December 1, 2020 Read More →

PEMR sending mixed signals on coal exit

The Daily Star:

After a decade of ruthlessly pursuing the world’s dirtiest fuel, the Ministry of Power, Energy and Mineral Resources (MoPEMR) is contemplating closing down 13 of the 18 previously approved coal-based power projects around the country and apparently switching to “cleaner” alternatives. On the onset, that seems like good news—perhaps the government has finally realised its folly and decided to put the environment at the top of its agenda to match its grandiloquent claims in international climate conferences. But is that really the case?

Environmental activists, both at home and abroad, had long pointed out that coal was an unviable option not only environmentally, but also economically, thanks to increasing competition from renewables, market reforms and overcapacity in the sector, but those warnings unfortunately were dismissed by the government as ramblings of madmen. The GoB’s Revisiting Power System Master Plan 2016 (PSMP) set a target of producing 60,000 MW by 2041, of which 35 percent was to come from coal. A report published by Transparency International Bangladesh, Bangladesh Poribesh Andolon et el on November 2019 highlighted that Bangladesh had at least 29 coal-fired power projects with a total capacity of 33,200 MW in the pipeline which, if built, would increase the country’s coal power capacity by 63 times, and cost an estimated USD two billion annually to import the large volumes of coal to power the proposed plants. At a time when coal is being phased out around the world—the number of new coal plants that began construction worldwide fell by 84 percent between 2015 and 2018 while countries such as the UK, France, Canada and New Zealand have committed to phasing out coal power by 2030—Bangladesh ranked sixth globally for the amount of coal in pre-construction and construction stages in 2019, according to Global Energy Monitor.

But now the government is being forced to reconsider. The decision to move away from coal seems less to do with environmental concerns than an astoundingly late realisation that the projects it had overzealously approved over the decade simply could not get backing from financiers. The State Minister for Power and Energy Nasrul Hamid admitted as much to The Daily Star when he said that they are only considering shutting down the plants which are “taking too much time to… [secure the funds and]… start the construction work even after getting approval from the government.” As it turns out, despite our eagerness, global financiers and even insurers are not as keen on coal anymore—they are facing increasing pressure from regulators and climate campaigners to turn their back on the fossil fuel industry, particularly as cleaner fuels become cheaper. In 2019, over 100 globally significant financial institutions divested from thermal coal, including 40 percent of the top 40 global banks and 20 globally significant insurers, according to the UK-based Institute for Energy Economics and Financial Analysis (IEEFA). The International Energy Agency meanwhile predicts that investment in coal supply will fall by one-quarter this year because of Covid-19. 

[Sushmita Preetha]

More: The coal conundrum: Are we really moving away from dirty energy?

Posted in: IEEFA In the News

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