Kayin state struggles expose Myanmar's energy dilemma

Kayin state struggles expose Myanmar's energy dilemma

Local and national opposition to a proposed coal plant in Kayin state,
eastern Myanmar, has exposed Myanmar's energy security dilemma. Activists
argue the project will have a range of negative impacts, encouraging land
grabbing; polluting air and water supplies; ruining local livelihoods; and
exacerbating already poor public health across the region.

Approximately one-third of Myanmar's citizens have electricity access -
among the lowest rates in Asia. Low energy security has particularly
hampered economic growth and the livelihoods of citizens in rural areas,
where electricity is most scarce. Nevertheless, focusing on coal power
creates unnecessary risks and ignores viable renewable alternatives for
rural communities.

The government's plans

Under its National Electrification Project (NEP), the government plans to
connect 100% of homes to the national grid by 2030. This ambitious 15-year
project involves expanding the grid to a further 40,000 villages, drawing on
investments of US$5.8bn. A central aspect of these plans is to increase
coal's total contribution to the grid from 3% to 30%. This represents a huge
success for coal lobbyists, and reflects the industry's revival across South
and Southeast Asia.

Major financial institutions have thrown their weight behind Myanmar,
including the World Bank, the Asian Development Bank (ADB) and the Japan
International Cooperation Agency (JICA). The World Bank has pledged US$1bn
and provided a further US$400m in loans to expand the current grid, with the
remainder coming from a variety of initiatives and foreign-funded projects.

For the government, coal provides an efficient and cheap power source and
will contribute greatly to Myanmar's energy security. Data shows the Kayin
plant alone will increase Myanmar's total electricity production by 25%.
Myanmar's grid is currently over-reliant on hydropower, causing the country
to suffer from regular blackouts during the dry season. Opposition to
hydropower has also grown due to the controversy surrounding the
Chinese-backed Myitsone Dam, causing delays to most of Myanmar's other
planned hydropower projects.

NLD spokesperson Win Htein noted the potential value of coal in locations
where hydropower no longer seems viable. The government plans to proceed
with the Kayin state plant, one of eleven plants commissioned under the NEP.
It will be run by the Thailand-based Toyo-Thai Corporation Public Company
Limited (TTCL).

The risks of coal

Despite coal's reputation for contributing to global warming, TTCL intends
to employ 'high energy, low emissions' (HELE) technology to mitigate the
adverse environmental effects resulting from coal burning. As previously
reported, this 'clean coal' technology has attracted interest from a host of
countries, including Australia, India and China.

HELE technology is still under-researched. For instance, the best methods of
dealing with the pollutants that are not filtered out (nitrogen oxide,
sulphur dioxide, and other particulates) are still unclear. This is
important considering Myanmar's high vulnerability to climate change's
negative impacts. Clean coal is also more costly, although costs may
decrease with further research and development.

'Clean' or not, coal extraction remains controversial. Mining has a long
history of opposition in Myanmar. The Ban Chaung coal mine in Kayin state
has faced resistance for many of the same reasons as the planned power
station, namely environmental and health problems, land seizures and other
human rights violations (concerning which Myanmar has a long and sorry
history). Villagers are well-educated on the costs and benefits of energy
projects, and adept at generating community opposition - the chief element
behind stalled projects.

The majority of Myanmar's coal is low quality; hence the government will
need to import expensive bituminous coal for these new plants. As Naing and
Lee observe, this 'would mean an outflow of dollars from a country with tiny
reserves of hard currency'. To handle the vast quantities of coal imported
annually, experts anticipate the need for a new sea port, creating further
economic and logistical strains.

By proceeding with these plans, the NLD risks jeopardising the support it
has gained in Kayin state. Moreover, resource politics is deeply entwined
with the tensions between different ethnic militias. Although a ceasefire
has been observed since 2011, peripheral regions - like Kayin and Mon -
remain volatile and vulnerable to clashes, particularly over land and
resources. Historically, there has also been collusion between members of
these armed groups and military officials.

The case for renewables

NGOs believe there are opportunities for greener solutions. Renewables are
abundant, cheap, quick to install and well-positioned for off-grid needs.
Solar, wind, biogas and small-scale hydro-technologies have positively
impacted rural communities. These markets have received much attention in
Thailand, and Myanmar should take heed of its neighbour.

Under the NEP, Myanmar has made some commitments to renewables. The
cumulative target by the end of 2021 is to install solar panel units in
456,500 homes and 'mini-grids' (which draw on any combination of the
aforementioned technologies) in 35,500 households. However, the NEP favours
coal, gas and big hydro, and is not forward-thinking enough regarding
renewables and the growing market for household-scale solutions. Whereas
Thailand's target contribution from renewables is 40%, Myanmar's is just 5%.

One of the contributing factors is the limited role of Myanmar's private
sector. Responsibility for off-grid rural electrification falls under the
agriculture ministry - and not the energy ministry - which has hampered
private-sector participation in renewable energy projects and prevented a
unified policy framework concerning off-grid rural electrification. As a
solution, more power should be devolved to each state's own energy ministry.

As one article notes, there are exceptions: the NGO 'Pact' is working with
businesses to provide electricity for 1 million villagers by 2021. Pact will
offer highly-subsidised solar panels to villagers, and - given sufficient
funding - hopes to develop mini-grids. The NEP report does acknowledge that
'further reforms, institutional development and increasing private sector
participation' are needed to develop a commercially viable renewable energy
market. The NEP report also acknowledges a rural market for grid extension
even while it highlights off-grid renewables as being more unreliable due to
their reliance dependent on weather and climate, and notes that relatively
speaking 'off-grid customers tend to pay significantly more for lower level
of services than grid-connected users.'

As Myanmar continues to liberalise after years of underinvestment and
underdevelopment, energy security will represent its Achilles' heel.
Clearly, the government believes renewables will be unable to meet the
country's growing energy needs. Nevertheless, embracing 'clean coal' risks
magnifying Myanmar's myriad environmental, social and political problems.

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Link to Original Article:
http://globalriskinsights.com/2017/07/myanmar-energy-dilemma/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com