Friday, November 29, 2013

ADB suggesting Bangladesh to go for more coal?

I have just come across this document ‘Energy Policy Options for Sustainable Development in Bangladesh’ published by ADB.  This document, an ‘ADB Economics Working Paper Series’ paper makes right noises about the emerging energy challenges of Bangladesh but tactfully recommends more use of coal, besides talking of reforms in natural gas allocation and pricing that means the people of the Bangladesh have to pay a lot for their energy consumption.

Pasted below please find the conclusion part of this document which is self-explanatory.   You can find the complete document at the following link:

Friends in Bangladesh are requested to look into this further and devise a suitable strategy to counter coal and work for alternative and green energies.

Conclusion Section of the above referred document:

Bangladesh today faces a different future than it did decades ago when relatively abundant natural gas seemed to be the key to prosperity. Known reserves are not expected to last more than 2 decades on current use trends, energy price policies appear to seriously undermine energy security and economic efficiency, and the fiscal costs of those policies pose serious questions. To support more evidence-based dialogue on energy development, allocation, and pricing reform, this study uses a detailed economic forecasting model to evaluate leading energy issues facing Bangladesh. This study uses this model to evaluate a variety of policy options that are under active discussion and consideration by public and private stakeholders. In particular, we consider reforms that would make gas prices more market determined and uniform across private uses, as well as energy efficiency potential, the special nature of the fertilizer sector to receive subsidized gas, coal substitution for electric power generation, and the prospect of exporting part of the country’s natural gas reserves at more competitive international prices, and investing augment gas revenues for infrastructure development.

The relatively small negative growth impact of increased energy price can be easily counteracted by economy-wide increase in energy efficiency. Quite contrary to the general expectation, the gas price increase without supplementary policies of energy efficiency or fertilizer subsidy does not increase inflation. This is due to the contractionary effect of gas price increase. Subsidized gas for fertilizer production more than compensates the negative economic impact of high gas price through its productivity impact in agriculture. Diversification of power sector fuel mix by introducing coal provides good macroeconomic indicators, but result to higher carbon emissions. Investing the gas revenue in infrastructure provides the best macroeconomic indicators. This best policy option, however, further increases carbon emissions. The impacts of these different policies in terms of increased household income are more or less equally distributed among different groups.

Polices considered in this study are quite diverse, but all have important implications for the country’s energy sector, particularly in terms of economy-wide efficiency, equity, and sustainability. Our results suggest that, although its energy future is more challenging than in the early days of gas abundance, Bangladesh has many options for energy policy reform for a sustainable future. To realize the vast human and economic potential of this country, more balanced consideration of political and economic criteria will be essential. Because most of the attractive policy options have the drawback of higher carbon emissions, supplementary policies and suitable technology adoption should play a balancing role.

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