The energy crisis – towards an independent future

The following are suggestions for the budget from the Bio Energy Association of Sri Lanka (BEASL), on the most feasible indigenous solutions available to us in Sri Lanka.

Although the present fuel prices have dipped slightly from the record high, they are expected to move even higher in due course. Therefore we should be prepared for even higher prices in the future years. The additional burden cannot be expected to be borne by the government any more, and all sectors from the smallest household using kerosene for the oil lamp to the large industries, will feel the adverse effects.

The movement of the oil price indicates that it will continue to be volatile as a commodity and considering its limited availability the eventual trend of price movement will be upwards except for occasional dips. Sri Lanka, not having any proven indigenous fossil fuel resources will therefore be directly and adversely affected by the future price movements. Hence the need to find indigenous alternatives, even though some of them may appear less attractive financially at the present times.

The price of coal delivered to Sri Lanka will follow the same trend due to two factors. One, the demand for coal increasing with the depletion of oil resources in the world and matching the price movement, and secondly due to the increased cost of transport by ship which will depend on the use of expensive oil and the current increasing costs of shipping in general.

As such use of coal for electricity generation, to which we have been forced, due to inaction to exploit other more viable and indigenous resources, should strictly be considered a short/medium term solution. It should never be considered in the long term, as we would be exposing ourselves to increased costs of generation in the future with heavy capital expenditure on large power plants.

Possible Solutions
We are pleased to note that the Cabinet has approved the following measures:
* Declare Gliricidia Sepium as the fourth national plantation crop after Tea, Rubber and Coconut.
* Announcement of a development tariff of Rs 8.50 per kWh for the first 50 MW of dendro energy,
However, more urgent and intensive intervention by the government is essential in the current situation, to derive the full benefit of these policy decisions to counter the adverse effects of the increased energy costs.

Need for a long term and sustainable solutions.
It will be remembered that in 1979 with the last major oil shock there was a lot of discussion on various initiatives to counter the effect on the economy. But looking back these solutions would appear to be mere fire-fighting exercises and have not been based on the need to reach a long-term solution, which can be sustained by our own efforts.

One other aspect of the efforts at that time was the lack of coherence of the initiatives amongst the different sectors of the government and other agencies. As a simple example the suggestions at that time to promote the use of bicycles, was never taken seriously by the road development authorities. It is downright suicidal to be using a bicycle on the roads now.

In this light the appointment of an Inter Ministerial Working Committee by the Minister of Power and Energy, to promote Dendro Energy as a result of the representations made by our Association, is a step in the right direction.

The several other recommendations made by this committee which has been accepted in toto by the Cabinet of Ministers, require such coordination amongst several Ministries, and their own initiatives to implement such decisions. As will be seen these actions will have a wide-ranging salutary effect on many sectors of the economy while providing a sustainable and indigenous solution to the energy crisis.

The ease with which indigenous alternatives can be found, and their economic and technical viability differ for each sector and the priorities and resources assigned should therefore be carefully assessed to ensure optimization of the benefits.

Importance of indigenous energy options
Many countries in the world have realized the importance of energy security. That is to ensure adequate energy to meet the basic needs and economic growth and be available at reasonable prices. These countries feel that no other country should hold them to ransom. The USA for example wants to be independent of Middle East oil. Sweden and India want to be totally self-sufficient.

We, being an island nation, and with no proven fossil fuel resources on our own, should consider this approach very seriously.

Contrary to the misinformation spread by some in authority, Sri Lanka has the potential to be largely non dependent for its energy requirements. In addition, the options available have multitude of spin off benefits with wide ranging positive impacts on the social, environmental and economic well being of the country.

Dendro option
The use of firewood for energy is nothing new, even for Sri Lanka. The most important distinction that must be appreciated in respect of Dendro Energy, as opposed to the traditional use of fire wood is, the use of Sustainably Grown Fuel Wood (SGF) such as Gliricidia and similar Short Rotation Coppicing (SRC) species, planted either as a mixed crop or as dedicated plantations, for our energy needs.

The proven yield of woody bio mass from these plantations is 25 tons per Ha per year and the harvesting can commence within 18 months of planting .

A further source of bio mass that can be developed with multiple benefits is bamboo. There are many varieties of the fast growing plants several of which are already available in Sri Lanka. The greatest advantage of growing bamboo even for its bio mass alone is the very large yield which can be as high as 200 tons per Ha per year. The reservations on either side of the irrigation channels and the catchments areas above all the reservoirs are ideal places for growing bamboo.

However both these resources need to be developed by concerted efforts so that the developers as well as the banks and other financial agencies would have no doubts about the sustainability of any energy projects based on these bio resources.

The thrust of the proposals made by us is primarily to ensure that this indigenous resource with multitude of benefits is developed as a national effort. The return on the investments made would be very quick and very substantial indeed.

Relevance of Dendro power
The multitude of benefits to be derived from adopting Dendro power can be listed under several simple but most nationally important and relevant aspects.

•Poverty alleviation
•Organic agriculture
•Energy security
•Self sufficiently in milk production
•Development of rural industries
•Renewable energy for rural development
•Reversal of urban drift
•Rejuvenation and enhancement of fertility of lands
•Creation of a national energy industry Recommended Action Plan

A summary of the proposals made are given below.

Unlike in the past any action taken now should be based on a long term perspective and on the use of indigenous resources.

The decisions already made need to be converted to assertive action and not limited to good intentions. There is no positive action taken as yet to ensure the achievement of the declared goal of 100 MW of dendro power by year 2010.

Specific Proposals for the Budget 2007
1. When the cabinet decision was made to declare Gliricidia as the fourth national crop in July 2005, no treasury funds were allocated to derive the benefit from this decision. When the request was made by the Coconut Cultivation Board , for treasury funds, it was agreed that the funds can be allocated only in the 2007 budget. We therefore request that the Rs 200 million sought by the CCB be allocated in the current year budget.

2. Although the CCB was assigned by the Cabinet, the responsibility of promoting the growing and use of the Gliricidia to derive the undoubted multitude of benefits, the experience during the year has indicated that due to the demands on their resources for the development of the coconut cultivation, the core activity, adequate attention could not be given for this equally important task. We therefore propose that a officer with the necessary background and proven capability be appointed with the specific responsibility and authority to assist the Chairman CCB for this purpose with a mandate to effectively manage the above budget allocation.

3.In order that there is parallel action to covert the consumers of all levels to indigenous resources we also recommend the following incentives and initiatives:

Policy initiatives proposed

1. 50% of all new thermal power from renewables.
2.Firm development tariff for renewables.
3.Low interest loans for renewables.
4.Mandatory planting of GS to qualify for urea subsidy.
5.Targets for replacement of industrial thermal energy with suitable fiscal incentives.
6. Removal of subsidies for Diesel and Kerosene and support for needy sectors only .
7.Tax on all large cars and mandatory size limitation on cars used by government officials and politicians.
8.All provincial councils required to recycle, compost or generate methane from solid waste for energy.
9.Tax incentives for conversion to renewables by industries.