Fossil Fuels Today Extends Beyond Mere Energy Production

By Radhika Wijesekera –

Singapore, 2 December 2023 – The shift to renewable energy sources is one of the hottest global topics today, and indeed, this is a move that is crucial to ensure an environment that is sustainable to all. While there is pressure on all nations to make the necessary adjustments to this end, low-income countries targeting high economic growth find it particularly challenging to make the switch.

The South Asian region in particular, remains heavily dependent on fossil fuels for power generation. In spite of awareness of climate vulnerabilities, the progress towards decarbonisation has been slow. Approximately 80% of the energy mix in major South Asian economies such as Bangladesh, India, Pakistan and Sri Lanka comprise of coal, oil and gas. Diversifying this mix remains tough, as fossil fuels continue to be a critical component in meeting the increasing energy demands needed to support economic growth. Achieving the much-needed transition from fossil fuels to renewable energy requires a nuanced understanding of the complex interplay between energy choices, economic growth, and environmental considerations in the South Asian context.

Speaking exclusively to AsiaBizToday, founder and chairman of Summit Power International Limited Muhammed Aziz Khan elaborated on why denouncing fossil fuels will restrict South Asia’s economies, as countries like Bangladesh still rely on it for power.

According to Khan, in many developing countries, a lack of reliable access to energy still exists. Insufficient infrastructure, economic constraints, and the time required for a comprehensive transition further complicate the shift away from fossil fuels. They remain vital in supporting industries, powering essential infrastructure, and driving economic growth. The affordability and reliability of fossil fuels make them a linchpin for sustained economic activity in many developing nations. Consequently, any policy decisions aimed at restricting their use must be carefully calibrated to balance environmental objectives with the imperative of ensuring continued economic stability and growth.

Striking a balance between environmental sustainability and economic viability requires a nuanced approach, considering the economic constraints, infrastructural limitations, and the imperative of ensuring access to affordable and reliable energy for sustained development in these nations.

Scaling up the generation of renewable energy to meet the burgeoning residential and industrial demands is not without its challenges. One such issue is the intermittent nature of wind and solar power, which can result in fluctuations in energy production. To address this, advancements in energy storage technologies and grid infrastructure are paramount. Developing efficient and cost-effective energy storage solutions can mitigate the impact of intermittency, ensuring a reliable and consistent energy supply.

Land constraints also pose a limitation on the widespread deployment of renewable energy infrastructure, especially in densely populated areas like Bangladesh. Innovations in technology, such as the development of more efficient solar panels and the exploration of alternative renewable sources, can help overcome these spatial limitations.

Moreover, policy support and investment play a pivotal role in bridging the gap between renewable energy capacity and growing demand. Government policies that incentivise and promote renewable energy projects, coupled with strategic investments, can accelerate the transition to a more sustainable energy landscape. Summit Power International’s (SPI) partnership with Denmark’s CIP/COP to carry out a feasibility study for the development of Bangladesh’s first offshore wind project highlights the significance of private sector involvement in driving renewable energy initiatives. It also marks a significant technological leap for the region. The project’s potential to be the first of its kind in South Asia underscores the importance of technology transfer, which can accelerate the learning curve for a nascent industry and reduce technological barriers for future projects.

The investment is expected to have positive economic implications, creating numerous direct and indirect jobs during the construction phase and sustaining high-skilled permanent positions throughout the operational phase spanning decades. This showcases the dual benefit of renewable energy projects, not only in addressing environmental concerns but also in contributing to economic growth and job creation.

The Growing Importance of LNG

LNG will become a key player in supporting economic growth in developing countries. It presents a cleaner alternative to traditional fossil fuels, and its role is particularly important in nations like Bangladesh. The first step to decarbonisation is to replace higher polluting energy sources, such as coal and oil, with cleaner sources like LNG/gas. In the power sector, this would mean the replacement of coal and liquid fired plants with more efficient combined-cycle gas turbine (CCGT) power plants.

This characteristic allows developing countries to gradually transition towards cleaner energy sources while still meeting the imperative of sustaining robust economic growth, such as the targeted 8% annual growth in Bangladesh. This approach conforms to the principles of the just energy transition framework, whereby decarbonisation progresses equitably alongside continued socio-economic growth.

Summit Group, as the largest Independent Power Producer (IPP) in Bangladesh, plays a significant role in shaping this landscape. Currently contributing 17% of the country’s total private installed capacity, the company strategically focuses on enhancing regional LNG production and regasification capacity to meet the growing demand. This commitment underscores the importance of LNG in supporting the energy needs of a rapidly growing economy.

Becoming a Net Zero Country

Achieving net zero status would be much more challenging for developing countries to achieve. Economic constraints hinder investments in renewable technologies, and the upfront costs of cleaner energy sources can be difficult for developing countries to bear.

In addition, developing countries face a delicate balance between transitioning to cleaner energy and addressing immediate energy needs for growing populations. The challenge is further exacerbated by vulnerabilities to the impacts of climate change.

Furthermore, establishing and enforcing effective climate policies can be challenging due to governance issues and competing priorities in developing nations. International cooperation, funding, and capacity building are essential for these countries to overcome these obstacles.

Seeing the End of Fossil Fuels

While renewables are gaining traction, a complete transition to renewables is a complex and time-intensive process. The current trajectory suggests that achieving a state where energy demand is met solely through renewable sources will require a significant amount of time and concerted efforts. Renewable energy technologies, such as solar and wind, have witnessed remarkable advancements, and their adoption is on the rise. However, several challenges, including intermittency issues, energy storage limitations, and the need for substantial infrastructural developments, must be addressed to facilitate a comprehensive shift to renewable energy.

Realistically, a complete transition to renewable energy is unlikely to occur in the near term. It is more practical to envision a future where a diverse energy mix is employed to meet the increasing demand. This diversified approach involves integrating a combination of renewable sources, such as solar and wind, with conventional sources such as natural gas and transitional technologies like liquefied natural gas (LNG) supported by carbon abatement technologies, such as carbon capture and storage (CCS).

Ideal Renewable Energy : Fossil Fuel Ratio for the Near Term

Instead of envisioning a world entirely devoid of fossil fuels, a more pragmatic approach involves a phased transition toward cleaner energy sources. Striking the right balance between renewable and fossil fuel technologies is essential, recognising the indispensable role that the latter plays in certain applications, supported by affordable carbon abatement technologies to mitigate the impact of GHG emissions. This approach enables industries to continue functioning while gradually reducing their environmental impact.

In determining the ideal renewable energy to fossil fuels ratio, a nuanced and context-specific approach is necessary. Each industry has unique energy requirements, and the ideal ratio will vary accordingly. However, the overarching goal should be a substantial increase in the share of renewable energy in the global energy mix. This shift must be guided by a commitment to sustainability, environmental stewardship, and the imperative to mitigate climate change.

Global collaboration is crucial for fostering innovation and developing cleaner technologies. Governments, industries, and research institutions should work together to incentivise sustainable practices, invest in research and development, and facilitate the integration of cleaner energy solutions.