Bangladesh, a rapidly industrialising south Asian country is scaling back on its planned massive coal-fired electric power plants.
Once coal’s future haven, Bangladesh is now set to leave developers and importers in hot water. A major factor influencing this radical departure from coal is the global drive to abandon dirty sources of energy such as coal and crude oil for cleaner ones such as natural gas and renewables.
This is a clear signal that the countdown to the end of fossil fuels as major energy resources has long begun and Nigeria’s 37 billion barrels of oil reserves may well be less valuable two decades from now.
Bangladesh’s 2016 energy plan showed some 20 gigawatts (GW) of coal power capacity to be developed in the next two decades. Now, the government is scaling back the coal-drive dramatically and capacity will peak at 7.3 GW in 2025, a Rystad
Energy analysis shows, a development that will hurt Chinese and Japanese developers and cancel nearly 30 million tonnes of expected annual coal imports towards 2040.
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This is a blow for thermal coal exporters in Australia, Indonesia and South Africa who were hoping that a growing Bangladesh market post-2025 would help fill the void stemming from declining demand in more mature Asian economies such as Korea and Japan.
Based on Rystad Energy’s revised development outlook, it is estimated that coal power generation in Bangladesh will increase from the current 6 terawatt-hours (TWH) and peak at 46 TWH by 2025. Annual thermal coal demand for power generation is forecast to rise from the present 2.3 million tonnes to 18 million tonnes by 2025 to fuel the new plants that weren’t scrapped.
“While this is still a significant increase above the existing low coal demand levels had the coal power generation pipeline been developed as per the 2016 master plan, annual coal demand growth would have been almost three times greater, potentially reaching 50 million tonnes by 2040,“says Steve Hulton, Rystad Energy’s Senior Vice President and Head of Coal Research.
Over the past ten years, some 36 different coal-fired generation projects were proposed. The government will now abandon all but five of the new coal projects; keeping only those that are either currently operating or under construction.
These include three major government-backed projects; Payra Phase 1 (1,320 MW), Rampal (1,320 MW), and Matarbari (1,200 MW) thermal power plants; and two private independent power producer projects Barisal (350 MW) and Banshkhali (1,224 MW) thermal power plants.
Bangladesh is responding to global demand for cleaner energy. This is time for Nigeria to latch on to its vast natural gas reserves, which would serve as a transitional fuel to renewables.
Last year, the European Union set out to stop funding oil, gas and coal projects at the end of 2021, cutting €2bn (£1.7bn) of yearly investments.
The European Investment Bank (EIB), the EU’S financing department, will bar funding for most fossil fuel projects. The ban will come into effect a year later than originally proposed after lobbying by EU member states.
Since 2013, the EIB has funded €13.4bn of fossil fuel projects. In 2018, it funded about €2bn worth of projects.
Under the new policy, energy projects applying for EIB funding will need to show they can produce a kilowatt-hour of energy while emitting less than 250 grams of carbon dioxide, a move which excludes traditional gas-burning power plants.
Gas projects are still possible, but would have to be based on what the bank called “new technologies” such as carbon capture and storage, combining heat and power generation, or mixing in renewable gases with fossil natural gas.
