The coal era is coming to an end in South-East Asia
In 2020, Indonesia, Vietnam, Bangladesh and the Philippines have cancelled several coal-based energy projects. These projects were set to produce 45 gigawatts, a figure equivalent to over a quarter of Germany’s total energy capacity.
Several factors linked to the pandemic and funding have pushed these four emerging economies to look for alternative solutions that are both more profitable and more environmentally friendly.
According to a study by Global Energy Monitor (GEM), an American NGO that identifies fossil fuel projects worldwide, coal consumption is not set to resume after the pandemic.
Following the withdrawal of South Korean and Japanese banks, which are the main Asian investors in coal, the construction projects for 29 new power plants in Bangladesh were cancelled. In June 2020, Bangladesh’s Energy Minister stated that the country was continuing to build three power plants, but it was considering alternatives to do without the others.
Further east, Vietnam’s power development plan, which is set to come into effect in 2022, proposed cancelling seven power plants and freezing six other projects, which will be reexamined in 2030.
Coal is less and less competitive
In November, the Philippines proposed a moratorium on new coal plant projects. The Secretary of Energy wants to focus foreign investment on geothermal exploration. The Philippines already has the highest renewable energy rate in South-East Asia, and solar energy is set to reach 35% of the energy mix by 2030.
Asian countries are the last to extensively use coal in their energy mix. However, at the beginning of 2020, the think tank Carbon Tracker demonstrated in its “How to waste over half a trillion dollars“ report that renewable energy had become sufficiently competitive compared to fossil fuels. As a result, coal power plant projects were highly likely to quickly become stranded assets, in other words not profitable enough to be operated.
By turning their back on coal, these four countries are providing new proof that banks and investors around the world are increasingly taking climate issues into account in their investment decisions.
“2020: a dismal year for coal power,” China Dialogue, January 4, 2021 - chinadialogue.net/en/energy/2020-a-dismal-year-for-coal-power