan from its Nationally
Determined Contributions (NDCs) and Paris Agreement goals due to comparatively
larger CO2 emissions.
2. In climate summit 2020, the prime minister of Pakistan announced that the country will
not approve any new coal-based power plants, however, the ones that are in pipeline
will come online.
3. Buoyed by the recent moratorium on coal in Pakistan, announced by Prime Minister
Imran Khan on December 12, marking the fifth anniversary of the Paris Climate
Agreement, the statement received international acclaim since Pakistan’s bid to achieve
energy security based on coal-based power generation has widely been known.
Although, it seems like a step in the right direction, most experts believe that we may
not see coal vanish away in anytime near future.
4. Coal announcement by the PM, however, does showed a lack of coordination among
different departments, since the government of Pakistan has recently put forward the
initial draft of its Indicative Generation Capacity Expansion Plan (IGCEP) in which the
coal moratorium was not accounted for.
5. The moratorium of coal was also supported by constantly increasing capacity payments
and resulting circular debt, since the capacity of Pakistan has increased well beyond its
peak demand.
4.2 LCOE based Financial Model for coal power plants
LCOE methods is used to compare and benchmark different energy technologies and conversion
processes across different scales and find lifetime energy supply costs. Based on NEPRA
determined Tariffs over the 25-year lifetime, LCOE was calculated for coal-based power plants
operating with a capacity factor of 85%. Figure 11 shows the reference tariffs of a proposed
powerplant and how the total cost per kWh differs over the life cycle. In initial 10 years, the total
cost is significantly higher due to load repayments, interest charges and debt servicing which
significantly changes the value of CPP (EPP remains the same).
Figure 11 Reference Tariff values of Power plants (NEPRA proposed)
EPP
91%
CPP
9%
Tariff (10-25 yrs) = 10.61
EPP,
77%
CPP , 23%
Tariff (1-10 yrs) = 13.504
39
Since LCOE is taken over the life cycle, average tariff values are used while calculation of LCOE.
Figure 12 shows the calculated LCOE for Thar coal power plants. Based on the calculations, the
LCOE for Thar coal power plants without considering the cost of CO2 emissions is around PKR
8.7/kWh with a capacity factor of 85%. However, again as previously mentioned that this
calculation does not include the social costs.
Most of the coal plants under CPEC especially the ones that use sub critical technology emits a
large quantity of CO2. A methodological difficulty faced in these calculations is the absence of any
such policy. Hence, for incorporating these values, we have taken the average emission cost of
other OPEC countries, where the emission costs for lignite and sub bituminous coal are PKR 3.2
and 2.96 per kWh.
Figure 12 Levelized Cost of Energy of Thar coal power plants excluding emission cost
After inputting the average cost of 3.08 PKR/kWh, the adjusted LCOE of thar coal power plants
becomes approximately PKR 11.7/kWh as shown in figure 13.
Figure 13 LCOE of Thar coal power plants excluding emission cost
0
1
2
3
4
5
6
7
8
9
EPP CPP Total EPP CPP Total EPP CPP Total EPP CPP Total
Thar Coal Block 1 Engro Power Gen Thal Nova Thar Energy
Cost
(R
s/K
Wh
)
0
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Thar Coal Block 1 Engro Power Gen Thal Nova Thar Energy
Cost
(P
KR
/kW
h)
EPP CPP Emissions
40
4.2.1. Comparison of Thar based LCOE with Non coal thermal plants
Non coal thermal plants commonly include the ones running on natural gas, RFO, and LNG. As
per the NEPRA tariffs, these plants have an average tariff cost as shown in figure 14. However, this
should be noted that the capacity factor of gas plants as mentioned in tariffs is 60%. However, the
plants can also run on base load conditions just like coal power plants and hence a capacity factor
of 85% can also be used for them.
Figure 14 LCOE of NG, RLNG, and RFO plants at 85% capacity factor
Based on the figure 14, natural gas is currently the cheapest source of energy generation from
conventional sources followed by coal. However, again the cost of generation does not included
emissions, in which case the cost of NG would be even much lower as compared to others.
However, the average of Oil/NG fuel as compared to the local Thar coal is still high (a difference
of 1.44/kWh (making it a more viable option.
As per the proposed and already built plants, Thar coal can annually generate approximately 49
billion kWh of electricity and thus use of coal generation instead of oil/gas (average) based plants
can save around PKR 70 billion.
4.2.2. Comparison with Renewables
Cost of renewable energy generation can be analysed under two different regimes. With the
advancement in technology, the cost of electricity generation and technology investment for wind
and solar has significantly dropped. LCOE of different renewable projects under CPEC before
NEPRA Tariffs of 2018 is shown in figure 15.
41
Figure 15 LCOE of some renewable energy projects under CPEC before 2018 tariffs
As apparent from the figure 15, hydro power projects have the lowest LCOE followed by wind and
then solar. Coal plants as experienced in the previous section have an LCOE that is lower than both
wind and solar, but with an emission cost.
However, after 2018, tariffs for power generation through solar and wind have drastically changed
with an average wind power expected to be produced at a rate of $0.0486/kWh and an average solar
power at $0.034/kWh. This change is mainly due to a technological penetration and higher
possibility of capacity factors. Figure 16 represents the range of LCOE for wind and solar projects
after 2018.
Figure 16 Average LCOE of wind and solar projects as per NEPRA tariffs after 2018
These values when compared with both domestic and imported coal provide a cheaper economic
alternative.
The results of LCOE calculations presented above are subjected to a large number of variations, and
hence each figure must be interpreted very carefully. As far as the real working of a plant is
considered, LCOE are over-estimated in most of the cases. This is mainly because LCOE is the
minimum cost which NEPRA approves, and the power producer is allowed to charge. Most power
0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08
Kohala
Gilgil
Karot
Quaid e Azam-1
Quaid e Azam-2
Cacho
3 Gorges II
Sachal
Hy
dro
So
lar
Win
d
0 0.02 0.04 0.06 0.08 0.1 0.12
Average Wind
Average Solar
LCOE ($/kWh)
42
producers renegotiate the prices to a higher value since they have to turn a profit for long-term
stability of plant. Further, a plant faces certain limitations and risks that are initially not accounted
for and can increase the cost drastically. Finally, LCOE is driven by capacity factor that can be limited
by the power demand, scheduled and unscheduled maintenance and instability of the grid.
As per the study wind and solar (based on statistics after 2018) are the cheapest sources of energy
under CPEC followed by NG, Coal, RLNG, and RFO. However, this does not mean that all plants
should be based on cheapest or the cleanest source. Policy makers need to ensure a diversity in
energy supplies in case any source becomes a liability. Hence, the focus of CPEC should also not be
on a single technology. Currently, there is just too much focus on coal and that also is not among
the green options as explained in the next section.
4.2.3 CO2 emission Profiles under different scenarios of capacity addition
Each CPEC project contributes to an increase in total CO2 emissions. As per current scenario, CPEC
is expected to add approximately 51 million tons of CO2 annually. However, due to the difference
in plant sizes, it is difficult to compare the plants. Hence, the emission values for different plants per
MWh are shown in figure 17 below:
Figure 17 CO2 emissions from different CPEC coal-based power plants
Calculating environmental profiles require projecting the capacity building under the IGCEP 2047
plan as the base case. Figure 18 (top) shows the capacity additions and retirement of different plants
till 2035, while the bottom part of figure shows the share of additions due to local coal, i.e. CPEC
projects.
0 1 2 3 4 5 6 7 8 9 10
Engro
Oracle
TEL
ThalNova
SSRI
Sahiwal
Rahimyar
CPHGC
Port Qasim
Gwadar
CO2 Emission (Mt)
43
Figure 18 Net capacity additions as per IGCEP 2047 and the share of local coal
Based on the capacity additions as per the IGCEP, the total emissions resulting from the power
generation mix are as shown in the figure 19. It should be noted that the total emissions decrease till
2030 due the constraints applied by ARE policy 2019 which limits the share of renewables to 30%
by 2030. However, after 2030, IGCEP plan intakes a load share of coal-based power generation,
thus increasing both the total emissions and emissions per kWh of electricity.
0
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)Capacity Additions Capacity Retirement Net capapcity additions
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4000
2024 2027 2030 2033 2034 2035
Coal
Cap
acit
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ddit
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(M
W)
44
Figure 19 Total CO2 emissions from electricity power generation and emission intensity
As apparent from figure 19, the emissions in base scenario of Pakistan are constantly increasing
mainly due to coal-based power. The share of renewables in energy mix of Pakistan after is not only
“not sustained”, it starts decreasing. For a sustainable environment outlook, the upcoming coal
projects could be replaced by renewables such as wind. Figure 20 shows reduction in emission that
can be achieved if all new coal powered projects are replaced by solar and wind energy sources.
Figure 20: CO2 emissions under base case and renewable transition scenario
As apparent from the figure 19, replacing coal-based power plants running on both local or imported
fuels can save up to 28 Mt of CO2 in a single year (2030).
Another important aspect, which should be understood is that these emissions only represent the
emissions from combustion of coal. It does not include the emissions during plant construction,
transportation of fuel or other types that are involved in auxiliary processes. These are the reasons
0
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Wh)
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Base Case Scenario Renewable Scenario
45
why coal plants despite producing cheap energy are being shut down all across the globe [56]. EPA
recently banned the use of coal in many big cities including Beijing from China as well. In 2017,
China itself stopped the construction of approximately 100 coal-based power plants. The coal found
in Pakistan is further of low quality as compared to global average, which means larger emissions
and more utilization of coal to produce a unit power of electricity.
Above two sections have carefully analysed both economic and environmental considerations of
coal. However, the results of both sections should be carefully interpreted. 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 long term, then cheaper and greener options can be explored.
The coal investments produce the maximum amount of generation based at least amount of upfront
cost, this does not mean the cost of electricity to a common citizen would be necessarily that cheap.
The prices in Pakistan are driven by the 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 population). This price
offsetting also comes at a cost for the government calling for a need of decentralized energy systems
such as solar and wind.
Box 3: Coal to Liquid (CTL) and Coal to Gas (CTG) Conversion technologies:
Implications for Pakistan
While announcing coal moratorium at climate summit, the Prime Minister of Pakistan
announced that although there will be no coal base power, the country still intent to use
domestic reserves to produce energy by converting coal into liquid and gas reserves. This
resulting fuel are to be used either for power generation or to supply gas to consumers.
Currently, there are proposals to produce diesel and fertilizers through these processes with the
help of Chinese technology and finance.
Now, many experts believe that these projects are in no way going to be economical for Pakistan
and are only a result of strong lobby from coal supporters. Already considering high level of
subsidies for fossil fuels in Pakistan, these projects will also definitely rely on large subsidies for
making them economically viable which again will increase the unsustainable circular debt within
the power system.
Further since these projects and technologies will involve Chinese companies and their finance.
So, while Pakistan is already seeking debt relief from China under on coal power projects, these
projects will further cause debt increase.
46
Chapter 5: Discussion
5.1 Prospects of Coal vs RE Investment
Based on the results mentioned in the above section, RE investments will provide long-term
benefits considering many social, economic, and environmental benefits. But, at the same time, a
diverse energy mix and self-energy reliance using Thar coal can also build a financially affordable
energy sector. Given Pakistan’s rapid increase in energy demand due to urbanization,
industrialization, and population growth, a capacity built-up and hence power sector investments
are required in each case. However, the infrastructure build-up approach and policy diversions will
significantly affect the payback in long-term. Looking at Pakistan’s current policy signals and
financial closure of different plants, there is a resistance in the allocation of capital to low carbon
sources, that are aligned without SDGs. Considering that Pakistan is already facing financial
constraints, the investments in fossil fuels for ensuring energy access to all will fall short. Current
energy investments of Pakistan are skewed towards plants with shorted lead times, amid causing
uncertainties for the future outlook. For being on track with Paris Agreement, the share of
investments for renewables should be around 65% (global average). For Pakistan, this shift will
require massive step-in policies and measures. Total generation capacity of Pakistan is expected to
increase to around 62 GW by 2025, which is majorly driven by Hydro and coal. No oil capacity
addition, and very limited gas capacity (which also does not increase beyond 2021) is an indication
that Pakistan is not accepting any financial burden caused by high import price of these fuels.
However, the most shocking aspect is that even non-hydro renewables does not hold any share in
capacity additions after 2021, despite a rapid increase in emerging economies. If Pakistan builds
upon this approach, it will miss out very cheap energy generation process. A very high reliance on
coal will cause major problems especially, if there is a delay in any hydro project development.
Constant increase in coal power in Pakistan is against the word trend where even major coal-
dependent economies like China and India are moving away from it in near time.
Renewables in recent years have experienced a remarkable decline in generation and development
cost, thus resulting in lower tariffs. Pakistan has good potential for both solar and wind. Especially
the south-east region of Thar, there is a major solar potential, while the area is currently focussing
on providing supplies to coal-based plants. Although at this stage, most policy makers recommend
that coal is a necessity since it provides a pipeline for making investments for renewables in the
time to come where the prices will be even cheaper.
5.2 Role of Financing and Policy Making
Most of the developed and developing countries in the world (incl. US and China) have established
proper goals, mandates, policies, and frameworks for electricity production through renewables.
Chinese government practices an outcome base approach by setting up national targets, and then
use provincial or other incentives to support those facilities. Unlike China, many countries
encourage a state level market outcome by putting the focus on technology build-up. No wonder
the method varies for different countries depending on their financial policies, the common step
in all of them is the price support through both direct or indirect means. It could be through tax
breaks for producers and consumers (like as done in US), or it could be in the form of Chinese
subsidies like low electricity rates or government-set pricings. However, for countries other than
China and US, the finance availability is a major challenge as it requires the access to many sources
and funding organizations.
47
Box 4: Focus areas around the world for Renewable Energy Transition
• Cost of renewable energy generation is constantly declining, which has made it the
most competitive energy form. As per IRENA, the cost of solar PVs has dropped by
around 80% after 2010. In the same period, the cost of on-shore wind has also
dropped by approximately a quarter. In some countries, on-shore wind projects are
delivering energy for as low as $.04/kWh. Further, technological advancement and
supply chain betterment will reduce the cost to even more lower values.
• Since the development of RE sector is closely tied with national policies and regulatory
frameworks, governments have facilitated the role of private sector participation,
especially in transition from a centralized system to a decentralized networks. Those
technologies are now under focus that provides much better efficiency and are
integrated with renewable energy systems, such as CHP plants.
• Supporting the investments that enable infrastructure for integrating VRE and smart
technologies.
• Scale-up and economic viability of renewables has been increasing 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.
• Socio-economic structures of the country must be aligned with green and climate-
friendly transition.
• Digitalization is considered a key variable for reliable and economic decentralized wind
and solar systems.
Understanding how any country develops or presents a finance model for any project (s) is a
complex process due to the different roles of investors. Along with understanding the finance,
what is being financed should also be analysed. A finance always flows towards a concrete project,
and any firm will invest only in technologies or processes that it supports. Even as of today, the
investments in RE are skewed and a diverse set of technologies is available (luckily which is
desirable). Hence, the financial policies must analyse the different the consequences of different
types of investments, even though they are in direction of RE. If a policy favours a technology,
the investors would come with their prioritized investments. Understanding what role such
investments have previously played in other countries will also explain the impact these policies
can have. Just creating a pool of funds might not solve the major problems of RE penetration.
Some regulatory policies that can be implemented are as under:
• Setting Renewable Portfolio Standards (RPSs) for electricity generators and distributors,
which must state that a certain percentage of total electricity must be generated through
renewables. There should be further a solid framework to monitor the compliance as well.
• Some countries have also supported Tradable certificate schemes in which each generator
can buy or purchase a set of certificates typically awarded for each unit of electricity
produced. This must also be supported by strictly penalizing the non-compliance.
48
• For increasing the bankability of RE projects, Feed in Tariffs (FITs) and Feed in Premium
(FIPs) have been encouraged worldwide. Especially for countries like Pakistan where
knowledge about RE deployment is very limited, they should appear to be a reliable
framework.
• Auctions have also been used by many countries to bring transparency and commitment
in any RE project. However, in most of the previous cases, auctions have been coupled
with other financial incentive schemes such as quotas or tradable certificates.
• There is a dire need to develop a concrete regulatory framework for decentralized energy
system in Pakistan, especially to promote the SDGs. Current, grid is definitely not in a
position to be extended to such lengths. Developing financial models of decentralized
electricity will eliminate poverty, increase electricity access, provide livelihood and
employment, along with decreasing the non-commercial use of energy in rural areas.
Decentralize solutions have lower cost and wait times as compared to grid extension
projects and are more sustainable.
• Along with the above-mentioned regulatory framework, non-regulatory policies must also
work along. This includes providing tax incentives, capital grants and subsidies, attractive
loans, and mitigation of associated risks.
5.3 Role of IPPs and private sector engagement
The focus of IPPs and private sector revolve around ensuring a universal and modern access of
clean energy for all, improving the rate of increase in energy efficiency, and increasing the share of
renewables in total power generation mix. Globally, it has been observed that the private sector
has a lead role to play in energy transitions. There is a rapid need to strike a balance between energy
access and “building in resilience”. Further, considering that global public sector debt is currently
at all-time high value of 80% of global GDP, it is up to the private sector to make substantial
investments in a smart way. Energy companies and policy makers must work in collaboration with
industry, academia, regulatory bodies, and other government affiliated institutes to establish
innovative ways for supporting RE transition, de-carbonization, and energy diversification.
Hence, for a rapid energy transition, Pakistan must answer whether the current environment is
attracting private investment? More importantly, is it providing an equal opportunity? No doubt
each country has its own energy subsectors that are unique and depends on its history, economy
and resources. It should also be realized that in a growing energy market, new trends and
technologies are different from the conventional ones. Subsidized technologies are preferred over
unsubsidized ones, and similarly technologies and processes with short-term financing structures
are discouraged. It should be further noted that a pricing framework that offers short-term price
constituents provides an inhospitable environment, and in those cases, mostly the governments
have to look for short-term solutions, i.e. thermal plants. Although renewables do not have a very
high capacity factor especially the technologies used in developing countries, this does not indicate
the incompetence of renewables in such market. Most of the financial markets are resistant to
invest in such systems unless there is assurance of a revenue.
5.4 Meeting the NDC and SDG Commitments
Most objectives in achieving sustainable development goals linked with energy sector revolve
around the supply of clean energy to all. SDG 7 clearly indicates that by 2030, universal access of
49
modern energy should be ensured in each country. Although the condition of country-side in
Pakistan has significantly increased over the past years, a major portion lacks access to modern
fuels, and hence the economy well of-track to achieve this goal. Providing commercial energy to
different parts will require the use of decentralized systems in the form of mini and micro grids,
especially for areas where grid electricity transmission is not possible. This goal can be accelerated
by penetrating more renewables in the form of solar rooftops, solar heating, and cooling
applications, small-scale wind turbines, and efficient use of bioenergy resources. Most of the
villages in Pakistan are currently using biomass in different forms for energy purposes. Such a non-
commercial use of this source on the one hand is very inefficient, and on the other it is a much
severe environmental hazard. Hence, the commercial technology utilization through renewables
will address the target of providing clean energy access to all.
The second main objective of SDG 7 states that the share of renewables in global energy mix must
substantially increase. Currently in Pakistan, the share of non-hydro renewables in total energy mix
is below 5%. Although the recent ARE policy 2019 states that country will increase the renewable
share substantially, the expansion plans of the country seem to look the other way. Even based on
a very optimistic approach that Pakistan manages to achieve a share of 30% in electricity by 2030,
the renewable share of Pakistan as per the latest IGCEP plan will decrease after 2030, thus
describing country’s lack of focus for a complete clean energy transition. Further, in the revised
form of IGCEP, the renewables have been allotted a share of around 12% in power generation
mix by 2030 due to high percentage of committed projects.
Since CPEC is skewed towards coal power plants, it can have adverse environmental impacts. The
associated risk includes air and water pollution, loss of habitat and fermentation, deforestation,
increased mortality of wildlife, and increased GHG emissions, that puts under threat Pakistan’s
actions to combat climate change [34]. Asian development bank despite funding a 600 MW coal
project in Jamshoro Sindh has raised its concerns over the coal fired power plants under CPEC4.
To reach Pakistan’s target under Paris agreement, the emissions must fall each year by 2.7% to
achieve the only less ambitious goal of 2C (not 1.5C) [57]. Pakistan already suffers from toxic air
pollution, and it is expected to be worsened by the first phase of CPEC projects, and if the trend
continues, we might reach an unwanted temperature rise of 4.9C by the end of this century thus
making all agricultural activities impossible.
Not only in Pakistan, but coal based power generation is also a bigger threat in developed
economies such as China and USA as well [10]. India itself suffered 80-115 thousand of deaths
due to coal fired plants and an estimated loss of $ 3-4 billion in 2017 [58]. NAS reports suggest
that US coal fired power plants has an external cost of approximately $ 175-500 billion. Many
studies have warned that the negative impact on air pollution from coal power could almost
double the mortality by 2050 [59]. IPCC further stated that if countries have to follow the Paris
Agreement’s 1.5C scenario, a large number of existing coal plants would have to be retired, used
less frequently (low capacity factor), and countries must refrain from building them any further
[60].
Currently, the quality of coal used under CPEC is sub critical which results in significantly larger
emissions than a high-quality coal. Those plants that are using better quality are importing the
4 CPEC coal-based power plants to damage environment: ADB; https://www.dawn.com/news/1387105
50
coal from other countries, thus causing a financial burden. Even other than coal, many thermal
powerplants have shut down due to the use of subpar technologies and high inefficiencies that
makes them economically unfeasible. Hence, SDGs clearly state that the investments in the
energy sector must increase while focussing on building clean energy and energy efficient
infrastructures. Hence, relying on fossil fuels further, the power sector is expected to go further
off the track to meet these goals.
Moreover, Pakistan has to meet its other NDCs such as different national policies and especially
the Paris Agreement. Paris agreement limits the global temperature rise to below 2oC above pre-
industrial levels. This clearly requires that the emissions of each country must reach their
emission peak as soon as possible. Just like SDGs, Pakistan is well off the track to meet its Paris
objectives. Although Vision 2025 does incorporate Pakistan’s INDC, reliance on coal might be a
big hinderance in achieving it. A clear path must revolve around the renewables as the main
source ahead.
5.5 Technology Transfer and Innovation
In interviews with different stakeholders, both Pakistani and Chinese officials have agreed that the
CPEC projects will be using clean combustion technologies that conforms to the international
standards. Both parties further stated that they are well aware of the environmental repercussions
and hence significant efforts have been made to import the best available technologies. Now, many
of the civilian representatives’ serious concerns were raised regarding environmental hazards of
coal--based CPEC projects, especially for the local community. Considering that Pakistan is already
environmentally vulnerable, coal plants still may have adverse long-term implications. So, rather
investing substantially in coal technologies, Pakistan may focus on building supply chains for
ensuring a smooth renewable technology penetration in the market. However, since such a stage
is achieved, Pakistan must adopt stringent policies to mitigate the emissions from coal plants. Cost
of renewables around the globe is reducing significantly, especially for wind and solar powerplants.
This decline has significantly accelerated the growth of renewables across the world. As shown
through the results, renewables are now the cheapest form of energy in Pakistan too.
5.6 Prospects of other clean energy sources
Pakistan is a geographically blessed country that has all the main renewable energy sources available
in abundance. Being an agriculture-based economy, Pakistan possesses vast potential of bioenergy
that can be used on a commercial scale. As of today, the major use of biomass in Pakistan is mainly
limited to the use of bagasse in CHP plants (and one waste management plant in Lahore). Many
studies have performed bioenergy resource mapping in Pakistan for analysing the potential of
different bioenergy resources for energy production on a commercial scale. Agricultural residues
are available to be treated through combustion turbines for heat and energy production while non-
edible oil seeds such as Jatropha can be harnessed to produce biodiesel. Such initiative was already
taken by PSO which started the use of B-10 fuel. Energy crops can be harvested along the barren
lands that does not only provide energy fuel, it will also help revive the barren soil. Another
important application for biomass is its use in coal plants through co-firing. Cofiring is a well-
matured technology in which slight modifications in coal plants can integrate both sources thus
resulting in reduced emissions. Hence, being an agriculture-based economy, reliance on bioenergy
will be significantly important for both power and transport sector.
51
Although the current focus of policy makers should be on wind, solar, hydro, and somewhat
bagasse in post 2030 era, Pakistan may even look to other sources such as CSPs, ocean energy,
off-shore wind turbines to enhance the renewable share. Further, battery storage (although it can
be held for now) will make significant cost reductions in solar plants as well.
Box 5: International Renewable Energy Agency (IRENA) report on
Renewables’ readiness of Pakistan
In 2018-19, IRENA published a report that assessed the readiness of Pakistan to adopt
renewable energy technologies. The key takeaways from the study are as under:
Renewable energy potential of different resources
• Pakistan has abundant renewable potential that can be utilized for both power and
end-use sectors.
• Hydro power has the largest generation potential that values around 60 GW. This also
includes the possibility of developing small-scale plants.
• Solar PV potential is mostly available in southern and southwestern parts, which has
significant potential of developing decentralized energy systems. Along with clear
energy access, this will provide employment opportunities to the near-by residents.
• Wind potential is mainly available in Sindh and Balochistan with a theoretical potential
of around 50 GW.
• There is an availability of approximately 25,000 million tons of biomass feedstock in
the form of industrial and agricultural residues, and around 26,000 tons of municipal
solid waste that can come to good use through waste to energy conversion
technologies.
Key Steps forward
• Departmental coordination and development of an integrated energy plan.
• Targeted focus for renewable energy development.
• Involvement of private sector for infrastructure development
• Electrification programmes must be governed by proper regulatory frameworks and
policy measures.
5.7 Greening CPEC
• Public and private investments and interventions should be made for the provisioning of
water services and water resource management, thereby increasing communities’ resilience
to change in ecosystems and their services, and to bring efficiency in agriculture
productivity and improved health conditions for livestock and humans.
• Integrated Water Resources Management (IWRM) must be adopted to harness
relationships between natural resources, socioeconomic systems, and biophysical
processes, with an objective of scaling the implementation of ecosystem-based
technologies for effective water management.
• Sustainable land management practices must be adopted to control land degradation
52
caused by mining activities to enhance productivity of other ecosystems and services such
as crop production.
• Gender-based equality and women’s empowerment initiatives must be brought into
mainstream discourse and action. This is critical to the success of regional development.
• Groundwater management strategies should be developed, including improved
environmental standards in the extractive sector and governance using regulatory and
incentive-based tools (e.g. credit-based systems), as well as outreach and education.
• Climate adaptation and mitigation strategies must be part of 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 countries 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 development policies of Belt and
Road Initiative. Capacity building with research institutions to implement environmental
assessments is also needed for better environmental planning and conservation purposes.
53
Chapter 7: Conclusion This study analyses in detail the socio-economic impacts of Thar coalfield development under
CPEC, likelihood of coal-based projects and their implications for long-term planning in terms of
economic growth. The study discussed how the greening CPEC and renewable energy
development will lead the country towards clean energy transition pathways to achieve climate
goals. It is further expected to contribute to economic growth and prosperity for further
development. However, there are strong public concerns and political resistance for the predicted
impacts on environment, ecosystem, and natural resources. There is not only a limited knowledge
and lack of national capacity to address and manage these challenges, but weak governance also
contributes to climatic hazards. There are guidance frameworks and laws to develop these projects
according to international best practices, which mainly focus on broad considerations such as
infrastructure development, employment, conflicts in local communities. However, there is a lack
of scientific knowledge and research to provide an empirical evidence to manage and mitigate
those impacts in a sustainable way.
Based on the analysis of the assessment, it has become evident that the risks of water scarcity and
quality can bring major constraints to social wellbeing, ecosystem health, and economic
development in Thar region. Groundwater is a productive asset for the livelihood of people in
Thar coalfield region, which can be destroyed through over-abstraction in coal mining and years
of forgone consumption. This problem is coupled with the uncertainties of climate change, which
can further push the poor into poverty. Further, given the typical economic lifetime of coal fired
power stations at around 40 years, this infrastructure will lock high emissions and financial sources
into an energy system that needs urgent decarbonization. Both literature and LCOE based model
in this study depict that renewables are currently the most economical and environmentally sound
alternatives.
Investments in renewable energy can significantly provide economic benefits in the long-term
scenario. Especially considering that most countries are recovering from COVID-19, an
opportunity is provided to recover with implementing green policies. The investments made for
clean energy transition will payback through job creation, higher energy access and electrification,
cleaner energy, and a lower levelized cost of energy.
Hence this case study attempts to incorporate the explicit consideration of environmental
assessment using both impact evaluation approach and prospects of clean energy and feasibility of
renewable energy projects in Thar Coalfield. However, for Pakistan, this shift will require massive
step-in policies and measures. The government would have to come up with both regulatory and
non-regulatory frameworks to increase the pace of renewable development. Groundwork needs
to be laid for the private sector to come in and go for large-scale development of decentralized
systems.
The quantitative analysis presented in the study and statistical values used should be carefully
analysed. Many power plants face certain limitations and risks that are initially not accounted for,
therefore, can increase the cost drastically. LCOE is driven by capacity factor that can be limited
by the power demand, scheduled and unscheduled maintenance and instability of the grid. Further,
this study has tried to incorporate the views of every stakeholder, still the ground realities change
when it comes to implementation and hence the best possible pathway is suggested based on the
available evidence. This study can further be extended to perform Levelized Avoided Cost of
Energy (LACE) analysis, which can further improve the insights coming from financial models.
54
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Appendices
58
Appendix 1: Expert Interviews, FGDs, and PPDs
Thar Field visit and Interviews with Key Informants
Interview # Interviewer Interviewee Affiliation of Interviewee
1 Ahad Nazir Dr. Fatima Khushnood General Manager Business Development
2 Dr. Hina Aslam Dr. Hannan Economist, Planning commission
3 Dr. Hina Aslam Usman Manzur Program Officer Environment and climate change unit
UNDP
4 Dr. Hina Aslam Dr. Irfan
5 Dr. Hina Aslam and Kashif Salik Dr. Hina Aslam Research Fellow, SDPI
6 Dr. Hina & Ahad Nazir Mr. Aftab Awan Deputy Chief, Energy Wing, Ministry of Planning
Development & Reforms
7 Kashif Salik, Dr. Hina & Ahad Nazir Shams Ud Din Sheikh, Ex-CEO SECMC Thar
8 Dr. Hina & Ahad Nazir Mr. Shahjahan Mirza Managing Director, Private Power & Infrastructure Board
(PPIB)
9 Dr. Hina Aslam Zofeen Ibrahim Independent freelance Journalist
10 Dr. Hina Aslam Syed Manzoor Hussain CEO, ETPL
11 Dr. Hina Aslam & Ahad Nazir Tanveer Director, UEP Wind
12 Dr. Hina Aslam & Ahad Nazir Ejaz Ahmed Secretary KP GB- Ex MD TCEB
Focus Group Discussions
Sr. No Title Participant Affiliation
1 Role of Start-ups in Clean Energy
Transition
Hira Wajahat Founder, Climate Launchpad
Faraz Khan Founder and Director, SEED Ventures
Shahzad Qureshi Founder, Urban Forests
2 Shafiq Abbassi Director, AJK EPA
Appendices
59
Role of Environmental Protection
Agencies (EPAs) in Clean Energy
Transition
Khadim Hussain Deputy Director RnD, GB EPA
Dr. M. Bashir DG, KP EPA
Khalid Mehmood Deputy Director EE/TT, Pakistan EPA
Dr. Khurram Shehzad DG, Punjab EPA
Waqar Hussain Additional Director General, Sindh EPA
Public-Private Dialogues
Sr. No Title Collaborating Partners
1 The role of Pakistani and Chinese leadership in Energy
Transition of Pakistan
GEIDCO Beijing China
2 Clean Energy Transition in Pakistan Policy Recommendations
and network for Renewable Energy Research and Advocacy
None
3 Potential of Renewable Energy and Hydropower development
in Khyber Pakhtunkhwa Opportunities and Challenges
KP-BOIT
4 Roadmap for Sustainable Development of Balochistan:
Aligning development priorities with clean energy transition
pathways.
None
Appendix 2: Questionnaire for Interviews
Questions Follow-up questions/descriptions Respondent/type of
Organisation
Start-up questions: In your opinion what is the current
state of energy sector in Pakistan?
In your opinion what is current
energy consumption patterns and
future trends?
Appendices
60
In your opinion what is our current
state of access to electricity?
Increasing or decreasing? Why?
what the most important overall policy
objectives (e.g. poverty reduction, job
creation…) and how energy policy
relates.
Current energy mix? What are the
motivation/rationale behind this
energy mix?
What is the current government
strategies (in comparison of previous
govt.) for the energy mix?
How much coal is imported or used
from domestic and international
sources?
Considering both advantages and
disadvantages, do you see coal as a
potential energy source of Pakistan in
future?
Based on your expert opinion, how
much total energy of Pakistan can be
Appendices
61
or should be extracted from Coal by
2030 or 2040?
What role is China playing in
transforming Thar Coal field?
Is there any contribution from other
countries? Technologically or
economically?
Strategy
(Policies, Transition
plans)
What are the underlying reasons for
increase of coal-fired power plants?
What is the expected economic value
of energy generation from Thar Coal?
Is it expected to be cheaper other
sources?
What is the quality of coal in
Pakistan? and is it sufficient to be
used as a source without pre-
treatment?
What is “clean coal”? and is Pakistan
technologically equipped to achieve
this level of clean coal?
What are super-critical and ultra-
super technologies in Coal power
plants?
Appendices
62
What are the major impacts of using
poor quality coal in Powerplants?
Is Thar extracted coal only to be used
directly for power production? Or
will it also be converted to energy
forms such as biodiesels (as
mentioned by Shenhua group, china)
What are the long-term
initiatives and action plans for
ensuring minimum impact on
the environment and
sustainability?
How can you have a low emissions
future while still using coal?
How important carbon capturing
techniques and increased conversion
efficiency will be in the longer term,
to make the deep cuts in carbon
emissions required for a low-carbon
future.
What steps has the administration
taken to regulate power plant
emissions? (Pakistan)
Are there any plans to reduce
greenhouse gas emissions by existing
power plants to run less frequently,
Appendices
63
retire early or to be retrofitted with
technology to capture their carbon
dioxide pollution and bury it
underground?
Is Pakistan economically capable and
technologically mature enough to
deploy carbon capturing technologies
in coal power plants?
Isn’t it true that major countries
are moving away from coal as an
energy source? Why is Pakistan
still seeking more investments?
Is it in-line with Pakistan’s NDCs or
other commitments like Paris
Agreement, SE4All, etc?
Why did World Bank and other
international donors opted out of
their initial commitments regarding
coal powered pants? And what will be
its economic impacts?
What are the social, ecological, and
environmental impacts of coal? And
how can they be mitigated? And what
Appendices
64
kind of risk assessments do you think
are necessary for these projects?
Energy New Energy and power policies in
Pakistan
What is the Rationale behind these
policies?
What is the current policy and actions
initiatives?
What are the prospects of coal in this
policy?
The new RE policy and motivation
behind it- what are the prior interest
of shifting to renewable? Economics
or environmental?
What prospect you will see to flourish
renewables energy production in
Pakistan.
Climate-related matrices
(low-carbon economy)
What is the national commitment
to reduce its greenhouse-gas
emissions?
What are the other sources of GHG
emissions other than from coal
(powered plants)?
Appendices
65
What are the environmental
hazards associated with coal
mining?
Is Pakistan on-track, and keen on
fulfilling its promises of Paris
agreement?
What measures are (or can) be taken
to prevent local residents from such
health hazards?
Is there any plan to timely phase out
of coal power plants?
What would a transition away from
local coal production do to the
imports to the country? Would we
stop our dependency on the
imported coal?
Do you have any instructions or
guidelines to follow, administered
by Ministry of Climate Change
and other relevant institutions to
follow? Such as carbon tax,
emissions trading and/or internal
Appendices
66
carbon price use, natural capital
accounting, social cost assessment
and risk evaluation?
Do you have your own monitoring
and evaluation team in this regard?
How often are you being regulated
and advised by the relevant
authorities to comply with the
standards?
Do you have any long-term
envisioned plan, forecasted or built
up scenario of the development of
the project and its likelihood of the
environmental and social footprint?
How your organisation goals and
objectives coincide with renewable
energy production in Pakistan?
Any climate change envisaged policy?
How would you weigh coal vs. RE
for long term energy planning? What
would be your honest opinion?
What are your views on co-firing of
coal along with biomass?
Appendices
67
Can a hybrid renewable energy
system be used with coal?
Governance What is the role of Ministry of
energy other than policy actions
and directions?
What is the situation at provincial
level?
Is implementation of any policy being
hindered by the role of lobbies etc?
What other sector policies such as
climate change policy envisaged
energy production in the country?
What are the mitigation targets
regarding GHG emissions?
How it is integrated with the
objectives of Ministry of Energy and
Power?
What are key mitigating challenges
OR key adaptation challenges to
technological innovations?
In your point of view what are the
key political, societal, economic
drivers that leads to different energy
investments, such as building dams,
coal power plants, and renewable
energy?
Who is supporting whom and who
advocating what?
Who are the key players and how they
influence (through national and
international organisation, business
groups, governments, etc.)?
Appendices
68
What are the key actors contributing
in formulation and implementation of
energy policy?
What are the strong social and
political actors influencing policy-
making? Is the influence positive or
negative?
Importantly, why certain policies are
adopted?
What are the groups (or driving
forces) advocating and alternate and
renewable energy source? What
rationale behind for this focus?
What are the trends in energy
production and demand in
comparison of economic growth?
Do they coincide?
Do we plan energy production
according to the economy demand?
Do we know the long-term
investments for bringing an energy
transition?
What is the role of private sector
(including the bilateral and
What is the criteria of engagement or
investment?
Appendices
69
multilateral organisation or country-
to-country) engagement in the
energy sector?
Any plans from private sector to
diversify business model related to
energy mix? Or environmental
consideration?
How can this collaboration of
Private-Public sector become more
transparent?
How electricity prices are
determined? What is the key rationale
for increasing or decreasing prices?
What art-of-transaction is mostly
being followed by the key ministries?
Feed and Tariff or cost plus?
Cheaper vs costly; energy subsidies
and tariffs; allocation of permits (for
using fuel mix); monopolies and
mafias; independent power producers
(IDPs); international market for fossil
fuels. Etc.
What is the overtime budgetary
allocation to the energy sector
Appendices
70
(including infrastructure
development, subsidies, etc.).
Monopoly of local stakeholders and
power producers/ and business
community/ local manufacturers and
industry
Do you think energy tax policies can
being more efficiency and assist the
poor? Is it applicable in Pakistan?
In the end, I also offer the respondent to ask questions to me to clarify anything relevant to our discussion or if
respondent want to add or delete some aspects/details of discussion. I will also remind respondent to contact me
if they change their mind regarding to delete the information (completely) collected during the interview. I will
also ensure to left the respondent in good state after the interview, greet him, and say Goodbye (Khuda Hafiz)
according to local customs.
Appendix 3: Likert Scale Questionnaire for Surveys and Feedback forms
Q. No Question Statement (Score 1-5)
1 Based on current energy supply pattern, do you think coal is the most
important energy source for energy sector of Pakistan
1. Strongly Disagree
2. Disagree
3. Neutral
4. Agree
5. Strongly
Appendices
71
2 How would you rate the high dependence of CPEC projects on coal? 1. Highly objectionable
2. Objectionable
3. Neutral
4. Appreciable
5. Highly Appreciable
3 Would you advocate coal development in Pakistan 1. Strongly disagree
2. Disagree
3. Neutral
4. Agree
5. Strongly agree
4 What is the expected economic value of energy generation from Thar coal
when compared with other non-coal based thermal generation
techniques?
1. Very Expensive
2. Expensive
3. Approximately Same
4. Cheap
5. Very Cheap
5 Rate the average quality of coal that is to be used in CPEC projects 1. Very Good
2. Good
3. Usable
4. Poor
5. Very Poor
6 Rate the possibility of low carbon future while still using coal 1. Highly Unlikely
2. Unlikely
3. Neutral
4. Likely
5. Most Likely
Appendices
72
7 Rate the current measures taken by CPEC administration to regulate the
coal powerplant emissions
1. No measures
2. very few measures
3. some measures
4. Appreciable measures
5. Highly appreciable measures
8 Rate Pakistan’s economical capability and technological maturity to
deploy clean carbon technologies in coal power plants?
1. Very Poor
2. Poor
3. Neutral
4. Good
5. Very Good
9 What is the possibility that Pakistan remains on-track with its NDCs or
other commitments if it continues seeking more investments in coal?
1.. Highly Unlikely
2. Unlikely
3. Neutral
4. Likely
5. Most Likely
10 Do you think that the upcoming CPEC projects should exploit the
renewable potential of Thar instead of dipping further into the coal?
1. Extremely don’t agree
2. Don’t agree
3. Neutral
4. Good Option
5. Best Option
11 Do you think dipping further into coal with Chinese collaboration will put
Pakistan into a financial burden, especially the debt owed to China?
1.. Highly Unlikely
2. Unlikely
3. Neutral
4. Likely
5. Most Likely
Appendices
73
12 Considering the characteristics of Thar coal, do you think CPEC projects
are undermining the environmental and social impacts of coal power
plants?
1. Strongly Disagree
2. Disagree
3. Neutral
4. Agree
5. Highly Agree
13 In your honest opinion, do you think RE deployment in Pakistan’s energy
mix would be more sustainable than indigenous coal?
1. Strongly Disagree
2. Disagree
3. Neutral
4. Agree
5. Strongly Agree
14 How would you define the role of lobbies in hindering the growth of
renewable in Pakistan
1. Extremely low
2. Low
3. Neutral
4. High
5. Very High
15 How would you classify the required long term investments for bringing
an energy transition in Pakistan
1. Very High
2. High
3. Moderate
4. Manageable
5. Very low
16 How would you define the importance of Public-private partnership in
building the renewable energy infrastructure?
1. Extremely high
2. High
3. Average
4. Low
5. Very low
Appendices
74
17 Do you think carbon pricing and incentivizing renewables are the most
critical factors for ensures a sustainable future?
1. Highly Disagree
2. Disagree
3. Neutral
4. Agree
5. Highly Agree
18 Do you think Pakistan’s national grid is capable of integrating renewable
energy sources such as solar and wind with low intermittency
1. Highly Disagree
2. Disagree
3. Neutral
4. Agree
5. Highly Agree
19 Do you think recent energy policies of Pakistan are more inclined towards
renewables as compared to the previous ones?
1. Highly disagree
2. Disagree
3. Neutral
4. Agree
5. Highly Agree
20 Do you think energy tax policies can being more efficiency and assist the
poor? Is it applicable in Pakistan?
1. Highly disagree
2. Disagree
3. Neutral
4. Agree
5. Highly Agree
Appendices
75
Appendix 4: Preliminary Scoping appraisal
Table A1: Preliminary scoping appraisal
Category Theme Focus Key findings
Primary questions
What are likely to be
the main ecosystem
service dependencies,
impacts, and other
environmental
externalities?
What are the main
ecosystem service
dependencies and
impacts likely to be?
Water is a key ecosystem service to be addressed due to its high
dependency in the area for livestock, human wellbeing, agriculture
and other purposes. Water scarcity in the desert and potential
pressure from the mining activity along with other users in the area
would lead to rising mitigation costs for the company in the future.
What other
environmental
externalities are relevant,
and should these be
valued too
The hydrogeological study results indicate the presence of at least
three aquifer zones: one above the coal zone (the top aquifer), one
within the coal and the third below the coal zone.
Soil quality, soil water retention services, timber, crop production,
spiritual values.
Other environmental impacts include emissions such as dust, NOx
and SO2 releases, particulate matter PM10, PM2.5.
What is the overall
objective of carrying
out assessment?
To investigate the ecological baseline settings of the project,
associated environmental and social impacts, identification and
prioritization of ecosystem services mine service area covers 52 hectares of land
Secondary questions
What geographic and
temporal boundaries
should be used?
What data and
information is available
within the company?
To access the status of ecosystem services, the environmental
management, resettlement (rehabilitation) and mitigation plans to
compensate for the potential loss of services provided to the locals.
Appendices
76
What data and
information is available
externally?
Feasibility study of the project, Environmental and Social impact
Assessment reports, Both primary and secondary data on
indicators.
What relevant
information is
available?
What further data
requirements may be
needed?
technical data for management plans and scenarios e.g. for
providing water services, membrane bioreactor (MBR) sewage
treatment system, submersible pumps for dewatering of mine pit at
990 liters per second (l/s)
A geographical Information System (GIS) map covering the project
area (one for each village), stakeholder consultations
Digital videos are available online. Also a video profile for each
village to document village structures, assets, trees, wells is also
available.
Who are the key
stakeholders and how
should they be
engaged?
Who are the key internal
and external
stakeholders?
Sindh Engro Coal Mining company (SECMC)-mainly responsible
for exploitation of coal mine reserves in block II.
Engro Powergen responsible for Coal-fired power plants. Other
partners include Engro Powergen, HBL, Thal limited, HUBCO,
SCEMC,
What ecosystem
valuation techniques
are likely to be
necessary?
What application is
required: trade-off
analysis, total valuation,
distributional analysis or
sustainable financing and
compensation analysis?
trade-off analysis, total valuation, simple value transfer approach
Appendices
77
What types of valuation
technique are likely to be
needed?
cost-benefit, value-transfer, contingent value, choice modeling,
hedonic pricing, state-preference
Should a particular
valuation tool be used?
Off-the-shelf tools such as GIS or valuation software, InVEST,
Scenario generator tool, Habitat model.
Appendices
78
Appendix 5: Assessment of surface mining technologies
Table B1: Assessment of surface mining technologies
Objectives Impacts Scale of impact Mitigation Measures
(both proposed and being implemented)
Ecology
• Loss of biodiversity, habitat areas
• Removal of vegetation.
• Sighted IUCN Red List of
Threatened Species includes
Egyptian and Indian vulture
Wildlife, habitat fragmentation.
---
Significant negative effect
on baseline
environment/features
-3
Reclamation of mine and waste dump following
operational use. Habitat creation and re-planting.
Water
• Contamination of local
groundwater supplies (no surface
water bodies in Thar coalfield)
through acid mine drainage.
• Potential major disruptions to
aquifers and any surface drainage
lines through extraction and
discharge process.
• Pollution or depletion of the upper
aquifer would significant effect
water supplies which is the
principle source of drinking water
for the region.
---
Significant negative effect
on baseline
environment/features
Surface and groundwater management and monitoring.
Water usage reduction through reuse, i.e. for dust
suppression system within the pit, on truck haul roads,
conveyors, within the coal process to reduce water
needs, and other similar technologies.
Waste dump to be lined and drainage system in place to
deal with any leachable contaminants to minimize
contamination of land and water environments.
No discharge of untreated effluent to the environment.
Appendices
79
• Surface and groundwater
extraction (de watering) to remove
water from mine site resulting in
groundwater draw-down, reducing
water supplies in wells and for
habitat.
Land and soil
• Erosion of soil.
• Removal of large quantities of
topsoil (or overburden).
• Waste dumps are created where
exclusion zones are created around
the mine, the coal underneath
could be sterilized (unavailable for
use). Quality of land is reduced.
--
Moderate negative effect on
baseline environment/
features
Evaporation ponds are constructed to manage site
effluent. Need to meet policy and targets on
groundwater quality.
Waste &
contaminated land
• Negative impacts on soil quality
from contamination.
• Large volumes of tailings & solid
waste from Coal beneficiation.
• Overburden and waste rock
removal and disposal.
• Considerable waste created from
cleaning and de-watering process.
---
Significant negative effect
on baseline
environment/features
Plan is required for dealing with any waste (both
domestic and from the coal industry) in a sustainable
manner.
Air
• PM emissions from exposed
mining pit, waste dumps, roads and
material and coal treatment
(crushing, grinding, screening and
--
Moderate negative effect on
baseline environment/
features
Dust levels controlled by spraying water on roads,
stockpiles, conveyors and exposed materials.
Fitting drills with dust collection systems.
Appendices
80
washing).
• Gas emissions (PM, SO2, NOx)
from mobile sources such as
vehicles, spontaneous combustion
of sub-economic lignite that is co-
disposed of with waste, or coal
processing.
• Coal beneficiation and storage and
handling of coal generate large
quantities of dust.
Creating a buffer zone around the mine. Use of
screening and hoardings (planting of trees as screening
not likely to be feasible in Thar).
Waste dumps can be covered to minimize spread of
odor and emissions.
Air quality monitoring.
Climate change
adaptation
• Coal extraction could affect
aquifers and wells used for water
in times of drought.
--
Moderate negative effect on
baseline environment/
features
Proposals should consider water management over the
course of extraction and restoration to ensure local
supplies when a drought occurs.
Climate change
mitigation
• Local climate will be affected by
dust from extraction and waste
dumps, and loss of vegetation.
• Greenhouse gases will be
produced from machinery used
for coal extraction.
-
Marginal negative effect
Closely controlled combustion conditions. Use
renewable energy sources to power machinery if
possible.
Landscape
• Visual impact due to removal of
vegetation, severe changes in
topography of area, and the open
pit mine itself.
• Extraction and creation of dumps
may alter the landscape
permanently and severe routes.
--
Moderate negative effect on
baseline environment/
features
Should be addressed from the start with a short,
medium and long term (post mining) plan for extraction
and the waste dump that considers intermediate and
final land use.
Appendices
81
• Crater could be used for water
storage eventually return to
grazing. Any dumps can be re-
graded and vegetated although this
is expensive.
Sustainable
transport
• There is an existing road network
within and around the blocks. The
location of the surface mine could
mean certain roads are no longer
accessible.
+
Marginal positive effect on
baseline environment/
features
Existing infrastructure is being utilized where possible.
New infrastructure of a good quality is being developed
such as extended road networks, construction of airport
located to open up areas.
Sustainable coal to
power
• Transportation of large quantities
of overburden and waste material
required to waste dumps.
• Transportation of workers
required.
-
Marginal negative effect
Consideration has been given to the fact that trucking
distances are kept to minimum to the location of any
local manufacturing processes using coal.
Worker colonies are located near to place of work to
reduce travel distance.
Settlements
• A number of villages and towns
exist within the coalfield that needs
to be relocated.
--
Moderate negative effect on
baseline environment/
features
A detailed census including assessment of ownership,
through engagement with those affected and fair
compensation (legislation in place). Development of
block aims to avoid existing services (post office, police
station) located in the coalfield and ensuring access to
services.
Cultural Heritage
• Only one historic place within the
coalfields has been identified from
the baseline study mapping, located
within block II. However, other
local religious or historic sites and
assets may also exist.
--
Moderate negative effect on
baseline environment/
features
Proposals are being considered to take into account
location of historic and religious sites/assets.
Appendices
82
• The pit, waste dump, and
associated facilities will take a large
area and may affect the fabric or
setting of protected assets
including historic, cultural, and
religious sites and assets.
Education/Skill
development
• There are existing schools located
in the Thar coalfield area and
within the blocks themselves.
Effects on these facilities are
dependent on the location of the
mine and power plant but it is likely
some may need to be relocated.
+
Marginal positive effect on
baseline environment/
features
Many initiatives have been taken to provide training for
local people on mining processes to enable local people
to gain skills and employment in the coalfields.
Educational facilities are planned to be provided as part
of new resettlement plans in proximity.
Food security and
health
• Noise during construction and
mining activities.
• Dust from extraction process can
cause respiratory problems for
workers. It can also be dangerous
especially if blasting is employed.
• Effects on these facilities is largely
dependent on the location of the
mine and power plant that could be
avoided through relocation.
+
Fire evacuation plan is being implemented on site with
appropriate firefighting equipment.
A pan for providing electricity for the local population is
pipelined.
Any fuel storage tanks must be bonded (to withhold
100% of contents), isolated from ignition sources and
designed to withstand working pressures and stresses.
Health facilities are scaled up as part of new resettlement
plan.
Income
generation/poverty
reduction
• Loss of agricultural land.
• New economic development and
infrastructure.
+
Grow existing centres and training programs for locals.
Job creation - Extraction process could employ up to
10,000 people primary and secondary jobs, many of
these local, ensure high use of local labor.
Appendices
83
• In-migrant workforce culturally
different from local indigenous
group.
Appendices
84
Table B2: Prioritization of criteria and alternatives
Criteria Decision alternatives Symbol for
alternative
Eigen
values
Water Sediment retention and soluble
components B1 1.03
Acidic waters from mines B2 0.83 Heavy metal leaching B3 0.47 Heated effluents B4 0.54
Soil Open pit mining B5 0.32 loss of top soil B6 0.28 Erosion B7 0.29 Dumping of OB material B8 0.12
Vegetation Waste dump B9 0.23 Settlements B10 0.12 Company/industry B11 0.22 Fire hazard B12 0.14
Agricultural
land Coal dust B13 0.12
Fires B14 0.05 Opencast mining B15 0.23
Land form Surface mining B16 0.22 Land Subsidence B17 0.14 OB dumps B18 0.04
Air and dust Coal dust B19 0.02 Drilling/heavy equipment B20 0.05 Vehicles B21 0.01 Coal burning-release of gases B22 0.02
