CEB Engineers’ Union says back and forth on coal vs LNG wasteful

July 11, 2016 (LBO) - The Ceylon Electricity Board Engineers' Union says a continuous “back and forth” on whether to construct further power plants using coal or LNG is a costly delay that Sri Lanka cannot afford. Coal is not substantially more environmentally polluting than LNG, and preparations for coal-fired power has been in existence for several years, the note adds. "If CEB was allowed to proceed as intended, this country would have seen its first, technologically superior, Japanese built, Coal Power plant operational in 1998," it said. "Unfortunately, CEB ‘s voice (just like today) was suppressed in favour of (an identical set of) baseless arguments (which are repeated today), paving the way for the dark era of Furnace Oil fired private power plants known as the IPPs." The union, however, did not comment on the need to create a market for Sri Lanka's petroleum resources with the choice of coal versus LNG. Some analysts say Sri Lanka has significant untapped petroleum resources and delaying the utilization of these resources represents a wasted opportunity. Sri Lanka could derive huge savings over a 20 year period through substituted petroleum imports and other externalities such as a cleaner environment. The island is currently in the process of awarding two blocks for exploration and drilling that is expected to yield natural gas. For the proper pricing of exploration contracts, Sri Lanka will have to develop a domestic market for LNG. Full statement is below: A Note on – “Deciding the optimum fuel mix for power generation with an open mind.” In writing this note, we must clarify that it is not our intention to canvass for one fuel against another. We only want decision makers to let us freely consider each fuel on its true merit (technologically, economically, and environmentally) and decide the optimum future generation mix. We are also against completely closing the door for any fuel option as we cannot foresee future world trends ahead of 1 to 2 decades and the danger on over relying on one fuel. By this note, we only want to clear certain myths about Coal and LNG and prevent any fuel from being unduly “closed” or “forced”. For brevity, we will write things in point form. (1) Repeating the same mistake again In 1989, CEB identified Coal as the next most suitable and economically favourable fuel to take over base load generation from Hydro Power and to diversify the countries fuel mix. By 1994, everything, including Japanese soft financing was available and CEB was a step away from initiating the tendering to procure the first Coal plant of the country. What happened next due to political intervention is history. If CEB was allowed to proceed as intended, this country would have seen its first, technologically superior, Japanese built, Coal Power plant operational in 1998. Unfortunately, CEB ‘s voice (just like today) was supressed in favour of (an identical set of) baseless arguments (which are repeated today), paving the way for the dark era of Furnace Oil fired private power plants known as the IPPs. Though Oil fired expensive IPP generation was forced upon CEB, CEB Engineers are being blamed today for the debacle while political authority who were responsible maintain silence. Every single argument brought against Coal then, ranging from, Acid Rains, devastation to Sri Maha‐Bodhiya & tea plantations, sea completely eroding Thalawila sacred Catholic shrine, destruction to fish breeding grounds and future Coal prices being equal to Oil were all proved wrong. Sadly, the country had to pay a massive price for believing the lies and ignoring the professionals. Unfortunately, the same set of lies is being repeated today and is being believed today by decision makers. If entire Puttlam Coal plant is not in operation for a single day and the shortfall is met from other thermal plants, the financial loss per a single day is 250 million rupees. We appeal to you to calculate what would have been the additional cost of delaying Puttlam Coal plant by 10 years and calculate how many hospitals, schools, roads that could have been built if not for this single blunder. (2) Is Coal that much dirty? Coal is being portrayed today as a dirty, unclean fuel of the past shunned by all. Contrary, even in the today’s highly environment conscious modern world, Coal is still the largest source of power generation and new plants are being built in thousands of Mega Watts every year. The world is having almost 1,900,000 MW of coal power plants and the countries have planned for about 1,428, 000 MW1 of coal power plants by 2030. As per the latest records, China has planned 150,000 MW and India about 125,000 MW of coal power plants by 20202.One can find Coal power plants still operating in the heart of modern European cities like Amsterdam, Berlin, Hamburg and many more. Even in the USA, Coal power still has the largest share of electricity generation. Despite painted with the impression of a smoke gusting power plant, one would hardly notice any smoke coming out of the tall chimneys of our own Puttlam Coal plant even when on full 900MW. Further, there are much cleaner Coal power technologies such as using “Super Critical” boilers earmarked for the Japanese funded Coal plant under discussion. (3) With a Coal plant in operation, is Puttlam the most polluted city in the country? When CEB fought for Coal 2 decades back, Coal was a new technology. Thus, we had to site examples from other countries. Not any more. Thus, to find out the adverse local effects of Coal, we now have an operating, living example, Norochcholai plant. If Coal is that much dirty, Putlam should be the most polluted city. Contrary, recent news revealed that most polluted city (despite not having any operational coal plants) is the hill capital Kandy. The culprit was road traffic. Sadly, the solution proposed to overcome body level vehicular emissions on roads was promoting electric vehicles. But if not for cheap electricity that too would not be realized. Norochcholei coal power plant is well equipped with environmental protection systems. Following are a few recorded for information. ESP (Electro Static Precipitator) ‐ This equipment removes 99.9% of the fly ash from flue gas. The removed fly ash is collected and sell to Cement factories such as Puttalam Cement, Tokoyo Cement etc. FGD (Flu Gas De‐sulpherization Unit) ‐ This unit removes 99% of SOx from the flue gas. SOx is the gas that causes acid rains used by environmentalist to spread fear among public. Each FGD unit consumes 5MW. A total of 15MW out of 900MW and are used to protect the environment from acid rains. Despite being installed at Puttlam, the FGD unit which cost around 35 USD million is not a standard equipment with most Chinese plants. Low NOx Burner ‐ NOx also causes acid rains. The burners in LVPS are designed such that NOx are not created. NOx are normally formed at high temperatures. The LVPS controls the temperate and it never goes to the region where NOx are formed. (4) Shouldn’t we be a good global citizen and contribute our share? In 2014, Coal accounted for the largest share of power generation (39%) in the world, generating 22,433 TWh (Trillion Units) whereas Sri Lanka, the country that is aspiring to be a good global citizen and cancel its Coal program (with a view of contributing to the arrest to rise to global temperature by 20C) has generated a mere 3.2 TWh. The amount of annual CO2 emissions by Sri Lanka only amounts to 15 Metric Ton Million, where the rest of the world had emitted 32,000 Metric Ton Million. Sri Lanka’s current emission standards are much more stringent than world standards. Thus, we do not see any reason why Coal plants cannot be operated as long as emissions are within limits. Further, our tropical rain forests and overall forest cover in the country already absorb CO2 well over what we emit. Thus, we are already are good global citizens and already are sinking Carbon on behalf of others. We are among top fifteen countries in the world having over 40% of electricity coming from renewables. Hence, we do not see any reason why we cannot pass the benefits of cheaper energy from Coal to our citizens while continue to being good responsible global citizens (much more than the western countries we try to emulate). It is true that certain developed countries are now gradually phasing off their future Coal plants in favour of LNG. But we need to understand the difference to the phase of development they are in as against a developing nation such as Sri Lanka is in before trying to blindly follow their example. Western world have already reached economically fully developed nation status after polluting (more than) their share and thereby taking the benefits of cheap energy. We are now in the phase of rapid movement towards development. We are like a car that is in acceleration phase and hence need more power and fuel. Developed nations have already accelerated and are cruising at high speeds of 100 kmph along a highway. One must compare how foolish it is for us to strive to achieve the standards of a cruising vehicle when we are still accelerating. (5) Is LNG that much cheap and that much clean? LNG is increasingly harnessed today by a new technology called “Shale fracturing” that is said to have driven market prices down. It employs a process called Hydraulic Fracturing or “fracking”. This process is highly controversial as it severely damage environment. Fracking uses about 600 chemicals and about 40,000 gallons of chemicals per a fracturing. Only 30 ‐50% of the fluid thus used is recovered. The rest of the toxic fluid is left on the ground and are not bio degradable either. As a result, certain states in the USA had completely banned fracking, including New York. On the other hand, we are at a time where world oil prices and prices of other fuels that are indexed to Oil such as LNG have reached an unusually low value. It is not prudent to take decisions solely on such temporary price dips ignoring the historical trends of world fuel prices. Even if environmental damages of fracking are not surfaced, increasing demand to LNG is certain to drive prices up where as historically, Coal prices have maintained a very steady pattern well below petroleum based fuels. If the proposed 500MW Coal Power Plant is converted to an LNG plant the additional fuel cost will be minimum Rupees 10 Billion per year. This is considering the current lowest LNG prices recorded in this year. If the LNG prices increase due to increasing demand from the wealthy countries this may even high as 2 to 3 times this estimate. (6) Why Coal should not be replaced with LNG at Trincomalee in particular? Trincomalee was the very first site that was earmarked in feasibility studies to locate Sri Lanka’s first ever Coal fired power plant. However, due to the political situation back then, CEB had to abandon Trincomalee and look for less favourable alternatives. Finding locations for future energy infrastructure and heavy industries is a challenge to any country, more so to a small island nation like ours. Such development need lands having specific attributes and in Sri Lanka there are only a couple that qualify, Trincomalee being at the top. It is our earnest appeal that such locations (even if not utilized today) must be reserved and secured for the future. The premier land plot in the country bordering one of the world’s best deep sea ports should not be “wasted” to locate plants like LNG, that can be easily located elsewhere. (There are various forces outside that tries to hinder our economic progress to their advantage by putting forward various proposals in the guise of protecting the environment to prevent us from using such sites. It is up to the government not to fall pray) (7) Why LNG Generation in the country should start from Colombo? LNG is certainly a candidate fuel for power generation in the not so distant future to complement Coal (but not to substitute it). The best location to house the first LNG powered power station complex has been already identified as Kerawalapitiya, which is closer to the load centres of Colombo. Instead the country cannot afford to have three LNG terminals as envisaged by the government at Trincomalee, Colombo & Hambanthota within foreseeable future. (It is to be noted that even India has only 3 LNG terminals and almost all of them are underutilized.). An LNG terminal is a massive investment. Thus, the cost of LNG terminal cannot be recovered out of a single isolated power plant. If LNG terminal is built in Colombo, over 1000MW of existing Diesel fired power stations in Colombo too can be converted to LNG and even the transport sector can use LNG as the third fuel. Thus, we invite the government to follow already prepared plans and commence LNG based power generation in Sri Lanka from Kerawalapitiya than forcing it at Trincomalee to eject Coal power. (8) National Energy Policy or No More Coal policy? We as a nation has suffered from a long time due to inconsistent national policies. Lately, however, things were streamlined somewhat following the 2009 Electricity ACT which clearly defined the government policy, the role of the operator and role of the Regulator. We have been operating within such laws up until recently. However, things have become “chaotic” in the recent past with different “policy directives” are being given every other week at Ministerial level, Presidential level, Prime Minister level, powerful cabinet appointed committee level with professionals not knowing what to follow. Despite having written, cabinet approved and gazetted government policy guidelines, various things are said in various forums that goes totally against such written down policies, with official not knowing what to follow. The same is true for the generation fuel mix with one minister saying only two Coal plants to another powerful committee saying no more Coal and the President requesting India for LNG to replace Coal at Trincomalee. One must also realize that this continuous “back and forth” movements of policies and decisions have a big cost attached. For example, a considerable investment (around Rs. 30 Billion) has already been committed for the Transmission Line from Trincomalee to Colombo. The construction of the Transmission Line with the assistance of JICA is already commenced and it is too late to reverse the decision. The cost of such large investment cannot be justified for an LNG power plant that itself would have additional costs. What is to be done now is not to replace Tricomalee with LNG but to expedite two Coal plants at Sampoor (Trincomalee), which are progressing at “snail pace”. Ceylon Electricity Board Engineers’ Union.