Pakistan’s hydropower push ignores history, along with the latest research on large dams in the country.
For the Government of Pakistan, the Dimer-Bhasha Dam is an integral part of the country’s green energy future, with Hydropower is playing a major role In your updated nationally determined contribution. Construction of the 4,800-MW plant began in June 2020 with an estimated completed cost of US$14 billion. The target is to complete it by 2027.
Pakistan’s first green bond was issued to fund the dam, with $500 million raised from foreign investors by May 2021. In August 2021, in a speech during the foundation ceremony for the fifth expansion project of the Tarbela Dam, Prime Minister Imran Khan emphasized the role of hydropower in meeting the country’s energy needs. And yet a closer examination of the costs, both ecological and financial, belies expectations that the dam will provide affordable, green energy.
The Carbon Cost of Dimmer-Language
The surface area of the Dimer-Bhasha reservoir will be 200 square kilometres. About 12 million tonnes of steel and 22 million cubic meters of concrete are required for its construction. Concrete is highly carbon-intensive to make: globally, the production of cement contributes eight percent of CO2 emissions.
a 2016 paper, based on data from 1,473 dams around the world, estimated that an average of one megawatt-hour (MWh) of energy produced from hydropower generates 273 kilograms of carbon dioxide equivalent (CO2e). This includes both CO2 and methane emissions “from the decomposition of organic matter that was either flooded during reservoir formation, transferred to the reservoir by river runoff, carried into the reservoir such as by algal production, from water”. stems from fallen dead trees, or were grown in the newly created bog in the drawdown area”. With methane capture, the average carbon footprint of hydroelectricity is reduced to 173 kg. However, there is no provision for the capture of methane in the Diemer-Bhasha project.
Then there is the carbon cost of steel, which generates 1.85 tons of CO2e for every ton of steel produced.
According to US Energy Information Administration, 1 MW of energy generated by burning coal releases about 300 kg of CO2e. (Since converting thermal energy into electricity requires losses, the actual figure for CO2 emitted per megawatt per megawatt will be higher.) Given the lack of any methane capture at the Diemer-Bhasha project, we estimate that its In the first 30 years of operation the dam will have a carbon footprint of about 321 CO2e per MWh as the most polluting type of coal plant.
The carbon footprint of the Diemer-Bhasha Dam could still be high if the loss of ecosystem services is also included.
The large amount of water held up would have a disastrous effect on the Indus delta, as it would lead to encroachment of sea water up to the coast. This would be particularly damaging to mangrove forests. In the Indus Delta, the area covered by mangrove forests decreased from 380,000 hectares in 1950 to 87,000 hectares by 2005. During this five major dams were built in the Indus basin. Mangroves are among the most carbon-rich trees in the world, and their deforestation accounts for up to 10 percent of all emissions due to deforestation, even though they account for 0.7 percent of total trees.
no financial solution
The Diemer-Language project is also said to be “affordable”. It ignores the history of debt repayments for dams in Pakistan and the region, as well as the enormous cost and time taken. a Study on 245 Large Dams The average overrun at the cost of a large dam was found to be 96pc across 65 countries, with the average time exceeding 44pc.
Pakistan is also no exception to this. For example, the cost of the Tarbela Dam was 300 percent higher than its initial estimates, and the Neelum-Jhelum hydropower plant was over 500 percent. Diemer-Bhasha is already suffering from time and cost escalation: work on the project increased its cost by 174 billion rupees (US$1 billion) within the first year. In private conversations we are told that an ancillary facility – the 20MW Tanjir Hydroelectric Project to supply electricity at the main dam – is six months behind schedule, within a year.
If the Diemer-Bhasha project follows a similar timeline and costs 96 pc worldwide or the same as Pakistan’s previous large dams, it will be completed in 2035 at the earliest, rather than its initial estimate of the total cost. is $28 billion. 14 billion dollars. Since project financing and cash flow statements are not accessible to the public, we believe that – in line with the proportion of funding for previous projects – up to $20 billion will be financed through debt in foreign currency. To estimate external costs, we reconcile all foreign currency loans in a lump sum under an amortization schedule at 5 percent interest. (This is far below the interest rate on Pakistan’s green Eurobonds of 7.5 percent, or the average interest rate for lending by public and private institutions in Pakistan in 2020, 10.8 percent.)
We assume a grace period of 15 years (for the construction phase), during which the borrower gets the loan in equal annual installments, while only the accumulated interest is paid to the lender. After the grace period, both the principal and interest are paid – the principal amount in equal installments and the interest becomes zero in 30 years.
In comparison, the actual conditions were much tougher for the Ghazi-Barotha Hydroelectric Project until recently. It was financed by the Asian Development Bank with a grace period of six years, maturity of 25 years, 1 pc annual service fee and 14 pc annual interest rates. Therefore, the loan arrangement for our dimmer-language analysis can be considered very easy for the borrower: low interest, long tenure and significant grace period. But the project’s external cost of financing will likely be closer to $29 billion, despite the likely generous arrangement.
On top of this is the Social Cost of Carbon (SCC). This is an estimate of the financial damage caused by CO2 emissions.
The International Monetary Fund estimated that the social cost of carbon per ton of carbon in the US for 2020 was $6.8-80. While the SSC for Pakistan has not been estimated, this estimate could cost society a further $1-13 billion on the language project—the 170 million tonnes of CO2e generated by Diamer—in 30 years of operation. It should be noted that Pakistan is more vulnerable to climate change disasters than the US, and the SSC will continue to grow over time, meaning it will be much higher by the time the Diemer-Bhasha project ends.
The direct cost, the cost of financing, and the SSC together make the total cost to the Diemer-language society more than $70 billion. This would make it impossible to maintain the current tariff of Rs 4.11 ($0.024) per kilowatt-hour set by the Water and Electricity Development Authority. To break into just 30 years, the tariff has to be kept at Rs 22.00 (without considering externalities).
Other Renewable Options
If proper accounting is done and the cost of externalities is added to the project, the dimmer language can never break down, let alone become the engine of the national economy.
The current government’s dam building program is called the “Decade of Dams”. Last week, the Minister of Water Resources, Moonis Ilahi, reiterated the slogan, referring to projects under construction and planned.
Access to hydropower is a significant problem as part of Pakistan’s commitment to the Paris Agreement, as is the ambition of other countries such as China and India to continue building large hydroelectric projects in the region. But at least China and India also plan to set up large solar-plus-storage projects by 2030. Pakistan’s ambitions are small in comparison. Unless it realizes the true cost of hydropower, it could be blind to better opportunities in the renewables sector.
Header image: Asghar Hussain, a specialist in water modeling at the site of the Diemer-Bhasha project. — photo by Hassan Abbas
This article is originally from . was published by third pole and is reproduced with permission.