Fossil fuel likely to remain Southeast Asia’s dominant energy source for another 20 years despite the push for renewables
An excavator extracts coal at an open-pit mine in Jambi, south Sumatra in Indonesia, on May 19. High-efficiency coal remains the most affordable option to meet electricity demand for many emerging economies but renewables are expected to play an increasing role. (AFP)
Like it or not, coal is going to remain a major component of Southeast Asia’s energy mix for the foreseeable future despite the rise of renewables.
Since the Paris Agreement on climate change was signed at the end of 2015, governments in the Association of Southeast Asian Nations (ASEAN) have reassessed their energy requirements by increasing the use of renewable energy sources, such as solar and wind.
Even so, coal will stay the dominant source of energy for the 10-nation bloc for at least the next two decades.
A study by the World Coal Association, in collaboration with the ASEAN Centre for Energy, makes this clear.
Released in May, ASEAN’s Energy Equation is the first comprehensive cost-benefit analysis of climate and energy policies that cleaner coal technologies bring to a region looking to coal to fuel its growing economy.
83 percent, proportion of region’s coal reserves located in Indonesia
“High-efficiency coal is — and will continue to be — the most affordable option to meet electricity demand growth for many emerging economies, while reducing emissions at the same time,” the report said.
It suggested that increasing investment to encourage the use of lower-emissions coal would reduce cumulative emissions by 1.3 billion tons over the next 20 years.
Energy demand in Southeast Asia has expanded by two and a half times since 1990, its rate of growth among the fastest in the world.
The International Energy Agency, in cooperation with the Economic Research Institute for ASEAN and East Asia (ERIA), in its regional outlook report said electricity demand in Southeast Asia is expected to triple by 2040 with the focus on coal expected to continue.
To meet the increase in demand, 400 gigawatts of power generation capacity — roughly equal to the combined installed capacity of Japan and South Korea today — will be added across the region between now and 2040.
“The share of coal in power generation rises from 32 percent to 50 percent, contrary to the trend seen in most other parts of the world, while that of natural gas is expected to fall from 44 percent to 26 percent,” the report said.
“The rise in coal use is underpinned by economic factors, abundant supplies and the need for rapid electrification, but also highlights the need to accelerate the deployment of more efficient technologies to address the rise in local pollution and carbon emissions.”
134 million people, number of Southeast Asian residents without access to electricity in 2015
The report added that renewables such as solar, wind and hydro-based electricity generation are likely to increase by three and a half times by 2040.
Frank Yu, principal consultant for Asia-Pacific power and renewables with energy consultancy Wood Mackenzie, said there is “a clear drive for renewable energy in Southeast Asia, especially when renewable cost has been dropping significantly in recent years”.
“Some countries are still cautious because current renewables tariffs are more expensive than those of alternative fuels. However, this concern has gradually eased,” he said, giving the example of what had been happening in India in recent months. Indian wind and solar power tariffs fell to record lows earlier this year, as the country works to cut electricity shortages in one of the world’s biggest clean energy programs.
“Coal, however, will still be in strong demand in some countries such as Indonesia, Malaysia and Vietnam in the near term,” Yu said.
He said advanced “clean” coal plants can cut the intensity of the main greenhouse gases by up to 10 percent. But this depends on many factors, including power supply efficiency, coal quality and plant utilization.
“These factors will impact on power-generation emission intensity,” he said. “I think the main message coming out of the region is the rise of renewables.”
In a paper on the role of coal in Southeast Asia’s power sector, the Oxford Institute for Energy Studies said governments across the region have started to reassess their power development plans. They are introducing more renewable energy sources, promoting energy efficiency measures, and reducing the contribution of coal in the electricity mix.
“This reassessment, however, does not constitute a shift away from coal,” the report said. “Despite the scale back, coal still dominates the targeted additional capacity, followed by natural gas, hydropower and other renewables.”
The report said that most of the additional coal capacity planned for completion by 2025 is concentrated in two countries — Indonesia and Vietnam. “But in both countries, the targets are challenging,” it said.
50 percent, expected share of coal in power generation by 2040
Venkatachalam Anbumozhi, senior energy economist with ERIA, said Southeast Asia faces a “set of interconnected yet fundamental energy-transition dilemmas”.
“The region’s rapidly industrializing economies, intensifying levels of urbanization and increasing prosperity of the middle class have created an unprecedented demand for energy and electricity services,” he said in a recent paper.
“Average energy use per capita of the 10 ASEAN (member countries) remains quite low — about 0.61 metric tons of oil equivalent per person, compared with 1.10 for China, 4.67 for Japan and 1.69 for the world.
“However, the use of commercial energy has increased substantially in the last 25 years. The region is endowed with about 8 percent of the fossil fuel resources in the world.”
Anbumozhi said nearly all of the region’s coal reserves are located in Indonesia (83 percent) and Vietnam (10 percent). Natural gas and oil are found in Brunei, Indonesia, Malaysia and Vietnam.
Indonesia and the Philippines have substantial reserves of geothermal energy, ranking them as the second- and fourth-largest producers of energy from geothermal resources.
Hydropower is abundant in Thailand, Indonesia and Vietnam. And all the countries are endowed with biomass — a non-commercial source of fuel developed from organic materials, particularly in rural areas, for cooking and energy.
“The diversity of available energy resources provides opportunity for cooperation throughout the region,” Anbumozhi said.
“Southeast Asian countries face challenges in developing and distributing energy resources, from their remote locations to those urban centers of production and consumption where they are needed most.”
Anbumozhi noted that the challenges of energy resource development, distribution and energy poverty are rivaled by the difficulties of improving energy security and reducing carbon emissions.
“As of 2015, this region has at least 134 million people, or 22 percent of the population, without access to modern electricity. It is home to thousands of low-lying islands comprising major portions of Indonesia and the Philippines that are extremely disadvantaged in terms of energy access.
“Following on from the Paris Agreement in December 2015, and the ratification of Intended Nationally Determined Contributions (targets set by countries to try to stop global temperatures rising above 2 C), the countries in the region are paying more attention to advancing viable and scalable low-carbon energy transformation options,” he said.