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ASEAN could face a crisis over its appetite for coal

Coal News - Published on Thu, 01 Mar 2018

Image Source: globalriskinsights.com
Global Risking Sights reportede that ASEAN’s member states are ramping up coal energy infrastructure to meet the region’s energy needs, with help from Asia’s largest economies. New technologies, such as carbon capture and storage, could go a long way towards mitigating health and environmental concerns. But are countries prepared to foot the bill – and confront the environmental costs?

Last year, the Asian Development Bank found Southeast Asia would require USD 3.15 trillion in infrastructure investment between now and 2030, corresponding to 5.7% of GDP. Some countries are in greater need than others; Indonesia alone has a USD 721 billion infrastructure financing gap to fill. Taking the whole continent into consideration, Asia’s developing economies collectively need USD 14.7 trillion just for power generation.

China and Japan competing for coal projects

Meanwhile, China and Japan have spent several years locked in a heated contest of commercial diplomacy across Asia. In Southeast Asia, it appears Japan still enjoys the upper hand: new data from BMI Research shows the Japanese are currently backing 237 infrastructure projects across the region, compared to 191 projects for the Chinese.

This translates to hundreds of billions of dollars in investments for members of the Association of Southeast Asian Nations. Japan has spent USD 230 billion on regional infrastructure since 2000. China, with USD 155 billion, is catching up. This competition between China and Japan for economic influence over Southeast Asia is undoubtedly beneficial for the countries of ASEAN, who desperately need of major infrastructural investments to keep up with fast-growing economies and populations.

ASEAN governments welcome both Chinese and Japanese energy investments with open arms, but much of that investment comes in the form of coal energy projects. Local and international civil society groups point to the effects of pollution from coal-fired power plants on both human health and the environment. All the same, the fossil fuel remains a cheap and easily available source of energy across the bloc.

Among infrastructure projects, coal energy represents one sector where Beijing and Tokyo face little less competition from the global market. International financial institutions such as the World Bank refuse to directly fund coal projects despite the energy priorities of the Trump administration.

East Asian capital has been more than willing to step into the breach. One analysis last year found that “state-run financiers” from China, Tokyo and South Korea were involved in 18 of 22 coal deals in Indonesia between 2010 and 2017. ASEAN countries are also able to obtain financing from Singaporean banks, which have supported no less than 21 coal projects in Vietnam and Indonesia since 2012.

An enduring trend

Bucking other parts of the world, Southeast Asia’s enthusiasm for coal is growing. The region is striving for universal access to electricity by the early 2030s and needs to match a projected 60% increase in energy use by 2040. Coal power is expected to account for 40% of that increase, with Indonesia, the Philippines and Vietnam representing the most coal-friendly energy markets in the region.

Not all ASEAN energy mixes are created equal. The bloc also gets 42% of its energy from natural gas. Member states Singapore (95%) and Malaysia (62.6%) rely on natural gas is the primary energy source. Even so, at current rates of adoption, coal will supplant natural gas as the region’s dominant energy source with 261 gigawatts of capacity brought online by 2035.

In this, ASEAN is part of a wider Asian trend where coal remains a fuel of choice. Japan is not just exporting coal power to Southeast Asia; it has also relied heavily on high-efficiency low-emissions coal power plants to replace its nuclear reactors in the aftermath of Fukushima. China’s coal sector will likely peak this year in terms of consumption, though it is still projected to account for 47% of national electricity generation in 2040.

A question of mitigation

In meeting its energy needs, is ASEAN walking into a crisis of its own making? The member governments have already decided they cannot afford to rely on alternatives to coal. However, they also understand a balance must be struck between going for the cheapest option and protecting public health and the environment.

Striking that balance means looking to “clean coal” technologies that can mitigate and even counter the polluting effects of coal-fired power plants. The best-regarded CCT schemes combine HELE coal-fired plants with carbon capture and storage to sharply curtail pollutant output. By contrast, too much of the coal capacity present in ASEAN consists of outdated, inefficient, and polluting technologies.

HELE requires coal-fired power plants have either supercritical or ultrasupercritical infrastructure to operate at higher temperatures and pressures, producing fewer pollutants with higher efficiencies. Unfortunately, HELE technologies are not cheap and ASEAN governments have thus far eschewed them on grounds of cost. There are only two coal-fired power plants with ultrasupercritical infrastructure in the whole of ASEAN, in Malaysia. CCS is similarly under-used.

This is highly problematic, because carbon capture is the most important step in minimising pollutant output. As things stand now, CCS is at best a “strategic consideration” within the region. At worst, it remains a “prospect”. That does not make these technologies any less vital. The ADB’s estimates for ASEAN infrastructure investment needs, for one, clearly account for climate considerations and emissions-mitigating technologies.

ASEAN governments, and the bloc itself, have some capacity to lower the costs and boost the scalability of these technologies. They can leverage policies that encourage cleaner power generation, push institutions to provide financing, enter into international co-operative frameworks and even provide attractive financing schemes of their own accord.

All of these will be essential if ASEAN policymakers plan to commit to coal for a generation to come.

Source :

Posted By : Nanda Koijam on Thu, 01 Mar 2018
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