Pakistan at Crossroads: Power through Indigenous Coal or Nuclear? (Aug 2023)
Pakistan is a net importer of petroleum fuels, including residual fuel oil and liquified natural gas (LNG). Pakistan’s Oil and Gas Regulatory Authority (OGRA) noted in its 2020 report that natural gas and residual fuel oil (RFO) supplied 36% and 25% of Pakistan’s commercial energy consumption, respectively, and that 29% of this natural gas consumption had been supplied from LNG imports.[1]
Pakistan’s Current Energy Outlook
Pakistan’s total energy supply (TOE) - 2020[2]
NEPRA State of Industry Report 2021 gives more recent figures in percentage for the primary energy supplies by sources as follows:
Pakistan’s Power Generation Sector
Historically, hydropower has been Pakistan’s major energy source in downstream electricity generation. However, the upfront construction costs for building new mega hydropower projects, increased electricity demand, low precipitation levels, and a global trend to privatise power prompted a drive to direct investment in new power generation through other sources in the 1990s. The new power generation brought in thermal plants with oil, gas and, more recently(surprisingly), coal as thermal power sources.
Though still a major contributor to Pakistan’s electricity basket (24.29%), the installed capacity for hydropower has been overtaken by thermal Independent Power Producers (IPPs) through gradual electricity market reforms (EMRs)commencing in 1994. Thermal IPPs, which include oil, gas, and coal, installed capacity stands at (60.95%), followed by nuclear (8.27%) and renewables (6.48%) in the total electricity basket.[3]
During the EMRs, the government categorised fuel for thermal power as a pass-through cost item, resulting in far-reaching consequences, including rising sovereign debts in lieu of fuel imports. Though Pakistan had discovered gas reserves in 1952, achieving commerciality in 1955,the gas was only enough to serve the domestic heat and industrial sectors. Therefore, electricity generation for thermal power plants mostly relies on imported oil and gas for production.
The country continually stands exposed to default risks on sovereign debt, and imported fuel payments being a large chunk of this debt have pushed it tore-consider the country’s energy mix in the past. In its Power Tariff and Subsidy Guidelines 2014, Pakistan’s government acknowledged the sovereign debt and mandated its elimination in Pakistan as a material issue by switching to‘ cheaper fuel sources’, which necessarily means a transition from expensive electricity.[4]
Pakistan’s Trilemma for Energy
Energy appetite
The United Nations Economics and Social Commission for Asia and the Pacific projected in its SDG 7 Roadmap for Pakistan that the total final energy consumption under the Business-As-Usual (BAU) scenario is expected to increase from 94.1 Mtoe in 2021 to 114.6 Mtoe in 2030.
Energy demand outlook in the BAU Scenario, 2021-2030[5]
Energy costs and fuel import payments
The State Bank of Pakistan reports that the provisional import payment to be made in the quarter of April-July 2023 for the petroleum products, petroleum crude, LNG, and LPG is USD 15357.169 million out of total import payments, i.e., USD45202.048 million.[6] Though only for one quarter in 2023, the figures for petroleum as a commodity illustrate how they constitute almost a third of the total import payments causing immense stress on foreign currency reserves and Pakistan’s economy.
Climate change – Pakistan’s vulnerability
The World Bank stated last year that the 2022 floods caused more than 1,700 deaths and displaced more than 8 million people. The damage to infrastructure, assets, crops, and livestock has also been more than $30 billion in damages and economic losses.[7]
Pakistan submitted its climate change Nationally Determined Contributions (NDC), are porting requirement for GHG emissions by a country under the Paris Agreement, in 2016, which forecasted an increase in energy sector GHG emissions from 185.97million tonnes (Mt) of CO2 in 2015 to 898 Mt CO2. Although, in its updated NDC submitted in 2021(conditioned on grant/aid), Pakistan has made ambitious claims – dependent on grant/aid - such as 60% of total energy production from renewables and a moratorium on imported coal. Notably, the moratorium does not apply to local coal.
Pakistan’s policy direction
A staff-level agreement with the IMF of USD 3 Billion recently brought a respite to the teetering Pakistan on the verge of default.[8] However, the balance of payments crisis led by expensive fuel imports and bulging energy demand is a bitter reminder that Pakistan’s energy policy can be driven by energy security concerns and economics rather than the environment.
The primary energy supplies reported in recent years also confirm the above view that Pakistan’s energy policy is driven by energy security and economics. The figure below noted in a National Planning Commission Report shows a sharp shift in power generation dominated by coal substituting oil. However, the question arises as to whether coal will remain the only obvious way forward for Pakistan.
The transition from oil to coal[9]
This paper addresses and covers the following topics:
1. Is coal an obvious way forward for Pakistan?
2. Is Advanced Nuclear technology a viable option for Pakistan?
3. Challenges and the way forward for Pakistan to pave the way for more advanced nuclear technologies.
Coal: An obvious way forward for Pakistan?
Coal deposits in Thar (south of Pakistan’s Sindh province, bordering India to the east) have the largest lignite reserves in Pakistan (6th largest globally),estimated to be 175 billion tonnes.[10] It is important to note that the coal deposits in Thar are Lignite A/B (the lowest among coal quality) category.
Though discovered in the 1990s, Coal has found a prominent place in electricity generation, approximately 20% of the total primary energy supplies by source in2020-2021[11],contrary to 7.0% in 2010-11.[12]
Pakistan’s Energy Minister told Reuters in February 2023 that imported liquified natural gas (LNG) was also no longer part of the long-term plan due to its volatile prices and that the country planned to increase domestic coal-fired power capacity to 10 gigawatts (GW) in the medium term from 2.31GW.[13]
Emissions during burning coal for electricity[14]
If taken even for energy security concerns, the suggested pathway towards the transition to more coal will be in defiance of the global decarbonisation trends, coal emissions, and the country’s already stressed water resources for the reasons listed below:
A country in distress: In 2016, the International Institute of Sustainable Development stated that Pakistan is rapidly moving from being classified as water “stressed” to water “scarce.”[15] Alkon et al. discussed coal powered plants for Pakistan in their paper and stated that coal thermal power to meet energy needs would come at the cost of depletion of regional water resources, and the negative impact on water supply shall offset benefits from coal-powered electricity supply.
The Black Mines, Coal Plants and Emissions: Coal mining and coal power are carbon-intensive, water-stressful, land and groundwater-polluting activities.
In 2020, a study estimated that the Thar mines (and not the emissions by coal plants) in Blocks I, II, and IV will cause output emissions of 6.57 MT, 8.06MT,and 3.29Mt annually.
The study also highlighted that the Thar power plant and mining cluster would emit approximately 1400 kg of mercury and 5,000 tonnes of heavy metal-containing particulate matter (coal dust and fly ash) per year. It also estimated that coal power plants and mines would be responsible for a projected 29,000 (95% confidence interval:22,000-37,000) air pollution-related deaths over an operating life of 30 years.[16]
Another study in 2020 highlighted that the deepest and most extensive aquifer in Thar was drawn down to allow open-pit coal mining, but the same will not be enough to supply water for the coal power plants.[17] Recently, it has been reported that coal power operations in Block II of Thar are already harming the drinking water and the integrity of subsoil and water aquifers.[18]
Carbon pricing and Pakistan’s exports to the EU: Pakistan’s trade with the EU accounted for 14.3% of Pakistan’s total business in 2020, and it makes up 28%of Pakistan’s total exports, predominantly textiles and clothing, both already carbon-intensive industries. Adding coal power to the value chain will significantly impact the carbon price for exporting these goods to the EU (which currently is just one jurisdiction applying a carbon pricing mechanism).
These studies highlight the overlooked health, safety and environmental costs being ignored by policymakers in Pakistan while pursuing the globally abandoned coal pathway. The Thar coal (of very low quality) may seem cheap, but the policymakers must recognise the hazardous impact, toxication of the entire region (in addition to the GHG emissions), land usage, and importantly carbon pricing on exports. The problems with coal power propagated as ‘cheap local fuel’ seems to be a quagmire, raising an important question: what other option Pakistan has to satisfy its energy needs?
One such possibility is more nuclear power by procuring advanced nuclear technologies. Nuclear has long been considered a clean energy source due to its minimal carbon footprint on the supply chain and the high energy density of the fuel in nuclear reactors, Uranium. This high energy density means that approximately 8 kWh of heat can be generated from 1 kg of coal and around 24,000,000 kWh from 1 kg of uranium-235.[19]
Comparison of uranium, oil, gas, and coal as energy producers[20]
The fuel (Uranium) is abundant and diversified in its geographical location. It is also seen as advantageous regarding land use compared to wind and solar, carbon footprint, fuel sufficiency, fuel costs in overall plant operation, operation and maintenance costs, and its potential to complement Hydrogen production as clean power.
Conventional nuclear power (large nuclear power plants) has faced criticism for cost overrun, construction delays, and intensive water use, mostly due to enhanced regulatory control and complex safety features. The design and regulatory approval processes and environmental permitting, even before the commencement of construction, have often added to the soaring costs of conventional nuclear projects making the project capital-intensive.
Globally, Advanced Nuclear Technologies have emerged as technologies that will cover and mitigate the costs over-run and construction risks associated with conventional nuclear projects. They cover a wide range of technologies under development that are smaller than conventional nuclear reactors.
Nuclear power in Pakistan
Pakistan has had a longstanding civil nuclear capacity since its inception in 1971, with extensive cooperation and support from China emerging as the sole technology vendor and fuel supplier. The country has the regulatory framework to cover various nuclear activities. A list of laws and regulations covering nuclear activities is provided in Appendix – I.
Reactors and facilities: Pakistan have seven (7) nuclear power plants at two sites: Karachi (on the coastline of Sindh province in southern Pakistan), and Chashma (situated at the left bank of the river Indus, in close proximity of the Koh-i-Suleiman Mountain range), two (2) research reactors in Islamabad, and one (1) spent fuel dry storage facility at Karachi. The nuclear power plants are usually called K-Series and C-Series due to their locations at Karachi and Chashma.
Reactor types:
- K-1, a pressurised heavy water reactor (PWHR), was commissioned under economic and technical assistance from Canada and had a capacity of 137 MW in 1971. It remained in operation until 2021 and has been permanently shut down to be decommissioned.
- K-2 and K-3, on the other hand, were commissioned under economic and technical assistance from China, each having an installed capacity of 1145MW, with K-3 going online in February 2023. The Chinese technology, Hualong One (HPR1000 design), has been constructed at K-2 and K-3.
- C-1 to C-4 NPPs, pressurised water reactors, have a net capacity ranging from 300 MW to 315 MW. CNP-300 is a pressurised water reactor with an electricity capacity of up to 325 MW and a thermal capacity of up to 999 MW. IAEA has categorised the reactor as Gen III in one of its papers.[21]
HPR1000 Design[22] CNP-300 design[23]
Pakistan’s uranium reserves: Pakistan has low-grade uranium reserves at Bannu Basin and Suleman Range in Central Punjab. Still, the production cannot meet the country’s demand, as a result the country relies on fuel imports from China to meet its needs.
Despite efforts to improve sectoral governance of the electricity market, the recent encouraging inclusion of nuclear power in the country’s basket, and the climate change obligations in place, coal stands as a primary energy resource.
The recent announcement of commissioning 1100MW using HPR-1000 design is estimated to cost USD 24 Billion, funded by Chinese investment. Yet, Pakistan must consider other advanced nuclear technologies to meet its energy demands which, besides being relatively cheaper and shorter in their construction times, are less water-intensive, for example molten salt modular reactors.
Advanced Nuclear Technologies – Are they viable for Pakistan?
1. Modularity
ANT technologies have a design that can be fabricated in a factory environment off-site and transported to the site reducing construction risks and making them less capital-intensive. Broadly speaking they are categorised into Gen III and Gen IV reactors. The advantages reported by Energy Options Network in one of its studies associated with advanced nuclear technologies include the following:
- Simpler and standardised design
- Factory and shipyard manufacturing
- Lower material requirements
- Modularisation[24]
- Alternatives to Engineering, Procurement, and Construction Model
2. Economics
This Energy Options Network 2017 study liaised with leading advanced reactor companies[25]to obtain reliable, standardised cost projections for their nth-of-a-kind plant(NOAK).[26] Since most of the work carried out by the technology developers is proprietary, little commercial data about costs is available in the public domain. The results projected in the report, though not very current, are cited as a reference. The summary of costs reported in the Report is as follows:
Table: Summary of Costs[27]
3. Pakistan’s experience
The progress in Advanced Nuclear Technologies is gaining traction globally, making it not merely a topic of the future. With China’s support, Pakistan has already commissioned Gen-III reactors (CNP 300) at its Chashma Nuclear Plants with Chinese collaboration.
4. Water crisis and advanced nuclear technologies
Pakistan’s water crisis is acute, rapidly moving from being classified as “stressed” to “scarce”. It is reported that the country’s annual (fresh) water availability has fallen below 1,000 cubic metres. The figure below illustrates population growth and water per capita in Pakistan.[28]
Advanced Nuclear Technologies can help Pakistan’s water crisis in two possible ways. Firstly, thermal and reverse osmosis desalination can help Pakistan’s access to fresh water. Forbes asserted in one of its reports that Small Modular Nuclear Reactors (SMRs) powered desalination plants are ideal for producing fresh water.[29] Forbes also cited the figures of NuScale– an Advanced Nuclear Technology – to demonstrate the economy of a desalination plant and these are reproduced below for reference.
Summary of economic analysis for coupled NuScale-desalination plant. Secondly, in addition to using Advanced Nuclear Technologies for desalination as a solution, molten salt reactors have the advantage of being less water intensive compared to other nuclear technologies as they use molten salt as a coolant and fuel, minimising the use of water for producing electricity. An illustration of an integral molten salt reactor is as follows:
Integral molten salt reactor-unit[30]
It has been reported that Gen IV reactors can also substitute the existing coal power plants. Nuclear Newswire reported, ‘Gen IV reactor can operate at the same temperature as a coal-fired boiler-the “polluting part of the [coal]plant”-the coal boiler can be easily substituted with the non-carbon-emitting fission reactor to extend the life of both the power plant and the associated benefits for the surrounding area for many years.’[31]
Pakistan’s current path to coal power plants can be updated to substitute the coal power plants with Gen IV reactors.
Nuclear export control: Pakistan’s Achilles’ heel?
Pakistan has been a member of the International Atomic Energy Agency since 1957. It has also ratified various treaties and conventions regulating nuclear power. A current list of international treaties and conventions that Pakistan is a signatory to, extracted from IAEA’s country fact sheet, is listed in Appendix II.
Though a nuclear jurisdiction for the last five decades, Pakistan has opted not to ratify the Non-Proliferation Treaty (NPT) for security and political concerns linked to neighbouring India – another nuclear country. This approach has denied Pakistan access to the Nuclear Suppliers Group,[32]a voluntary association of 48 countries capable of exporting and transporting civilian nuclear technology and that have pledged to transfer this technology under mutually agreed guidelines.
India, Israel and Pakistan, nations possessing military nuclear capacity, have not been members of the NSG since its inception. India and Pakistan applied for NSG membership in May 2016. Pakistan offered to enter into a bilateral moratorium agreement with India on non-testing nuclear weapons in 2016 to improve their chances for NSG membership.[33] However, formal progress has yet to be made on their NSG applications.
Nevertheless, India and Pakistan have developed their civil nuclear programs with the US and China’s (NSG members) support. The IAEA Safeguards Agreements govern all the existing civil nuclear facilities of Pakistan. Pakistan has further committed to putting all future civil nuclear facilities under the IAEA safeguards framework.[34]
Challenges and the way forward for Pakistan to pave the way for more Advanced Nuclear Technologies?
Pakistanis a developing country with an estimated population of 231,402,117 (231 million)reported by the World Bank.[35] Regarding energy policy, it faces the challenge of meeting its energy needs by braving the crunch of fuel import burdens and climate obligations. It has taken the brunt of climate-change effects in terms of heavy rain and floods displacing 8 million people in 2022 (the country’s cumulative emissions as a share of cumulative global emissions to GHG emissions has been 0.3% as compared to India (3.29%)and China (14.36%) [36]).
Nuclear power and Advanced Nuclear Technologies can potentially address the concerns faced by energy policy in Pakistan. However, the challenges for going forward are manifold and must be addressed on multiple levels. The following is a brief list of issues to be addressed internationally and nationally.
A. International
NPT: The accession to the NPT regime for Pakistan, amid security concerns with its neighbour India, is a political question (outside the scope of this work). However, a firm national commitment, for adherence and compliance to the NPT principles may yield the benefit of paving the way for streamlining the export of Advanced Nuclear Technologies to Pakistan. Additionally, Pakistan’s credentials of maintaining a successful civil nuclear program with China’s support, also protected under the IAEA safeguards framework, can play a key role in its pursuit of clean power.
Third-party nuclear liability regime: Pakistan has not acceded to any conventions relating to civil liability for nuclear damage. Adopting a third-party nuclear liability regime under international nuclear law will inspire the confidence of Advanced Nuclear technology developers as ‘suppliers’ of nuclear reactors and nuclear material to the country.
IAEA milestones audit: Pakistan may volunteer to conduct a compliance audit of IAEA milestones to present its credentials as a nuclear jurisdiction with a sound legal and regulatory framework to govern a civil nuclear power programme. In addition to the above, a compliance audit report following IAEA milestones may be used to promote nuclear as a viable option for Pakistan’s energy problems.
B. National
Siting policy: Pakistan has nuclear power plants at Karachi (the coastal area of Pakistan) and Chashma (Chashma is located on the left bank of the river Indus, close to the Koh-i-Suleiman Mountain range). It has declared to bring its nuclear capacity up to 8800MW by 2030, and it has also been reported to bring the nuclear power capacity up to 40,000MW by 2050. Limited information is available on the sites for new nuclear.
Identifying sites for new nuclear projects will be an important milestone to demonstrate the state’s interest in starting a nuclear program. In addition to what has been listed above, a clearer and more transparent siting plan and selection of sites for new nuclear should be publicly available for the prospective nuclear supplier. Regulations on the Safety of Nuclear Installations– Site Evaluation – (PAK/910) (Rev.1) have been in force, which lays down the siting evaluation criteria for the new nuclear sites, but limited information is available on nominating sites for new nuclear
Regulatory collaboration: In addition to the steps and suggestions noted above, the collaboration with other jurisdictions on a regulatory level will be a critical point of consideration. Advanced Nuclear Technologies (due to their standardised manufacturing design and modularity) which have obtained regulatory design approvals, with PNRA and IAEA’s oversight on the safety features, will significantly help to elevate Pakistan as a potential nuclear state for Advanced Nuclear Technology developers.
Market structure: Pakistan has undergone privatisation and simultaneous market reforms since 1994. These still exist, but a single buyer model is planned to be transitioned to the Competitive Trading Bilateral Contracts Market (CTBCM). More clarity and information on the nature of bilateral agreements, market rules and the timescale of applicability of the CTBCM will be required for creating investment opportunities in Pakistan’s civil nuclear power.
In the case of Pakistan, the energy trilemma exacerbates with economics, security, and environment, all driving in different directions. Coal, despite it being indigenous and cheap, comes with the ‘hidden costs’ of environmental disruptions and carbon pricing. Nuclear Fission, a clean power source, offers one solution to Pakistan’s energy problems.
Pakistan has five decades of civil nuclear experience and delivered its nuclear power programme with Chinese collaboration and cooperation. Nuclear power has an installed capacity of8.27% in the national basket. However, it is important to note that large nuclear is expensive and is a water-intensive electricity production resource, and it also comes with construction and cost risks.
Advanced Nuclear Technologies, particularly Molten Salt Rectors, can provide a solution to Pakistan’s energy and water crisis. Gen-IV reactors, with their modularity, safe designs, reduced time scale, and economics make a good case for consideration to assist in the energy transition in Pakistan.
Pakistan has to consider if its energy transition (forced by economics) will be for ‘more indigenous coal (indigenous coal is of the lowest quality)’ or ‘more nuclear’ Gen IV reactors offer a commercially realistic chance of helping Pakistan to avert the energy and water crisis.
Pakistan has to develop a diplomatic solution for access to the Gen-IV reactors, including the Molten Salt Reactor Technologies, in line with the principles enshrined in the Non-Proliferation Treaty in its path to net zero.
