Analysis: Coal returns to the China-Pakistan Economic Corridor — A greener life, a greener world

Progress towards the construction of a China-funded coal power plant in Gwadar raises questions about the climate pledges of both China and Pakistan.

News that the Pakistan government plans to secure financing and start construction on a long-stalled 300-megawatt coal-fired power plant in the port city of Gwadar has triggered a debate on the direction of the country’s energy sector. Set to be built and funded by Chinese state-owned entities, recent developments have also raised fresh questions about China’s pledge – made at the UN General Assembly in 2021 – not to build any new coal power plants overseas.

The Gwadar coal power plant was first conceived in 2016, with an estimated cost of USD 542.32 million. It is to be constructed by the Chinese company CIHC Pak Power, a subsidiary of the state-owned China Communications and Construction Group. The plant was recently reported to have secured financing from the Industrial and Commercial Bank of China (ICBC), China’s largest commercial bank. Once completed, it is intended to supply power, on a priority basis, to the industries being set up at the Gwadar Free Zone (GFZ), a special economic zone at Gwadar port that forms part of the China-Pakistan Economic Corridor (CPEC), the USD 62 billion bilateral infrastructure and connectivity project between China and Pakistan.

The environmental impacts of coal power – from local air and water pollution to carbon emissions – have made the project controversial.

“We are pushing the Chinese company to complete its financial closure by 31 December 2023, and start construction at the earliest so that it can be completed by 2025,” Shah Jahan Mirza, managing director of the Pakistan government-owned Private Power and Infrastructure Board told me. “Electricity shortage is the biggest impediment to developing Gwadar,” he said.

Pakistan’s energy sector is dominated by fossil fuels. According to the country’s Finance Division, as of April 2022, just under 60% of total installed generation capacity used fossil fuels, including gas, oil and coal. Just 3% of generated electricity in the 2022 fiscal year came from non-hydropower renewables. Pakistan’s Nationally Determined Contribution (NDC) ­– its climate pledge under the Paris Agreement – targets 60% renewable energy generation by 2030, including hydropower. The NDC also states: “From 2020, new coal power plants are subject to a moratorium.”

Analysis: Coal returns to the China-Pakistan Economic Corridor — A greener life, a greener world

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