Obama’s Green Obsession Opens Door For China’s Global Energy Strategy

GWPF | 20 April 2015

China’s President In Pakistan To Cement Huge Coal Power Projects

Chinese President Xi Jinping is set to unveil a $46 billion infrastructure spending plan in Pakistan that is a centerpiece of Beijing’s ambitions to open new trade and transport routes across Asia and challenge the U.S. as the dominant regional power. The largest part of the project would provide electricity to energy-starved Pakistan, based mostly on building new coal-fired power plants. —Jeremy Page, The Wall Street Journal, 19 Aril 2015

The US government has stepped up pressure on the World Bank not to fund coal-fired power plants in developing countries. In a letter sent to the World Bank United States Executive Director Whitney Debevoise said, “The Obama Administration believes that the Multilateral Development Banks (MDBs) have a potentially critical role to play in the future international framework for climate finance, and, in particular, to assist developing countries in mitigating greenhouse gas emissions and strengthening their economies’ resilience to climate risks.” Following Debevoise’s controversial guidelines, the axe has already fallen on Pakistan’s Thar Coal and Energy Project on the grounds that “the limited financing available from the Bank should be directed toward investments that address energy supply shortfalls in an environmentally sustainable manner’’. —Swati Mather,  The Times of India, 24 January 2010

1) China’s President In Pakistan To Cement Huge Coal Power Projects – The Wall Street Journal, 19 Aril 2015

2) China To Invest $37 Billion In Pakistan’s Energy Projects – Business Recorder, 18 April 2015

3) China-Pakistan Multi-Billion Deal To Expedite Thar Coal Projects – Associated Press of Pakistan, 19 April 2015

4) Obama To World Bank: Don’t Fund Coal-Fired Plants, Or How The U.S. Opened The Door For China To Fill The Gap –  The Times of India, 24 January 2010

5) For India, China-Backed Asia Investment Bank May Be The Answer To Coal Investment – Reuters, 5 November 2014

6) Pakistan’s Thar Coal: Enough Energy For 300 Years –  Pakistan Observer, 26 July 2014

Out of the total $45 billion investment in Pakistan, China will invest up to $37 billion in various energy projects while give $8 billion concessional loan for infrastructure development projects of Pak-China Economic Corridor project. He said that the energy projects with Chinese support would generate a total of 16,500MW electricity, adding the work on 10,400 MW projects would be completed by 2018 in the first phase. While projects of 60,00MW will be completed in the second phase, he added.  In Thar, Ahsan said that 10 coal-based power plants will be installed on commercial basis which will generate up to 6,600MW electricity from coal.  —Business Recorder, 18 April 2015

A new era of development is set to dawn on the underdeveloped interior Sindh, specially Tharparkar, as inclusion of Thar Coal mining and power project in the prioritised energy schemes under the multi-billion China-Pakistan Economic Corridor (CPEC) will help overcome financial challenges being faced by it. This venture will open not only unprecedented economic opportunities but also prove to be a panacea for energy shortages that are stifling economic growth. —Associated Press of Pakistan, 19 April 2015

India is hoping a new China-backed multilateral lender will fund coal-based energy projects, an official said, putting it in direct conflict with the World Bank, whose chief has maintained that it would stick to its restrictions on such lending. A senior Indian official told Reuters the Asian Infrastructure Investment Bank (AIIB), sponsored by China, is expected to allow funding of coal-fired power plants that the World Bank has almost totally blocked. “When you have 1.3 billion people starved of electricity access and the rest of the world has created a carbon space, at this point denying funding is denying access to cheap energy,” said the official, who spoke on condition of anonymity. —Manoj Kumar and Tony Munroe, Reuters, Reuters, 5 November 2014

The Geological survey of Pakistan reveals that 175 billion ton of coal is buried under the Thar Desert. These coal reserves alone are equivalent to total combined oil reserves (375 Billion Barrels) of Saudi Arabia and Iran. The coal deposits in Thar can change the fate of the country if utilised in a proper way. The coal reserves at Thar Desert are estimated around 850 trillion cubic feet (TCF) of gas, and are worth USD 25 trillion.  According to experts, if this single resource is used properly, we not only can cater to the electricity requirements of the country for next 300 years but also save almost four billion dollars in staggering oil import bills. —M Rafaqat Hussain, Pakistan Observer, 26 July 2014

1) China’s President In Pakistan To Cement Huge Coal Power Projects

The Wall Street Journal, 19 Aril 2015

Jeremy Page

Chinese President Xi Jinping is set to unveil a $46 billion infrastructure spending plan in Pakistan that is a centerpiece of Beijing’s ambitions to open new trade and transport routes across Asia and challenge the U.S. as the dominant regional power. The largest part of the project would provide electricity to energy-starved Pakistan, based mostly on building new coal-fired power plants.

The plan, known as the China Pakistan Economic Corridor, draws on a newly expansive Chinese foreign policy and pressing economic and security concerns at home for Mr. Xi, who is expected to arrive in Pakistan on Monday. Many details had yet to be announced publicly.

“This is going to be a game-changer for Pakistan,” said Ahsan Iqbal, Pakistan’s planning minister, who said his country could link China with markets in Central Asia and South Asia.

“If we become the bridge between these three engines of growth, we will be able to carve out a large economic bloc of about 3 billion living in this part of the world…nearly half the planet.” […]

If realized, the plan would be China’s biggest splurge on economic development in another country to date. It aims over 15 years to create a 2,000-mile economic corridor between Gwadar and northwest China, with roads, rail links and pipelines crossing Pakistan.

The network ultimately will link to other countries as well, potentially creating a regional trading boom, Pakistani and Chinese officials say.

The Pakistan program has been described by Chinese officials as the “flagship project” of a broader policy, “One Belt, One Road,” which seeks to physically connect China to its markets in Asia, Europe and beyond.

The largest part of the project would provide electricity to energy-starved Pakistan, based mostly on building new coal-fired power plants. The country is beset by hours of daily scheduled power cuts because of a lack of supply, shutting down industry and making life miserable in homes—a major reason for the election in 2013 of Prime Minister Nawaz Sharif, who promised to solve the electricity crisis.

The plans envisage adding 10,400 megawatts of electricity at a cost of $15.5 billion by 2018. If those projects deliver, plugging the electricity deficit, Mr. Sharif would be able to go into the 2018 election saying he has lived up to his pledge.

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2) China To Invest $37 Billion In Pakistan’s Energy Projects 

Business Recorder, 18 April 2015

Out of the total $45 billion investment in Pakistan, China will invest up to $37 billion in various energy projects while give $8 billion concessional loan for infrastructure development projects of Pak-China Economic Corridor project. 

This was stated by Ahsan Iqbal, Minister for Planning, Development and Reforms while speaking at a press conference along with Information Minister Pervez Rashid and Prime Minister’s Special Assistant on Foreign Affairs Tariq Fatemi, here on Friday. 

Briefing journalists about the two-day state visit of Chinese President Xi Jinping, who will arrive here on Monday, Ahsan Iqbal said that the investment in energy and infrastructure projects would be done by the Chinese companies and the Chinese banks will provide loans. 

To a question about the exact mark-up rate of the loan, Ahsan Iqbal did not divulge the exact rate but added that the markup of the concessional loan being acquired for the infrastructure projects will be much lesser than the market rate and it will be for a period of 15 to 20 years. 

He said that the government was trying to give maximum share to the private sector to invest in these projects. About completion of the energy projects, he said most of the coal projects would be completed in three years while the projects related to wind and solar will take up to one year to be completed. 

He said that the energy projects with Chinese support would generate a total of 16,500MW electricity, adding the work on 10,400 MW projects would be completed by 2018 in the first phase. While projects of 60,00MW will be completed in the second phase, he added. 

In Thar, Ahsan said that 10 coal-based power plants will be installed on commercial basis which will generate up to 6,600MW electricity from coal. 

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3) China-Pakistan Multi-Billion Deal To Expedite Thar Coal Projects

Associated Press of Pakistan, 19 April 2015

KARACHI: A new era of development is set to dawn on the underdeveloped interior Sindh, specially Tharparkar, as inclusion of Thar Coal mining and power project in the prioritised energy schemes under the multi-billion China-Pakistan Economic Corridor (CPEC) will help overcome financial challenges being faced by it.

This venture will open not only unprecedented economic opportunities but also prove to be a panacea for energy shortages that are stifling economic growth.

The financial and technical assistance by China for exploiting the coal reserves, which are estimated at about 175 billion tonnes and spread over 9,000 square kilometers in the Thar desert, will mark a turning point for the economy and help ensure energy security and ultimately lead to self-reliance.

The Sino-Sindh Resources Limited (SSRL) and the Sindh Engro Coal Mining Company (SECMC) are working on Block I & II of Thar Coal mining and power generation, as these energy projects have been included among the Early Harvest Projects of the CPEC making way for swift financing from Chinese financial institutions.

The SSRL has recently reached an agreement with the Industrial and Commercial Bank of China (ICBC) for funding for the mining operations. Large-scale mining at Thar coalfield is likely to begin next month, according to media reports quoting the SSRL Chief Executive Officer.

Prime Minister Muhammad Nawaz Sharif and former president Asif Ali Zardari jointly performed ground-breaking of the Thar Coal power project last year. It was decided that in its first phase, a coal mining and power project with a capacity of 3.8 million tonnes per annum and 660 MW would be developed. Subsequently, the mine would be expanded to a coal capacity of 6.5 million tonnes per annum to support a 1300 MW power plant.

In the second phase, it was planned to expand the mining project to 13.5 million tonnes and then to 19.5 million tonnes, with power generation capacity of 2400 MW and 3600 MW.

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4) Obama To World Bank: Don’t Fund Coal-Fired Plants, Or How The U.S. Opened The Door For China To Fill The Gap

The Times of India, 24 January 2010

Swati Mather

NEW DELHI: Close on the heels of the inconclusive end to the Copenhagen Accord, the US government has stepped up pressure on the World Bank not to fund coal-fired power plants in developing countries. 

In a letter sent to the World Bank, a copy of which is with TOI, United States Executive Director Whitney Debevoise said, “The Obama Administration believes that the Multilateral Development Banks (MDBs) have a potentially critical role to play in the future international framework for climate finance, and, in particular, to assist developing countries in mitigating greenhouse gas emissions and strengthening their economies’ resilience to climate risks.” 

Referring to the guidelines as a product of “internal US government deliberations”, Debevoise has advised MDBs to “remove barriers to and build demand for no or low carbon resources”. Though the US Treasury Department (USTD) is a statutary body and its recommendations are not binding on the World Bank, the move, the first-of-its-kind, is believed to have created pressure on the bank. 

While India, with its history of funding its own coal-fired power plants, does not stand to be affected immediately, representatives of developing countries like China, India and others in the World Bank have reacted sharply to this development. Calling the guidelines “an unhealthy subservience of the decision-making processes in the Bank to the dictates of one member country”, they have said that the US should instead raise these issues during discussions in the Board on the Bank’s Energy Sector Strategy. 

“The guidelines do not spell any immediate threat to the Indian power sector. However, the Indian states, looking out for World Bank funding will be hit,” says a well placed source in the government. Following Debevoise’s controversial guidelines, the axe has already fallen on Pakistan’s Thar Coal and Energy Project on the grounds that “the limited financing available from the Bank should be directed toward investments that address energy supply shortfalls in an environmentally sustainable manner”. According to sources, the next coal-fired power project to be affected will be one from South Africa. 

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5) For India, China-Backed Asia Investment Bank May Be The Answer To Coal Investment

Reuters, 5 November 2014

MANOJ KUMAR AND TONY MUNROE

India is hoping a new China-backed multilateral lender will fund coal-based energy projects, an official said, putting it in direct conflict with the World Bank, whose chief has maintained that it would stick to its restrictions on such lending.

A senior Indian official told Reuters the Asian Infrastructure Investment Bank (AIIB), sponsored by China, is expected to allow funding of coal-fired power plants that the World Bank has almost totally blocked.

“When you have 1.3 billion people starved of electricity access and the rest of the world has created a carbon space, at this point denying funding is denying access to cheap energy,” said the official, who spoke on condition of anonymity.

India sits on the world’s fifth-largest reserves of coal, and the commodity generates three-fifths of India’s power supply. But the demand for electricity far outstrips supply, and according to data compiled by the World Resources Institute in 2012, proposals have been made to set up 455 new coal-fired plants in the country.

Research house Integrated Research and Action for Development said earlier this year India needs to invest $250 billion in the power sector by 2017.

Since 2013, the World Bank’s energy strategy limits the financing of coal-fired power plants to “rare circumstances”, making it part of a push by U.S. President Barack Obama to fight climate change.

“We have got to redouble and redouble again our efforts at fighting climate change,” World Bank President Jim Yong Kim told Reuters in an interview in Seoul on Wednesday. “And our way of doing it is to just do everything we can to avoid coal.”

Kim has said the World Bank has not signed any agreements to support coal-based power plants since he took office in July, 2012.

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6) Pakistan’s Thar Coal: Enough Energy For 300 Years

Pakistan Observer, 26 July 2014

M Rafaqat Hussain

Geological survey of Pakistan reveals that 175 billion ton of coal is buried under the Thar Desert. According to a study 100,000 MW of power for 300 years can be generated from this coal. These coal reserves alone are equivalent to total combined oil reserves (375 Billion Barrels) of Saudi Arabia and Iran. The Thar coal-field covers an area of over 9,000 sq km in the Thar Desert in Thar Parkar district, in south eastern part of Sindh. The coal deposits in Thar can change the fate of the country if utilised in a proper way. For starters, it can save oil import bill, reduce unemployment and help strengthen economy; rupee and forex stocks. The coal reserves at Thar Desert are estimated around 850 trillion cubic feet (TCF) of gas, and are worth USD 25 trillion. According to experts, if this single resource is used properly, we not only can cater to the electricity requirements of the country for next 300 years but also save almost four billion dollars in staggering oil import bills. 

With abundance of indigenous fuel reserves, Pakistan is still starving for energy; and importing costly furnace oil and planning to import natural gas. At present people are facing severe load shedding, Industrial sectors downfall and economy have been ruined due to energy crisis. Although according to World Energy Statistics 2012, published by IEA (international energy agency), Pakistan’s per capita electricity consumption is one-sixth of the World Average. World average per capita electricity Consumption is 2730 kWh compared to Pakistan’s per capita electricity consumption of 451kWh. According to Pakistan Energy Year Book 2012, Pakistan’s installed capacity for power generation is 22,477MW and the demand is approximately the same but still we are facing blackouts of 10 -15 hrs. If we look at the Pakistan’s electricity generation mix fuel wise; Oil and gas has 64.2 percent share in electricity generation portfolio of the country and hydel share is 29.9 percent. Pakistan is generating 35.2 percent of its electricity from furnace oil and diesel oil that is mostly imported; per unit cost of electricity generated from furnace oil is very high which is not viable for industrial consumers as well as domestic users.

Natural Gas share for electricity generation is 29 percent. According to Pakistan Energy Year Book, 2012, Pakistan has 26.65 trillion cubic feet (TCF) balance recoverable gas reserves. Current gas production is 4.2 billion cubic feet per day (bcfd) and the demand is 6 bcfd. The gas production is expected to fall to less than 01 bcfd by 2025 due to depletion and demand will increase to 8 bcfd. While depleting the indigenous natural gas reserves, about one third of the natural gas is used for electricity generation (29 percent) causing a severe domestic and industrial load shedding. That has significantly damaged country’s export earnings and increased the import bill. The recent agreement with Iran regarding IP gas pipe line will supply 0.75 billion cubic fit of gas per day and the proposed TAPI Gas pipe line will provide 1.32 bcfd if both the projects are completed still there is a short fall of 5 bcfd.

Currently, Pakistan is generating 6551 MW of electricity from hydro sources that is 29.9 percent of the total installed capacity. If country completes all the proposed hydro projects including Bhasha Dam, the hydro contribution would be 15000 MW until 2025 that is 29 percent of the total demand in 2025. The unit price of solar electricity is even higher than oil-fired power generation. Therefore, solar is not a feasible option under the circumstances. As far as wind energy is concerned, its unit price is higher than hydro power and coal power. Pakistan must develop indigenous energy resources to meet its future electricity needs. 

Thar coal reserves were discovered in 1992 and it took 2 decades to initiate work on the utilization of these rich resources. In 2010 Government launched Thar coal underground coal gasification project and is still working on this Research and development project. According to this project of Thar coal can be utilized by underground coal gasification without excavation and bringing coal to the ground. Underground coal gasification is clean coal gasification technique in which oxidants (oxygen/air) are injected through pre-drilled injection well and product gasses are obtained at the other end of the well. The product gas could be used as a chemical feedstock or as fuel for power generation. If gas production becomes successful it can cater the needs of whole fertilizer sector where natural gas is being used as raw material.

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