The import-only policy adopted by Bangladeshi energy planners has begun to unravel in bits and pieces. First came the liquefied natural gas (LNG) debacle. Now comes the coal-shock --- to be more precise, importing coal-for-power. According to a report by the International Energy Agency (IEA): "In 2022, high natural gas prices led to significant fuel switching to coal in electricity generation in Europe, although both gas and coal generation increased as the growth of wind and solar was insufficient to fully offset lower hydro and nuclear power output." Bangladesh is slowly waking up to the fact that coal prices globally, at least up to 2025, are not going to fall. The Adani cross-border electricity project (coal-fired) is turning out to be more of a bitter pill than a sigh of relief.
Having relied too much on Russian gas (which is now embargoed), the EU countries have been forced to use coal once more. This comes against the backdrop of lower hydro and nuclear power output due to weather conditions, "combined with technical problems in French nuclear power plants, put additional strains on the European electricity system." As cross-border electricity trading exists in the EU, this situation has forced some countries in Europe to fall back on coal power generation. Germany -- the biggest economic powerhouse in the EU is also turning to coal. The effect of all this flurry around coal means that coal will be in high demand till at least 2024.
China's economy is re-opening. The IEA forecasts that demand for coal globally will hover around 8.0 billion tonnes through 2025. The world is looking to China which remains the largest consumer of coal (roughly 50 per cent). Indeed "China's power sector alone accounts for one-third of global coal consumption." On top of this, India now consumes twice the coal it consumed in 2007, with an average annual growth of 6.0 per cent in coal consumption. China and India propel the direction of coal consumption globally. These two nations are both the largest producers of coal and consumers of it. India overtook China in coal production in early 2021. Then in March 2022, China set a new annual record where it achieved 8.0 per cent growth rate in coal production. These two countries have shown the rest of Asia where their national priorities lie in securing energy resources. In response to higher demand for coal in these two economic giants, Indonesia (3rd largest coal producer) is hoping to expand coal production to a new record in 2022, most of which will be headed outward as export to countries like China and India.
As Bangladesh starts 2023 in uncertainty, some basic facts demand a closer scrutiny. A number of coal-fired powered plants have been commissioned or are in the pipeline for commissioning. IAE data state that due to the tight supply of coal in foreign markets coupled with high prices, countries like Bangladesh are in an unenviable position. Given today's high prices, Bangladesh simply cannot afford to buy enough coal to produce electricity from its coal-fired power plants. This is leading to electricity rationing. While environmentalists gleefully call for a halt to these coal-fired power plants, the reality is that a significant portion of electricity is to come from these plants.
As the world moved to secure (particularly India and China) major coal fields all over the world, Bangladeshi energy planners went about it entirely the wrong way. Import-based coal for generating electricity was a nonstarter from the very beginning. Leading energy experts of the country had been warning over a decade that this folly of a notion that Bangladesh could generate electricity using millions of tonnes of coal imported from abroad would light up the country for generations to come. Well, we all know how that is panning out. Regardless of how many hard facts, data, international trends were presented, they all fell on deaf ears. There is an old English saying "you can drag a horse to water, but you can't make it drink." By all indications, the summer of 2023 will be very hot. Hardly good news for anyone, retail consumer or industrialist!
More than a decade has been wasted planning for an energy system that was never going to be able to see the light of day. All because a minority group of business interests which represent the import lobby (for energy) in this country could flourish to the utter detriment of the economy at large. It is one thing not to be able to get cool in millions of homes across the country, quite another to starve industry of requisite power to continue production. Billions have been sunk into the economy to make infrastructure, to build special economic zones -- all in the hope of attracting foreign (and domestic) investment. But without requisite power, nothing much will happen. Extracting domestic coal remains off the discussion table. Why? Exploring the most potential areas for on-shore natural gas remains off the table. Why? Will those questions ever be answered by our energy planners?
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