Submitted By
HASSAN MAHMOOD SHAH 0333-5973167 hmsh mshah8 ah87@h 7@hotm otmail ail.co .com m And
Sharjeel Ahmed Khan
[email protected] 0333-5377870
INTERNATIONL INSTITUTE OF ISLAMIC ECONOMICS (IIIE) INTERNATIONAL ISLAMIC UNIVERSITY ISLMAMABAD (IIUI)
CONTENTS
Acknowledgement Coal Early age use:
Modern age use: World coal reserves: Coal as alternative energy source: Coal is a cost-effective alternateive fuel: Environmental effects of coal: coal: Coal reserves in Pakistan: Major coal consumers in Pakistan: Coal and energy security in Pakistan
Why coal neglected so far?
Acknowledgement
All praise to almighty Allah, the most merciful and compassionate without his help and blessings, we were unable to complete the project. We are taking this opportunity to express our heartiest gratitude and respect to our teacher Mr.Tayyeb, for his guidance, constant encouragement, constructive and sincere criticism and immaculate appraisal of this project. Thankful gratitude for the loving parents, who provided us every suitable support both morally and financially and always pray for our achievement in life. (HASSAN MAHMOOD SHAH) (SHARJEEL AHMED KHAN)
Coal
Coal is a readily combustible black or brownish-black sedimentary rock normally occurring in rock strata called coal beds. It is composed primarily of carbon along with variable quantities of other elements, chiefly sulfur , hydrogen, oxygen and nitrogen. Coal is extracted from the ground by mining, either underground or in open pits. Coal is a trading commodity. The international market price of coal has gone up from around $30 per short ton in 2000 to around $150.00 per short ton as of September 26, 2008. As of October 31, 2008, the price per short ton has declined to $111.50. Early age use:
coal was used in Britain during the Bronze Age (2000–3000 years BC), where it has been detected as forming part of the composition of funeral pyres.The earliest recognized use is from the Shenyang area 4000 BC where Neolithic inhabitants had begun carving ornaments from black lignite, but it was not until the Han Dynasty (206 BC–220 AD) that coal was also used for fuel. In the past, coal was converted to make coal gas, which was piped to customers to burn for illumination, heating, and cooking.
Modern age use:
Coal is used as a fuel and as a reducing agent in smelting iron ore in a blast furnace, and in making steel. Coal produces valuable by-products that include coal tar , ammonia, light oils, coal gas and Ethanol. Coal can also be
converted into liquid fuels like gasoline or diesel by several different processes. Coal is primarily used as a solid fuel to produce electricity and heat through combustion. World coal reserves:
British Petroleum, in its annual report 2007, estimated at 2006 end, there were 909 billion tons of proven coal reserves worldwide, or 147 years reserves-to production ratio.The 930 billion short
Country USA Russia China India Australia South Africa Pakistan
TOTAL 246,643 157,010 114,500 92,445 78,500 48,750 3,050
Share 27.1 17.3 12.6 10.2 8.6 5.4 0.3
tons of recoverable coal reserves estimated by the Energy Information Administration are equal to about 4,116 BBOE (billion barrels of oil equivalent). Of the three fossil fuels (coal, oil and gas) coal has the most widely distributed reserves; coal is mined in over 100 countries, and on all continents except Antarctica. The largest reserves are found in the USA, Russia, Australia, China, India and South Africa.
Major coal producers Reserve Life Country
2006
Share
China USA India Australia Russia South Africa Total World
2380.0 1053.6 447.3 373.8 309.2 256.9 6195.1
38.4 % 17.0 % 7.2 % 6.0 % 5.0 % 4.1 % 100 %
(years) 48 234 207 210 508 190 142
The reserve life is an estimate based only on current production levels
•
for the countries shown, and makes no assumptions of future production or even current production trends. •
If growth in usage at this rate continues then it is assumed, reserves would be exhausted in 31 years.
Major coal exporters
Country
2005
Share
Australia
257.6
32.0%
Indonesia
147.6
13.4%
China
79.0
9.8%
South Africa 77.5
9.6%
Russia
62.3
7.7%
Coal as alternative energy
USA
49.9
6.2%
source:
Total
804.2
100%
Coal can
be
an
alternative
to
oil.
Liquefaction is one of the backstop technologies that could potentially limit escalation of oil prices and mitigate the effects of transportation energy shortage that will occur under peak oil. This is contingent on liquefaction production capacity becoming large enough to satiate the very large and growing demand for petroleum. Coal is a cost-effective alternateive fuel:
Estimates of the cost of producing liquid fuels from coal suggest that domestic U.S. production of fuel from coal becomes cost-competitive with oil priced at around 35 USD per barrel, (break-even cost). With oil prices as low as around USD 40 per barrel in the U.S. as of December 15, 2008, liquid coal lost some of its economic allure in the US, but will probably be re-
vitalized, similar to oil sand projects, with an oil price around 70$ per barrel. It takes 438 kg (966 lb) of coal to power a computer for one full year. One should also take into account transmission and distribution losses caused by resistance and heating in the power lines, which is in the order of 5–10%, depending on distance from the power station and other factors. In China, due to an increasing need for liquid energy in the transportation sector, coal liquefaction were given high priority even during periods of oil prices below 40$ per barrel. This is probably because China prefers not to be dependent on foreign oil, and instead utilize their enormous domestic coal reserves. As oil prices were increasing during the first half of 2009, the coal liquefaction projects in China were again boosted, and these projects are profitable with an oil barrel price of 40$. Environmental effects of coal:
The U.S. Energy Information Agency's 1999 report on CO 2 emissions for energy generation, quotes a lower emission factor of 0.963 kg CO 2/kWh for coal power. The same source gives factor for oil power in the U.S. of 0.881 kg CO2/kWh, while natural gas has 0.569 kg CO2/kWh. Estimates for specific emission from nuclear power , hydro, and wind energy vary, but are about 100 times lower. There are a number of adverse environmental effects of coal mining and burning, especially in power stations. These effects include: •
Release of carbon dioxide, a greenhouse gas, which causes climate change and global warming. Coal is the largest contributor to the human-made increase of CO2 in the air.
•
Generation of hundred of millions of tons of waste products, including fly ash, bottom ash, flue gas desulfurization sludge, that contain mercury, uranium, thorium, arsenic, and other heavy metals
•
Acid rain from high sulfur coal
•
Interference with groundwater and water table levels
•
Contamination of land and waterways and destruction of homes from fly ash spills.
•
Impact of water use on flows of rivers and consequential impact on other land-uses
•
Dust nuisance
•
Subsidence above tunnels, sometimes damaging infrastructure.
•
Coal-fired power plants without effective fly ash capture are one of the largest sources of human-caused background radiation exposure
•
Coal-fired power plants shorten nearly 24,000 lives a year in the United States, including 2,800 from lung cancer .
•
Coal-fired power plant releases emissions including mercury, selenium, and arsenic which are harmful to human health and the environment.
Coal reserves in Pakistan:
Pakistan’s major known coal reserves are located in the province of Sindh, specifically in Thar, estimated at 175.5 billion tons which account for the bulk of Pakistan’s total reserves, estimated at 185 billion tons. Other coal deposits of significance in Sind are located at Sonda (Jharruk) 5.5 billion tons and Lakhra (Dadu) 1.33 billion tons. Pakistan is 6th largest coal rich country in the world and the aggregate energy potential of these resources is
more than the combined energy potential of the resources that Saudi Arabia and Iran possess. Major coal consumers in Pakistan:
Major industrial consumers are cement industry, brick kilns, power plants, chemicals and steel industry. It is also used for domestic fuel consumption. Major suppliers are China, Indonesia and South Africa. Coal and energy security in Pakistan
Pakistan is one of the lucky countries which are blessed with vast deposits of coal. By increasing the share of coal in our energy mix we could have conserved more valuable gas, which is deplete able resource. Unfortunately, we have compromised our future by relying excessively on natural gas, and are now running the risk of energy security. Coal has gained special importance due to growing concerns for energy security prompted by the abnormal surge in world oil prices mounting tensions of the western countries with Iran, interruptions in the international supply network of gas from Iran and Russia and ongoing stand-off in the Arabian Gulf. Why coal neglected so far?
Usage of coal as a source of energy, in the developing countries, has been down played by powerful multinational oil companies and cartels who do not wish to see coal as a substitute of oil that they sell. Negative perceptions about the utility of coal have some how, adversely affected policies of the countries such as Pakistan. Coal as a fuel had been ranked low on the list of
Pakistan’s development priorities primarily due to concerns about its quality and requirement for huge upfront capital. Apart from this, in the absence of a strong political will to promote coal based power projects, foreign investors have not been supported as much as they ought to be. Quite a few were forced to withdraw their initiatives after incurring heavy losses. As a result what we see today is that share of coal in Pakistan’s energy mix is about 5 % and in power generation even less than 1%. Unfortunately there are factors, other than those mentioned above, that have not supported investor’s initiatives for the exploitation of Pakistan’s coal resource in the past. These are as follows: •
Lack of necessary infrastructure (roads, water, life support systems, community services and communication network) to support project activity.
•
Inconsistent government policy. Inaccessibility to national grid. Political uncertainty.
•
Security concerns – Law and order situation.
•
Tariff issues originating from uncertainties surrounding price instability of the capital equipment and other input costs as well as inherent risks associated with a typical coal mining and power generation venture.
•
Uncertainties in the lead time required in the delivery of capital equipment.
•
Mining is a provincial subject. Thus hostage to vested interests.
•
Coordination with Federal and Provincial Government departments and ministries.
•
The Quality Issue: Unfortunately, utility of the coal deposits found at Thar had been viewed doubtful.
•
In the context of climate change, CO2 mitigation initiatives may become mandatory for the countries like Pakistan. This may add to the cost of coal power generation. The pollution abatement costs make the projects yielding negative returns.
Consequently, Pakistan continues to rely considerably on imported coal to fulfill requirements for a range of industrial applications.
Thar coal reserves:
Pakistan’s major known coal reserves are located in the province of Sindh, specifically in Thar, estimated at 175.5 billion tons which account for the bulk of Pakistan’s total reserves, estimated at 185 billion tons. Current estimated value of the Thar coal deposits is $ 8 trillion and if converted into energy its values comes to $ 25 trillion. It has the potential to generate 100,000 MW of electricity for 300 years. Socio-Economic effects of Thar coal project:
On July 27, a three-member team of the World Bank experts on coal and mining visited Thar coal fields and met the representatives of civil society organisations and the local community. The team also visited village Thario Halepoto near Islamkot, Tharparkar.
The first concern countered by the WB team was the fear of local people whether Thar and Sindh will actually benefit from the exploitation of the world’s largest resource of energy. Perhaps it was the first-ever official visit and initial brain-storming meeting of the World Bank officials of this nature to look at the Thar coal issues. The team comprised Ms Ekaterina N. Mikhaylova, Senior Project Officer Oil, Gas, Mining and Chemicals Department, Mr Robert Murphy, a Consultant of Oil,Gas, Mining Policy Division. They were accompanied by officials of the Sindh Mines and Mineral Department and the Thar Coal Energy Board. Officials of the Sindh Energy Board and Minerals and Mining Department claimed that the development of Thar coal reserves has been included in the priority list of projects likely to be launched during the current financial year. Members of the WB team said their mandate was to hear the views of the community and civil society representatives to prepare their policy framework expected to be completed in one year. Representatives of leading Thar-based NGOs including TRDP were present. Ever-since 1964, when the first feasibility report on the use of Thar coal was completed, a number of similar studies have been carried out by experts, establishing the huge abundance of good quality, easily extractable coal and other mineral deposits in Tharparkar and their potential benefits. An estimated over 175 billion tons of proven reserves of good quality coal is spread over 9,000 square kilometers of the Thar Desert. Compare it with the
figures of India’s total coal deposits of 140 billion tons. Yet, for 40 years, these reserves have remained untapped. People in Thar live in sub-human conditions and remain deprived of even access to safe drinking water, sewerage, healthcare, transport and education. Other issues include bonded labour and violation of the fundamental rights to employment and access to food availability. Thar coal expert Syed Mohibullah Shah is of the view that technology exists to produce potable water from coal while the mineral is utilised for power generation. Thar coal has a very large water content (over 40 per cent of its weight) and +is capable of providing an abundant water supply for the locals. People of the area acknowledge that the country is under severe electricity and energy crisis and Sindh is ready to cater the needs but ask as to who will guarantee the protection of the rights of the local people. The community is of the view that it should be the first beneficiary of any coal project. Thar Coal exploitation can spearhead major economic development and employment generation activities. With over 200,000 jobs flowing from it over the years, the project could rank right at the top among all investments made in Pakistan—domestic or foreign. The first-ever baseline survey of the area and people was shared with the World Bank team and the Sindh officials were advised to do more studies and surveys to understand the area and community.
Keeping in view the importance of the issue, Thardeep Rural Development programme (TRDP) has done a baseline survey on the socio-economic and environmental aspects of this project. The report is re-produced in Sindhi, English and Urdu. The aim of the re-production of the research study was to provide baseline information and scientific data to policy and decision makers and other stakeholders for an open debate. This research will help to understand the demographic and geographic patterns of Thar, local community, environmental issues, socio-economic realities, and human landscape and project related issues like displacement, rehabilitation, burdens for the local people and the affected communities. The input/feedback/ briefing by the local civil society activists on socioeconomic and political situation of the area and community’s concerns and expectations of the project was very impressive in terms of their level of fundamental knowledge about the project. WB team was very impressed by the level of community’s understanding and information regarding Thar coal issues including technical and socio-economic and environmental impact. From the technical issues of gasification and tariff controversy and the ownership of the recourse, every issue was discussed at length. Following issues were tabled by the community representatives: Policy level issues: Ownership of the project should be solely with government of Sindh; elected representatives of the area be given visible charge/control in decision making; the community (especially field area) should be part of decision-making body. There should be a single body
controlled by the provincial government to deal with investors and other issues. Community issues: There is no clear policy for community welfare in Thar coal project; Sindh has a bitter experience of IFIs engagement in different projects and a lack of trust between the community and the donors/investors. Displacement issues: Protection of cultural, heritage and religious sites; guarantees of employment for the local people; compensation issues as per current day rates of the lands and other belongings and; change in environmental landscape, impact on water and other livelihood commodities The local community is happy to see its area developed but wants protection of political, social, economic, cultural and environmental rights for which a genuine effort on the part of Sindh government is required. The community feels more comfortable with the Thar Coal and Energy Board (TCEB) which it believes be treated as the only notified legal and authorised body to exercise all powers in deciding matters pertaining to mining and power generation from Thar coal. It should also address all the concerns and fears of the local people.
Thar coal quality issues and their remedies:
Unfortunately, utility of the coal deposits found at Thar had been viewed doubtful. Lignite coal has certain characteristics that makes it a low BTU fuel and difficult to extract and transport. It has high moisture content (almost 40 – 50%) and mineral matter (especially sodium). These can affect
adversely the efficiency of the plant by causing severe slugging and fouling in conventional boilers and thus make operation costly. But SFBD technology designed to produce dry coal, now developed commercially, provides a solution to these problems. The other concern about the quality of locally available coal relates to the presence of high sulfur content which can be dealt with Circulating Fluidized Bed (CFB) technology. Also the Integrated Gasification and Combined Cycle (IGCC) technology is designed to make best use of high moisture lignite coal for power generation. Coal found in Pakistan has high sulphur content. Therefore for certain applications, Pakistan has to rely on imported coal. However local coal can be processed to produce clean coal by setting up sulphur washing plants at respective mine sites. Thus appropriate technologies are available to ensure desired utility of the available coal deposits in Pakistan. Thar coal and Environmental Concerns:
While coal is going to be the fuel of next century, the issue of emissions control and pollution abatement shall have to be properly addressed in the context of climate change. In the longer term one must also keep in mind that CO2 mitigation initiatives down the road may become mandatory for the countries like Pakistan. a typical power coal plant generates 3 million tons of CO2 or 17 tons of carbon per megawatt and draws about 2.3 billion gallons of water per annum from nearby source while on land, whereas Sind is seriously deficient in the supply of water even for agriculture; produces mercury which not only renders water useless for human consumption but also for irrigation purpose as well.
Pakistan energy plans and coal:
In recognition of the growing importance of coal, it should be the cornerstone of our future energy policy. GoP is committed to increase substantially the share of coal in Pakistan’s current energy mix. Under the Vision 2030 strategic plan, Pakistan’s coal power generation is planned to be increased from present 200MW (which is about 1 % of total power generation) to 1060 MW by 2010 and to 19,910 MW by 2030. Also share of coal in the overall energy mix is planned to be increased from 5% to 19% by 2030 and to 50% by 2050.
What to be done now?
To meet the targets of vision 2050 strategic plan, besides initiating thar coal project, Pakistan must explore new reserves of coal. However, given the checkered history of the plans to exploit existing coal reserves in Pakistan, these targets appear to be over ambitious. GoP will have to bring about a drastic shift in the list of its development priorities and demonstrate its seriousness through a strong political will to make these goals look real. The thar coal project and exploitation of cheaply available indigenous coal would help Pakistan benefit in two ways. Firstly it would help achieve objective of self reliance and relieving burden of costly oil imports and secondly to generate power, as a least cost solution. Thar coal project: a comprehensive strategic plan.
Government should consider creating a high powered body (Commission for the development of thar coal) which should not only serve as a think tank for the formulation of strategic plans and policies but also should serve as one window facility and a high powered decision making body for the speedy implementation of coal mining and power projects. The proposed commission may draw representation from Federal Ministries of Planning, Water and Power, PPIB, NEPRA, WAPDA, KESC, Provincial Government Planning and Development Department, Mineral and Mining Dept and Sindh Coal Authority (for the province of Sindh), HDIP, PMDC and professionals, consultants, research institutions and experts. Private sector should be encouraged, through a package of incentives, to come forward and participate in the socio-economic uplift of the target areas. They may also be invited to participate in the private/public sector joint venture schemes which government must launch for the socioeconomic uplift of target areas so that basic conditions to attract investors could be satisfied.To name a few, these schemes could include recreational facilities, shopping centers, sports facilities, housing schemes, educational institutions, hospitals, etc. Also, in order to attract serious investors, a more detailed feasibility study is needed, especially on the mineability and suitability of Thar coal on the quality and utility. In addition more information and data on configuration and size of the reserves being claimed for large scale power generation projects be made available, it is imperative that extensive research may be undertaken by the national scientific research institutions to determine feasibilities of appropriate technologies that would ensure most efficient yet cost effective
exploitation of the coal resources. Pakistan must establish institutional linkage with China to benefit from their extensive R&D program to develop cost effective and environment friendly technologies involving coal as fuel. Foreign institutions that have excelled in coal mining/power generation technology from countries such as UK, Germany, USA, South Africa, China, India, Poland and Russia may be invited to establish institutional linkage for carrying out coal based technical studies and research projects. This would provide a platform for the exchange of knowledge, learning of best industry practice, transfer of know-how and technologies, adoption of international quality standards, knowledge on the application of modem technologies, etc-etc. The Board of Investment has an important role to play and need to move fast to attract potential investors from the world over. The proposed high powered commission for the development of coal should serve as a one window operation to support smooth implementation and timely completion of projects free of procedural hurdles.
REFERENCES 1.
Pakistan, energy planning in a strategic vortex . By Charles K. Ebinger, American Universities Field Staff.
2.
Physics and Contemporary Needs. By Saleem A. Ansari, A. Irej Jalal, Riazuddin Shoaib, Khan A. Shoaib.
3.
www.brecorder.com/
4.
www.wikipedia.org/
5.
pakobserver.net/
6. Turning 7.
coal into barrels of oil by Alauddin Masood.
Pakistan Politics: Thar coal turning into another Kalabagh Dam By Ansaar Abbasi.
8.
Pakistan’s Thar coal: a comparative study By Kamran Riaz.
