Since Pakistan mostly imports from South Africa, this means an export market of 11 million tonnes is now shut. Sixteen per cent of South Africa coal was exported to Pakistan in 2020.
Responding to Pakistan’s updated NDC, UN Climate Change Executive Secretary Patricia Espinosa on Saturday tweeted, “I welcome Pakistan’s submission of an updated and enhanced #NDC.”
“Pleased to see your commitment to shift to 60 per cent renewable energy and 30 per cent electric vehicles by 2030, and completely ban imported coal.”
As per the updated NDCs, Pakistan intends to set a cumulative ambitious conditional target of overall 50 per cent reduction of its projected emissions by 2030, with 15 per cent from the country’s own resources and 35 per cent subject to provision of international grant that would require $101 billion just for energy transition.
To reach the target, Pakistan aims to shift to 60 per cent renewable energy, and 30 per cent electric vehicles by 2030 and completely ban imported coal.
It says Pakistan’s financial needs still remain high, given the country’s vulnerability to climate change and capital-intensive transition to decarbonize the economy.
Pakistan has already identified market and non-market-based approaches to help diversify the funding sources, including Nature Performance Bonds, Green/Blue Bonds, Carbon Pricing Instruments, etc.
On coal, Pakistan says from 2020 new coal power plants are subject to a moratorium, and no generation of power through imported coal shall be allowed, shelving plans for two new coal-fired power plants in favour of hydroelectric power and focusing on coal gasification and liquefaction for indigenous coal.
It says buying out the relatively new coal power projects, including the local Thar coalmines, would have an upfront estimated cost of $18 billion.
In Pakistan, the coal consumption has tripled over the last five years to 21.5 million tonnes per year to meet the growing demand from industry, and the start of coal power production from 2018.
Whereas, coal import has increased up to five-fold in the last five years, primarily for industrial purposes — around 73 per cent, of which the cement sector constitutes 65 per cent of industrial coal consumption.
The relatively high economic growth until 2018 led to increase in cement manufacturing and pushed cement production forecast to grow 10-15 per cent annually over the next decade, say the updated NDCs.
The share of power generation from coal was 24 per cent in FY21 and is expected to increase to 31 per cent by FY25 due to committed plants, but will then decrease to 20.1 per cent by FY30.
According to climate and energy think tank, the world’s four-largest coal power producers – China, India, the United States and Japan – are responsible for over three-quarters of the world’s coal-fired electricity.
India alone is home to 7 per cent (21GW) of the global coal project pipeline, which is 56 per cent of South Asia’s total, says a report by climate change think tank E3G, with the country moving slowly away from coal at a national level, however considerable progress is being made at the state level.
The report says Sri Lanka, Bangladesh and Pakistan are showing leadership in cancelling projects and making political statements that they will no longer pursue new coal power.
In India, significant socio-economic headwinds to new coal have led to state-level commitments to no new coal, opening a pathway for national-level progress.
The E3G finds between 2019 and 2021 public officials from the states of Gujarat, Chhattisgarh, Maharashtra, and Karnataka announced their intention to not build new coal power plants.
India’s pre-construction pipeline of 21GW is the second largest in the world.
In a startling revelations by C40 Cities last month that under current plans major Indian cities would suffer 52,700 premature deaths, 31,300 preterm births, 46,800 asthma emergency hospital visits and 25.8 million days of sick-leave over the next decade from coal pollution.
According to IEEFA’s June 2021 study, even the under-construction pipeline of coal projects (34GW) face major stranded asset risk.
Stressed and stranded assets are already a reality, for example the seven-plus coal power units totalling 7410MW that have either been ordered to be liquidated or are heading for liquidation, six of which were in early stages of construction.
Most private developers have little appetite for coal and are instead pivoting to renewables, making it increasingly hard to fund new coal projects. Recent analysis also suggests that India may not even need additional coal capacity to meet its future electricity demand and could even begin retiring older coal plants and still meet demand projections.
(Vishal Gulati can be contacted at email@example.com)