PRIED’s study; ‘Include external costs to accurately price Thar coal power’

KARACHI: The Thar coal is being promoted as cheap local fuel for future, however there are huge socio-environmental concerns, a study said.

The study suggested that externalities of Thar coal should be included in the cost of power generation from Thar coal to determine its actual cost.

The study, “Externalities of Thar Coal” launched at an event organized by Pakistan Research Institute for Equitable Development (PRIED), said the coal being the largest local resource of fuel is being promoted as cheap local fuel for future and is often presented as a competitive cost effective solution to Pakistan’s energy crisis. However there are socio-environmental concerns around coal.

The report aimed to estimate the cost of externalities related to coal-fired power generation using Thar Coal in district Thar, Sindh, Pakistan. It identifies the externalities and estimating the cost of those externalities which are borne by the society and the environment.

First, it said the current procedures involved in determining the energy tariff for coal and other fuels is established by including energy generation costs , investment on infrastructure and financing costs incurred by the investors , transmission costs incurred by central grid transmission, distribution costs incurred by local grid transmission, consumer end costs based on type of connections and slabs of units used, periodic adjustment of costs related to fuel prices and O&M, government subsidies, and taxes.

These costs, report mentioned however, ignore many other costs which are not incurred by investors, distributors or the consumers, but nevertheless are borne by the society and the environment.

For example, public health issues faced by population centres near the power plants/coal mines, GHG emissions, toxic pollution, degradation of water resources, etc. These costs are externalized to the society and environment rather than being borne by the investors, the power generators or the power consumers away from Thar.

For example, social cost of carbon - which is a well-established cost and is revised on yearly basis - is not reflected in periodic adjustments. Such costs are reckoned as externalities.

The report focused on identifying these externalities for coal mining and power generation from Thar Coal.

The areas of externalities focused in this report are open-pit coal mining, post-mining landscape and coal-fired power generation, coal transportation and decommissioning of power plants.

Copyright Business Recorder, 2024