Coal is prominently present in the immediate future of Southeast Asia, as coal-fired plants account for higher than 40 per cent of the region’s power generation. Numerous regional governments considered liquefied natural gas (LNG) as a middleman between moving from coal to renewable energy.
FREMONT, CA: Across Southeast Asia, governments are faced with increased energy demands that necessitate major investments. These are not just for solar, but also for wind and other renewables, including hydrocarbons. If the latter is not given using natural gas, countries are presumed to continue their dependence on coal, which would heavily undermine their aims.
Coal is prominently present in the immediate future of Southeast Asia, as coal-fired plants account for higher than 40 per cent of the region’s power generation. Numerous regional governments considered liquefied natural gas (LNG) as a middleman between moving from coal to renewable energy.
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The usage of LNG produces fewer greenhouse gases (GHG) when compared to coal and was expected to be considerably more cost-effective, and therefore more feasible than an immediate switch to renewable energy. However, the LNG prices are more dynamic and Southeast Asian countries are being overbid by the European nations, and they must replace natural gas that was originally being imported. States in Southeast Asia are not expected to import the same amount of LNG as before or had intended. Natural gases which end up getting added to the energy mix in Southeast Asia are expected to be used to meet growing demands, rather than the replacement of existing coal usage.
The Energy Transition Plans for Southeast Asia
Indonesia
The energy mix of the country comprises 60 per cent coal, 21 per cent oil and gas, 8 per cent hydropower, 6 per cent bioenergy, 5 per cent geothermal, and lower than 1 per cent of solar and wind. It is Southeast Asia’s most populous country and therefore constitutes 40 per cent of the region’s energy consumption.
Indonesia's National Electricity Supply Business Plan for 2021 to 2030 forecasts that energy demand is expected to increase by 4.9 per cent annually and the demand for electricity in the industrial and household sectors is expected to rise substantially. About 60 per cent of the electricity in the country is generated by coal, and coal has a price cap, which pits it against the cleaner forms of energy. The Indonesian government aims to generate 23 per cent of its electricity through renewables by the year 2025 and has achieved up to 11 per cent as of the year 2022.
That being said, there seems to be a large gap in financing. Mooted investments in clean energy and permanently ceasing the operations of coal plants would end up costing around USD 25 billion per year through 2030. Indonesia has invested USD 3 billion in renewables from 2017 through 2021.
Philippines
The energy mix in the country of the Philippines consists of 55 per cent of coal, 22 per cent of oil and gas, 11 per cent of geothermal, 7 per cent of hydropower, and 4 per cent of solar and wind energies. Within its current transition plan, which is the Philippine Energy Plan 2020-2040, there are multiple reduction targets over the next few decades. By the year 2030, the country plans on reducing emissions by 75 per cent and also increasing the percentage of its renewable energy mix to 35. Nearly 97 per cent of the Philippines’ commitment is conditional on external funding. Without the use of external support, its emission targets are likely to be unsuccessful.
The country is amidst an energy crisis. Its electricity prices are one of the highest in Asia, indeterminate supply is resulting in nationwide brownouts, and the Malampaya gas field, which is offshore and provides the city with 20 per cent of its electricity, is expected to be depleted by 2027.
The Marcos administration has displayed vapid interest in reducing the prices of electricity, implying that coal will play a large role in the energy mix for the foreseeable future. The Philippines has also become increasingly dependent on imported coal, which is the biggest contributor to greenhouse gas emissions, as the most reliable and economical source of electricity in the past few years. Theoretically, LNG can serve as a transitional fuel for coal, but its realistic implementation in the Philippines has been slow. The government has validated seven LNG terminal projects, but out of them, the two that are predicted to become functional will not contribute substantially to meeting the country’s sustainability targets.
Vietnam
The energy mix of Vietnam consists of 30 percent of coal, 13 percent of oil and gas, 28 percent of hydropower, 24 percent of solar, and 5 percent of wind. By the year 2050, Vietnam aims to be carbon neutral, with renewable energy providing 75 percent of its electricity by 2045. Presently, the country is highly dependent on coal and is one of the world’s top 20 coal producers. Vietnam has a centralised economy, in which 75 percent of coal-fired plants are owned by state-owned enterprises, which is why the government should behave as the main driver for the energy transition.
The industrialisation over the past two decades, which has been backed by coal, has made the protection of energy a high priority for the government, and Hanoi is not likely to permit any limit on economic growth as the cost of decarbonisation.
