FOIZ AHAMED, JOINT SECRETARY OWER DIVISION MNISTRY OF POWER, ENERGY AND MINERAL RESOURCES BANGLADES

1.0 Energy Security

Energy Security can be described as "the uninterrupted physical availability at a price which is affordable, while respecting environment concerns”. Energy security may also be defined as “the availability of usable energy supplies, at the point of final consumption, in sufficient quantity and timeliness so that, given due regard for encouraging energy efficiency, the economic and social development of the country is not materially constrained.”

Access to cheap energy has become essential to the functioning of modern economies. However, the uneven distribution of energy supplies among countries has led to significant vulnerabilities. Threats to '''energy security''' include the political instability of several energy producing countries, the manipulation of energy supplies, the competition over energy sources, attacks on supply infrastructure, as well as accidents and natural disasters. The limited supplies, uneven distribution, and rising costs of fossil fuels, such as oil and gas, create a need to change to more sustainable energy sources in the foreseeable future. Energy Security has many aspects: long-term energy security is mainly linked to timely investments to supply energy in line with economic developments and environmental needs. On the other hand, short-term energy security is the ability of the energy system to react promptly to sudden changes in supply and demand. Another way to look at energy security is to study the different energy sources (coal, oil, gas, and renewable), intermediate means (electricity, refineries) and transportation modes (grids, pipelines, ports, ships). All of these have risks of supply interruptions or failures, challenging the security of undisturbed energy supply.

2.0 Security Threats

One of the leading threats to energy security is the significant increase in energy prices, either on the world markets – as has occurred in a number of energy crises over the years – or by the imposition of price increases by an oligopoly or monopoly supplier, cartel or country. In some cases the threat might come from a single energy superpower – those states able to significantly influence world markets by their action alone. Rather than just manipulating prices, such suppliers might go beyond this by suspending or terminating supplies. This has been done to apply pressure during economic negotiations. Suspension of supplies may also come about as a result of worldwide international sanctions against a country. Energy plays an important role in the national security of any given country as a fuel to power the economic engine. Hence, threats to energy security can also result from physical damage to the energy infrastructure either of the supplier, or of the importer as a result of natural events, misfortune, terrorism, or war fare. The political and economic instability caused by war or other factors such as strike action can also prevent the proper functioning of the energy industry in a supplier country. In recent years, new threats to energy security have emerged in the form of the increased world competition for energy resources due to the increased pace of industrialization in countries such as India and China. Increased competition over energy resources may also lead to the formation of security compacts to enable an equitable distribution of oil and gas between major powers.

3.0 Major Challenges

Energy is a key building block for sustaining any nation’s socio-economic development. As the global economy continues to grow, global energy needs as well as global emissions will increase by approx 60% between 2004 and 2030 as per the World Energy Outlook 2004 published by the International Energy Agency. Policy makers in developed as well as developing countries have realized that economic security of a nation has direct linkage with its energy security; hence for the sustainable growth of an economy it is essential to ensure the availability of dependable and affordable energy sources. Nations are now encouraging pragmatic energy policies and implementing state-of-the-art technology to mitigate the harsh economic impact of volatile energy prices, global climate change and to manage their energy security requirements. We believe that technology innovations can significantly contribute towards the development of clean, efficient, affordable energy sources over the longer term, while continuing to contribute towards improving the efficiency across various segments of the energy value chain.

Increasingly Information Technology (IT) is playing a role of a facilitator in realizing complete benefits from such innovations. Such technological breakthroughs will help countries manage the energy needs of its population, grow their economies and reduce poverty.

Any step which contributes towards either creating new sources of energy or helps in reducing energy consumption enhances energy security. Encouraging the use of renewable energy sources like bio-fuels, solar power and wind power through tax credits and other incentives for such technology innovations will help in reducing our dependence on fossil fuels whereby enhance energy independence. Conservation and energy efficiency initiatives also contribute to enhancing energy security as it results in using less energy for undertaking the same tasks.

In the World Energy Council report on “Long-term energy Scenarios”, one of the ecologically driven scenarios described, appears to be the ideal solution for achieving energy independence. This is a scenario based on new renewable energy resources allowing a gradual phasing out of most fossil fuel use and also creation of a new generation of inherently safe small-scale nuclear reactors, which achieve public and political support. The indicated possibilities over the next century are huge; For instance, global fossil fuel dependency may decline from its present 76% to scarcely 20%. There will also be huge shifts lying behind these global figures. The present developing countries that accounted for 34% of world primary energy consumption in 1990 are expected to account for about 50% by 2020, at least 60% by 2050, and over 70% by 2100.

4.0 Strategies for Enhancing Energy Security

Fundamentally, improving energy security is about ensuring availability of reliable energy services to the economy. As such, diversification has been at the heart of strategies followed by countries around the world. Most common are the following:

• increasing the number of fuels and technologies that are in the energy mix;
• increasing the number of suppliers for each fuel (especially if imported);
• increasing energy efficiency and conservation; and
• developing storage capacity for different fuels (e.g., strategic reserves).

However, achieving the desired level of diversification across all of these dimensions faces many challenges. As with any risk mitigation approach, premiums should be commensurate with the size and likelihood of the anticipated risk. Buying reserves or investing in upstream projects through national companies in producing countries, engaging in long-term supply agreements, or building multiple pipelines may help with supply security but not necessarily with diversification unless multiple producers are pursued. These strategies can also cost more in the long-run if, for example, the market price falls or fields turn out to be less productive or more costly. Similarly, building strategic reserves can be expensive in terms of both the capital cost of building storage facilities and the cost of fuels purchased to fill them. Somewhat paradoxically, the urge to fill the reserves gets stronger as fuel prices rise in anticipation of further increases; significant sums can be spent filling storage with expensive fuel. Supporting new fuels or technologies may require substantial investment in production capacity or subsidies for the fuel or both. If there are already subsidies for products like electricity, LPG, kerosene, or diesel, the alternatives will have an even more difficult time penetrating the market. Subsidies also discourage conservation and investment in more efficient buildings or equipment.

Therefore, it is useful to identify and compare key dimensions of energy security as they apply to various fuels. In order for any fuel to be a realistic part of a diversified fuel portfolio, sufficient resources should be available; producers should be able to have the technology, capital and access to produce the resource; and consumers should be able to afford the end product. Increasingly, consumers prefer fuels that are safe and environment friendly. These key dimensions of energy security can be summarized as availability, accessibility, acceptability and affordability.

• Availability captures the global energy resources that dominate current energy mix and are expected to remain the dominant sources of energy for the foreseeable future. Conventional and unconventional hydrocarbon resources, and renewable resources such as wind, solar and biofuels are considered.
• Accessibility addresses barriers to exploring and developing available resources. Barriers include geopolitical factors, financial and human resource constraints, fiscal regimes, and the need for major infrastructure and technology deployment.
• Acceptability reflects environmental and safety concerns.
• Affordability is ultimately about consumers being able to afford energy services provided to them but it also covers capital and operating cost structures for developing various energy sources.

5.0 Energy Security Indicators

• Diversification of energy supply sources (ES1) – This index was utilized since it considers both the significance of diversification in terms of abundance and equitability of sources:

◊ ES1=-(Σa_iLn(a_i))/Ln(6)

◊ where a_i is the share of each of our six primary energy sources (oil, natural gas, coal, nuclear, hydro and renewables) in total energy consumption.

• Net import dependency (ES2) – ES1 is altered to reflect the impact of both diversification and imports on energy supply security:

◊ ES2=1-{(Σ(1-m_i)a_iLn(a_i))/Ln(6)}/ES1

◊ where m_i is the share of import for energy source i.

• Net oil import dependency (ES3) – This indicator considers net imports of oil weighted by the share of oil in overall energy demand:

◊ ES3=net oil imports/total energy demand.

6.0 Plans and Reserves of Primary Energy Resources of Bangladesh

Natural Gas: Total proven and probable recoverable gas reserves are about 20 trillion cubic feet (TCF), of which about 6 TCF has so far been consumed. The net recoverable volume of gas is about 14 TCF. Currently Bangladesh has undertaken seismic survey for new discovery and exploration activities to enhance the reserves and recoveries. Production Sharing Contracts (PSCs) has already been awarded to the international IOCs for exploration of natural gas both in offshore and onshore through international competitive bidding process.

Coal: Total coal reserves are about 2,514 millions ton, most of which has yet to be explored. Currently Bangladesh has finalizing coal policy for immediate exploration activities to enhance the reserves and recoveries. Plans have already been taken to produce 2000 MW electricity by using imported coal until the production of domestic coal. Side by side plans have been taken to produce 4000 MW electricity by using domestic coal when available.

Hydro: Bangladesh has limited hydro resource. Only hydro power plant at Kaptai, Chittagong Hill Tracts of capacity 230 MW has been in operation since long. Though limited resource Bangladesh is trying to use mini-hydro and micro-hydro resources for power generation.

Renewables: Bangladesh has good potential of renewable energy resources such as solar, wind, biomass, etc. To enhance and encourage the use of renewables Bangladesh has recently formulated Renewable Energy Policy. This Policy has allowed fiscal and other incentives to the investors for rapid development of clean energy.

7.0 Power Scenario in Bangladesh

Electricity plays vital role in the socio-economic development and poverty reduction. Presently only 47% of the total population has access to electricity and per capita generation is only 182 kWh which are very low comparing with even other developing countries. Government has given highest priority in the Power Sector development and is committed to make electricity available to all by 2021. In this connection, Government has initiated implementing reform measures in the power sector including various development programs. Contribution of electricity in GDP and growth rate of electricity in last 7 years is presented below:

Table: Contribution of electricity in GDP and its growth rate

7.1 Generation Capacity and Demand Fulfilled

In FY 2008-09 total installed generation capacity was 5719 MW including 3812 MW in public sector and 1907 Megawatt in private sector. In the public sector, a good number of generation units have become very old and has been operating at a much-reduced capacity. As a result, their reliability and productivity are also poor. For the last few years, actual demand could not be supplied due to shortage of available generation capacity. Besides, due to shortage of gas supply some power plants are unable to reach their usual generation capability. Maximum demand of 4162 MW was supplied till to-date. The installed capacity by owner basis & fuel basis for FY 2008-09 is shown in chart below.

7.2 Energy Generation

26,415 Million-kilowatt hour (MKWh) net energy comprising 15,449 MKWh in public sector and 10,966 MKWh in private sector was generated during 2008-09. Of the total net energy generation 58.49 % was generated in public sector and 41.51 % in the private sector. Of the total energy generation 88.79% was gas based, 1.57 % hydro, 3.9 % coal and 5.74 % oil based. In FY 2007-08, 24311 million-kilowatt hour (MKWh) net energy was generated.

7.3 Development Plan

The government has prepared Power System Master Plan to realize the vision. According to the plan, installed capacity will rise to 16,643 MW by the year 2020. In this period transmission and distribution line will reach 12,000 km and 4,77,558 km respectively. Development plan of the government up to the year 2020 is stated below:

Table: Plan of Power Sector Development

7.4 Power Generation Program

The government has prepared Power System Master Plan (updated in 2006) to realize the goals. According to the reference forecast of Power System Master Plan, 2006 the maximum demand in 2010, 2012 and 2015 would be about 6608, 7732 and 9786 MW respectively. The demand is expected to be 13,993 MW in 2020 and 14,924 MW in 2021. To meet the demand with reasonable reliability, installed capacity will be increased to 16,643 MW and 17,455 MW by the year 2020 & 2021 respectively. In this period transmission and distribution line will also be increased to 12,500 km and 4,87,558 km respectively. To meet this demand of electricity Short, Mid and Long term generation, distribution & transmission lines expansion projects are in the various stages of implementation. According to the existing generation expansion program, total 3,547 MW of new generation will be added to the national grid within FY 2014. Moreover, 3300 MW newly initiated generation plant will be implemented by FY 2014.

8.0 The Role of Regional Cooperation

Asia and Pacific region has almost 25% of the global oil reserve and 54% of coal reserve. It has also abundant renewable energy resources. So, there is great potential for regional cooperation. The Asia-Pacific region, led by China and India, will represent the world’s largest energy market in the next decade. Technological advances and a more sophisticated energy market today have led to a growing reliance on natural gas, nuclear power and renewable energy relative to the region’s traditional sources of energy, coal and oil. However, coal and oil remain the region’s primary energy sources, with the rate of growth of oil demand set to increase considerably in the next decade.The financial crisis has temporarily slowed the pace of economic growth and development in much of Asia, but it has not fundamentally altered projections for Asia’s future energy needs. Long-term energy demand growth for the region is expected to surpass its own production capacity and eventually be the dominant consumers of the world’s energy supplies. Access to energy sources is a critical security issue for the Asia-Pacific region given the structure of its energy needs and expected future consumption patterns. Governments and security professionals continue to wrestle with traditional energy security concerns such as safe access to sea-lanes, reliable transportation, territorial conflicts, and attendant environmental security issues such as pollution. New sources of energy, such as natural gas, a more sophisticated and integrated energy market, and newly emerging strategic relationships have introduced new energy security considerations in the Asia-Pacific. This section reviews the salient security concerns associated with energy.

Also there are considerable opportunities for promoting flows of electricity and natural gas between SAARC countries. All the SAARC countries are large importers of oil and oil products. All of these imports come from outside the SAARC region, and put heavy strains on the economies of the South Asian countries. The large hydropower potential of Nepal and Bhutan, of which 43 GW and 30 GW respectively could be developed economically, could be tapped for the benefit of that country, as well as India, Bangladesh and even Pakistan.

Energy security for regional co-operation may focus on the following three areas:
(1) cross border energy trade,
(2) energy market formation, and
(3) regional clean energy development.

Through these activities more efficient regional energy resource utilization, works toward transparent and profitable energy practices, mitigates the environmental impacts of energy production, and increases regional access to energy.

8.1 Identification of Energy Sector for Cooperation

The energy sectors that deal with bilateral trading can be handled under existing trading arrangements. This can be expanded into a long lasting cooperation.

Oil Products: Some Asian Countries has surplus production capacity for middle distillates and lubes. It is estimated that the quantity involved today amounting to millions ton per year can make the region self-sufficient in these products.

Natural Gas: There exists no bilateral or multilateral trade or cooperation in the indigenous natural gas sector. In view of the limited reserves of natural gas and its increased demand for urea production and power generation, Bangladesh will be importing gas in next two decades if new reserves are not found. Although India has started to import LNG from the Middle Eastern sources, some proposals are on the table in the region for importing natural gas through pipelines at least from four sources. The proposal that is more relevant to Bangladesh right now is:

· Natural gas from Myanmar (proven reserve 13-15 TCF) to India through Bangladesh

India has been contemplating for bringing natural gas from the North Eastern India (Tripura and Mizoram) to Eastern India through Bangladesh. The cooperation should consider:

· Transporting natural gas from North Eastern India to Eastern India through Bangladesh

If the pipelines transporting gas either from Myanmar or North Eastern India go through Bangladesh, Bangladesh should permit so earnestly with provision for accessing gas from these lines when necessity arises.

Power Sector: Experiences of power trade between India and Bhutan, and India and Nepal since 1960s can be the stepping-stone for Bangladesh for realizing cooperation in power sector. India will be the key player in coordinating and implementing cooperation projects/deals whether bilateral or multilateral. India plans to import more hydroelectricity from Bhutan and it will get a boost with the completion of Tala project (1020 MW). India’s interest in Bhutan’s future hydropower project is evident from its technical assistance and funds made available to Bhutan.

8.2 Strategy for Cooperation

Some of the strategies for cooperation at various levels to overcome the barriers include:

1. Promoting trade in petroleum products on long-term basis at private and state level.

2. Removing all the barriers that block the land connectivity between the neighboring countries.

3. Getting the proposed natural gas pipeline from Myanmar to India through Bangladesh rolling immediately.

4. Establishing interconnecting transmission systems between regional/neiboring countries along the border at convenient points.

5. Promoting bilateral/multilateral cooperation with SAARC/BIMSTEC/ESCAP countries for electricity and transportation of goods.

Other strategies to have the cooperation in place should include:

1. Identification of common power projects in neighboring countries with equity participation;

2. Identification of interconnecting transmission systems for making a regional power grid systems for transferring electricity between neighboring countries;

3. Identification of Tran boundary natural gas pipelines serving the region, especially India, Myanmar and Bangladesh;

4. Having a common strategic reserves of crud oil and petroleum products, and

5. Mobilizing technological and financial resources for exploration, development and production of hydrocarbon resources.

9.0 Way Forward

Fossil fuels will continue to dominate the world energy scene in the foreseeable future mainly because cost-effective and environmentally acceptable alternatives are not yet available in large quantities. Proven technologies such as large scale hydro and nuclear facilities are once again seriously considered to meet growing electricity demand around the world along with renewables such as wind and solar, albeit at smaller scales. The transportation sector remains a bigger challenge as oil products continue to offer most viable options given current vehicle technologies and adequacy of supply infrastructure, which is not readily usable by alternative fuels. Fossil fuel resources are available around the world but there are challenges to accessing and developing them. Local pollution caused by burning of these fuels and concerns about climate change drives the search for alternatives while increasing the cost of these fuels as technologies to use them more efficiently and cleanly are implemented. These are some of the considerations to be captured when evaluating energy security. Continuing economic growth in Asia and Pacific puts further emphasis on security of energy supplies as growing economies of the region experience faster energy demand growth. As energy sector stakeholders in Asia Pacific develop energy policies, strategies such as diversification of fuels in the energy mix, increasing efficiency and conservation in energy use, and diversification of suppliers will be part of the debate. Renewables can help bring electricity to rural areas without the need for large scale investments in grids, especially if advanced technologies can be deployed. Large hydro resources of the region and neighbouring countries can be harnessed for the benefit of all if national grids can become more integrated and interconnections across countries are expanded. Planned international natural gas pipelines could provide similar benefits.