The long-awaited gas pipeline project of Turkmenistan, Afghanistan, Pakistan and India (TAPI) connecting the energy-rich Central Asian nation with the South Asian countries was inaugurated couple of days ago.
Considering the facts on the ground including political differences of the involved countries in the project and also insecurity and instability in the region many experts believe the successful realization of the project will depend on the ability of the project participants to maneuver through among others geopolitical, financial and technical challenges.
To shed more light on the issue we discussed the issue with the resident scholar on energy policy at the Middle East Institute, Rauf Mammadov.
Considering the differences between India and Pakistan, instability and insecurity in Afghanistan and Pakistan, how successful do you see the future of this project?
Although it is certainly a milestone for the two-decade-old project, TAPI is still facing an uphill battle. Successful realization of the project will depend on the ability of the project participants to maneuver through among others geopolitical, financial and technical challenges. It is still unclear how the project will be funded although external funding seems inevitable for the $10 billion (the figure ranges from $8 to $12 billion) project. The vague statement by the Turkmenistan government regarding the loan provided by Saudi Fund of Development failed to bring clarity to the loan terms and the actual amount of the loan. Moreover, the consortium has yet to bring clarity to the technical questions such as the transit fees and sales-and-purchase agreements for the gas.
The integrity of the Afghanistan stretch of the pipeline will depend on security guarantees provided by a non-state actor such as Taliban and tribe leaders. Fragile nature of the relations between Afghanistan and Pakistan, as well as, outstanding issues in relations between Pakistan and India will test the solidarity of the project participants to successfully complete and operate the pipeline.
How can this project affect the economy and security of the region particularly Afghanistan?
Turkmenistan has been recently facing acute economic problems. Only one of its three gas export pipelines is operating as Russia ceased the imports in 2016 and there is an ongoing arbitration between Turkmenistan and Iran regarding the payments. Turkmenistan needs to diversify its export outlets and energy-hungry India and Pakistan are evidently a lucrative market for the energy-rich Central Asian state. The leadership of India and Pakistan have repeatedly vowed to increase the share of natural gas in their energy mix and also to diversify the import sources. As both India and Pakistan currently rely on domestic production and LNG imports, relatively cheaper pipeline gas from Turkmenistan will only serve to alleviate their gas import efforts. Moreover, if completed the pipeline will be delivering natural gas to the landlocked regions of Pakistan and India rather than coastal parts of these countries.
Why Saudi Arabia supports the project?
The nature of Saudi Arabian support to the project is still unknown. It is also unclear in what capacity Saudi Arabian government or the Kingdom entities will be involved in the project. 700-million USD loan provided by the Islamic Development Bank was used for the completion of Turkmenistan part of the pipeline whereas there have been scant information regarding the loan provided by the Saudi Fund of Development for the rest of the pipeline.
What are the challenges and opportunities of the project for Iran?
There is a glut in the natural gas market at the moment, and the abundance in the market is expected to last for another 5 to 8 years. Therefore, major gas exporters such as Russia, Qatar and Australia are in fierce competition to capture their market shares. Qatar is currently the largest LNG exporter both to Pakistan and India. Although geographically located closer to these markets, Iran lacks the necessary infrastructure to transport its gas to these favorable markets. Successful realization of the TAPI pipeline will also have a negative impact on the realization of the long-disputed Iran-Pakistan pipeline.
How do you evaluate Iran’s energy diplomacy?
Iran is losing the historic chance to capture the market share in increasingly competitive natural gas, especially LNG, market. The dearth of its pipeline and LNG infrastructure constrains Iran’s efforts to become a significant player in the market. New large gas fields are being discovered in south shores of Europe, which are becoming substantial competitors for Iranian gas in European and Asian markets.
First published in our partner Mehr News Agency
The Development and Geopolitics of New Energy Vehicles in Anglo-American Axis Countries
While the global development of green energy and industries has been an ongoing matter, the war launched by Russia in Ukraine adds a deeper geopolitical dimension to it. In this shift, the “Anglo-American Axis”, comprising the United Kingdom and the United States, may once again lead the way.
Take the UK as an example. In promoting green energy and green industry, and reducing its carbon emissions, a series of seemingly radical policies have been introduced in the past two years. The UK government released the “Ten-Point Plan for a Green Industrial Revolution” in November 2020, proposing the development of offshore wind power, in addition to promoting the development of low-carbon hydrogen, and providing advanced nuclear energy, accelerating the transition to zero-emission vehicles, among others. It also includes action plans for the reduction of 230 million tons of carbon emissions in the transport and construction industries in the next decade.
In the policy paper Energy White Paper: Powering Our Net Zero Future published in December 2020, the UK has planned for the transformation of the energy system, and strive to achieve the goal of ne-zero carbon emissions in the energy system by 2050. On the conventional energy front, it announced a phase-out of existing coal power plants by October 2024. Focusing on the fields of energy, industry, transportation, construction and others, it aims at reducing greenhouse gas emissions by at least 68% by 2030. Additionally, the UK has also launched the Emissions Trading Scheme (ETS) on January 1, 2021, setting a cap on total greenhouse gas emissions for industrial and manufacturing companies, with the objective of achieving a net-zero emissions target by 2050. In March 2021, it took the lead among the G7 countries to launch the Industrial Decarbonization Strategy, supporting the development of low-carbon technologies and improving industrial competitiveness. The plan is to significantly reduce carbon dioxide emissions from manufacturing companies by 2030 and build the world’s first net-zero emissions industrial zone by 2040.
In terms of public transport, there is the March 2021 National Bus Strategy, and a green transformation plan for the bus industry is proposed. In July of the same year, the Transport Decarbonization Plan is announced, further integrating low-carbon transformation in transportation such as railways, buses, and aviation, and promoting the electrification of public and private transportation. At present, there are more than 600,000 plug-in electric vehicles in the UK, and the production of new energy vehicles exceeds one-fifth of the total car production. In the nation’s new car sales for February 2022, electric vehicle sales accounted for 17.7% of the market, the market share of plug-in hybrid vehicle sales is 7.9%. Adding traditional hybrid vehicles, electric vehicles account for more than one-third of the sales.
On April 8, 2022, the UK government announced the annual development goals for new energy vehicles. It is stipulated that by 2024, all-electric vehicles must occupy 22% of the market. This proportion rises to 52% in 2028 and 80% in 2030. The country’s authority hopes that these mandatory policies will force carmakers to, by 2035, increase the share of electric vehicles in sales every year, when all models must achieve zero emissions. It will then ban the sale of new petrol and diesel cars from 2030 and hybrid cars from 2035, under plans unveiled two years ago.
As the world’s largest automobile consumer, the United States has also put forward the development plan for new energy vehicles. It should be pointed out that the marketization forces represented by Tesla have played a strong and spontaneous role in the U.S.’ development of new energy vehicles. On this basis, the supporting policies introduced by the U.S. government will have greater policy flexibility. After the Biden administration came to power, there are changes in the negative attitude of the Trump administration towards the new energy industry, and an agreement returning to the Paris Agreement has been signed. To achieve the goals of the Paris Agreement, the U.S. government plans to increase the sales of new energy vehicles (including plug-in hybrid, pure electric, and fuel cell vehicles) to 40-50% by 2030. The government and industry will provide subsidies for the purchase of these vehicles, improve the charging network, invest in research and development, and provide subsidies for the production of the vehicles and their spare parts. On March 31, 2021, the Biden administration proposed to invest USD 174 billion in supporting the development of the U.S. electric vehicle market, which involves improving the U.S. domestic industrial chain. It targets to construct 500,000 charging stations, electrify school buses, public transport, and federal fleets by 2030. In President Biden’s USD 1.75 trillion stimulus bill passed by the House of Representatives that year, there was a subsidy mechanism for new energy vehicles and additional subsidies for traditional American car companies.
Major U.S. domestic and international automakers, United Auto Workers, Alliance for Automotive Innovation, the California government, the U.S. Climate Alliance, as well as other industrial and governmental agencies have issued a joint statement and support the Biden administration to accelerate the development of the new energy vehicle industry, so as to strengthen the leadership of the U.S. in this field. On the basis of marketization, the strong support of the U.S. to the new energy vehicle industry will greatly promote the development of this particular market in the country.
Researchers at ANBOUND believe that the UK and the American strategies and series of policies for the development of new energy vehicles are not merely concerning industry and green development. Instead, they carry profound influence and significance. Chan Kung, founder of ANBOUND, pointed out that the policy signals given by the Anglo-American axis represent the shape of the things to come. The development of new energy vehicles is not a purely industrial or technological issue. It is conspicuous that such a development means alternative ways of energy utilization have emerged, and this energy revolution has its geopolitical implication, where both the UK and the U.S. will further ditch their dependence on Russian energy. If the future industrial system and consumer market are no longer dependent on oil, then Russia, which is highly dependent on oil resources economically, will be hit greatly in economic sense.
It should be pointed out that due to the complexity and extension of the transportation system, this revolutionary policy of energy substitution will also drive the rapid development of other industries, as well as related technological buildout and the manufacturing of new products. It will not take long for a new manufacturing system to emerge in the countries and societies of the Anglo-American axis.
Chan Kung emphasized that it is also worth noting that from a geopolitical perspective, this large-scale new energy policy is also a measure to share geopolitical risks and pressures. In the past, countries and governments had to address issues caused by geopolitical risks, such as rising oil prices and inflation. These in turn, could lead to political instability if the ruling government failed to address them well. However, the rapid development of industries such as new energy vehicles has made a great change in the situation. The pressure on the government was quickly directed to the private sector, industry, and society. To improve the quality of life, people are spending money to buy new energy vehicles. This is tantamount to common people spending money to solve the geopolitical risks of the Anglo-American axis countries and governments. Once this pattern and market system are formed, the Anglo-American axis countries will not only eliminate the pressure of Russia’s weaponization of energy, they can also generate profits from it, even form a new manufacturing system that can scrap their dependence on the manufacturing industry of third world countries and China. From this ideal logic, the development of new energy vehicles can serve multiple purposes for countries such as the United Kingdom and the United States.
Noticeably, unlike in China, the “electric vehicles” or “new energy vehicles” mentioned in the supporting policies of the Anglo-American axis countries do not have any specific type (such as plug-in hybrid, pure electric, fuel cell vehicle, etc.). This is actually a wise decision in the design of public policy. The technology part is a technical issue, not a public policy issue. Separating public policy from technical issues not only distinguishes the functions of policy and market, but also effectively reduces the influence of interest groups.
China’s Contribution to Bangladesh’s Achievement of 100 Percent Electricity Coverage
With the opening of a China-funded eco-friendly 1320mw’s mega power plant at Payra in Patuakhali district, Bangladesh became the first country in South Asia to achieve 100 percent electricity coverage. That megaproject is a centrepiece of Bangladesh and China’s Belt and Road collaboration. Bangladesh saved $100 million by completing the Payra Thermal Power Plant project ahead of schedule.
Prime Minister Sheikh Hasina also expressed gratitude to the Chinese president and prime minister for their assistance in the construction of the Payra power plant. She claimed that with the inauguration of the project, every residence in the country was now getting electricity and announced 100 percent electricity coverage with the inauguration of the 1,320 MW Payra Thermal Power Plant, the country’s largest of its kind.
She also remarked March – a month of Bengalese Victory, noting that her government was able to open the power plant during this month, which coincides with the “Mujib Borsho,” which commemorates the birth centenary of Bangabandhu Sheikh Mujibur Rahman and the country’s Golden Jubilee.
Chinese Ambassador to Bangladesh Li Jiming quoted on the inauguration ceremony that, “This project serves another major breakthrough in China-Bangladesh cooperation in the Belt and Road Initiative, another splendid symbol of China’s strong commitment to Bangladesh in its development.”
According to the State Minister for Power, Energy and Mineral Resources, Bangladesh has not undertaken such a large-scale, cutting-edge project in the last 50 years, and the Payra plant is Asia’s third and the world’s twelfth to use ultra-supercritical technology.
Bangladesh China Power Company Limited (BCPCL), a 50:50 joint venture between China National Machinery Import and Export Corporation (CMC) and Bangladesh’s state-owned North-West Power Generation Company Ltd (NWPGCL), developed the Payra Thermal Power Plant with $2.48 billion financing from China Exim Bank.
The power generation capacity has rocketed to 25,514 MW in February 2022 from 4,942 MW in January, 2009. Bangladesh is now ahead of India and Pakistan, among the South Asian countries that have brought 98 per cent and 74 per cent of their population under the electricity network, according to data from the World Bank.
Patuakhali district of Bangladesh is set to take the lead in the country’s economic growth following the opening of the country’s first coal-fired Ultra Supercritical Technology power plant in coastal Payra. Within the next 5-10 years, the area will become an energy hub.
The government is also planning to establish a special economic zone and an airport to realize its dream of developing the country, attracting investments to Payra, and establishing besides Kuakata as a world-class eco-tourism centre within the next two decades, according to State Minister for Power Nasrul Hamid, while this powerplant will ensure power coverage of this flagship dreams.
The plant will energize Payra port, which has the potential to become an important sea-based transit point on the Silk Route as well as a global trade hub, as the government plans to develop the region as one of the country’s major economic corridors by establishing direct road and rail connections between Dhaka and the rest of the country, as well as connectivity to Bhutan, china, India, and Sri Lanka. According to the port authorities, a full-scale functioning of the port will result in a 2% boost in the country’s gross domestic product (GDP).
Another active power project, The Barapukuria Coal Fired Power Plant Extension is a 275MW coal-fired power plant in Rangpur, Bangladesh is also developed by CCC Engineering and Harbin Electric. Bangladesh received a US$224 million loan from the Chinese private bank Industrial and Commercial Bank of China (ICBC) in January 2014 to expand the capacity of the 250 MW Barapukuria coal-fired thermal power station by 275 MW.
China’s SEPCOIII Electric Power Construction Corporation has also committed to collaborate with Bangladesh’s S.Alam Group to build coal-fired power facilities in Chittagong with a capacity of 1,320 megawatts, which are targeted to begin operations this year.
Bangladesh joined the flagship BRI in 2016, and its ties with Beijing have grown significantly in recent years as Bangladesh’s largest trading partner is now China. During Chinese President Xi Jinping’s visit to Dhaka in October 2016 different development projects worth around $20 billion were agreed. Among which The Padma Bridge Rail Link, the Karnaphuli Tunnel, the Single Point Mooring project and the Dasherkandhi Sewage Water Treatment Plant are all slated to be finished this year. All of these china funded projects are expected to make a significant contribution to Bangladesh’s economic growth in order to meet the country’s goal of becoming a developed country by 2041.
The US is obliged to provide Energy to the EU if sanctions are retaliated by Russia
As a soft and initial reaction, Russia demands payments of its Gas in Rubles. After the EU imposed sanctions on Russia over the Ukraine crisis, Moscow demanded that it be paid in rubles for shipments starting April 1. But the bloc told member states that the mechanism the Kremlin proposed, which required opening euro and ruble accounts with state-controlled Gazprombank, would violate the sanctions. Four European gas buyers have already paid for supplies in rubles as President Vladimir Putin demanded, according to a person close to Russian gas giant Gazprom PJSC. Even if the other buyers reject the Kremlin’s terms, more cutoffs after the halt in the gas flow to Poland and Bulgaria Wednesday aren’t likely until the second half of May when the next payments are due, the person said, speaking on condition of anonymity to discuss confidential matters. Almost Ten European companies have already opened the accounts at Gazprombank needed to meet Russia’s payment demands, the person said.
Supplies to Poland and Bulgaria were cut off after they refused Gazprom’s proposed mechanism for ruble payments, which the gas giant says does not violate European Union sanctions, according to the person. Russia supplies gas via pipelines to 23 European countries.
As a matter of fact, the whole of Europe depends on Russian Oil and Gas, as a source of much-needed energy. Some of the European countries have already explored other options, but, with very little success. Without Russian Oil and Gas, their economy may suffer heavily. If they follow the American imposed sanction, they will suffer more than Russia.
European Union countries are scrambling to make sense of Russia’s decision to cut gas flows to Poland and Bulgaria, and are eager to maintain their own supplies from Russia while steering clear of violating trade sanctions imposed against Moscow. As Russia’s energy giant Gazprom announced it would be halting gas supplies to both countries after not receiving payment in Russian rubles from the two EU member states. Gazprom said the countries had violated an order by Russian President Vladimir Putin that payments for Russian gas must be made only in Russia’s currency and not United States dollars or euros.
Russia has ordered that energy companies from “unfriendly countries” make their payments in rubles at Gazprombank, a request that some in the EU, including Germany – which is hugely dependent on Russian gas – said did not break sanctions rules. “The payments will be made in euros and then transferred by Gazprombank into a so-called K account,” said Germany’s Climate and Economy Minister Robert Habeck. “That’s the path that we’re taking, that’s the path that Europe has shown, that is the path that’s compatible with sanctions,” he said. The payment process basically requires buyers to open a ruble account at Gazprombank into which their euro or dollar payments would be deposited after conversion into the Russian currency via authorization from the buyer. But others, including the European Commission, which drafts the sanctions on Russia for the EU, warned that the transfer could constitute a violation, putting gas importers in legal danger. The commission has said the process would breach EU sanctions on Russia as the currency conversion would involve a transaction through Russia’s central bank, which is subject to EU sanctions.
It is a very complex and complicated situation. Most of the EU countries are in a state of confusion and need clarification from the EU commission.
As a matter of fact, the sanctions were imposed by the US and the EU endorsed them. It is the sole responsibility of the US to provide alternatives to the EU for their energy needs. The US was never dependent on Russian Energy, nor will sanctions-hit America. Unfortunately, the victim will be the EU. Either the US provide them the energy required or compensate for the losses that occurred due to sanctions. The US economy is not in such a healthy shape to share such a heavy burden. But, the EU should have thought well before endorsing the American imposed sanctions. Only a few rich countries in the EU may survive, yet, most EU countries may collapse or face severe challenges.
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