Just five Asian countries are now producing the vast majority of the region’s coal, with little intention of reining in production as several companies invest in new coal plants. According to a study released in June, China, India, Indonesia, Japan, and Vietnam are producing around 80 percent of all Asian coal, with plans to develop over 600 coal power units. Together, the projects are expected to produce around 300 gigawatts of energy.
The continued reliance is surprising considering the many alternative energy projects that could be more financially appealing, as the cost of building new coal plants is extremely high considering global aims to reduce reliance on coal power.
Carbon Tracker, the London-based think tank that published the report, claims that solar and wind power generate significantly cheaper energy, with costs around 85 percent lower than existing coal production. And by 2026, close to 100 percent of coal production will be more expensive than constructing and operating renewable projects.
Europe, for example, is already phasing out coal production at an increasing rate, as the U.K. plans to decommission the country’s coal plants a year earlier than expected, by 2024. In addition, many of the U.K.’s disused coal plants are now being converted for alternative energy use, including the creation of geothermal power plants.
Catharina Hillenbrand von der Neyen, head of company research and co-head of research at Carbon Tracker, stated of the findings, "The vast, vast majority of new coal projects that are currently being proposed is likely to be value destructive — a very bad deal for investors."
At present, China is the world’s largest investor in coal. And it plans to boost its coal energy production by 187 gigawatts, on top of its current 1,100-gigawatt output. In addition, in 2020 a Shanxi state merger established one of the world’s largest coal companies.
Despite aiming to become carbon-neutral by 2060, China’s reliance on coal hasn’t subsided as coal-powered industry accounted for 37 percent of its economic activity in 2020. In 2019, coal constituted around 57 percent of the country’s energy consumption.
So, while China is increasing its investment in renewables projects, with it expecting to add 90 GW wind and solar capacity to the grid in 2021, the importance of coal cannot be overlooked.
However, the report predicts that renewable energy will overtake coal production in India and Indonesia by 2024. And it will become less economically viable than renewables in Japan and Vietnam by 2022.
Meanwhile, other Asian countries are following in the footsteps of Europe and abandoning coal production. For example, Thailand’s largest coal producer, Banpu, has said it will not pursue any new coal projects in a shift towards greener energy.
Chaimongkol, CEO of Banpu explained, “Since 2010, we talk about transformation. And since 2015, when I succeeded my predecessor as CEO, we started to implement a greener, smarter [plan]. For the past five years, we spent $2 billion and 90% of [that went on] … a greener investment, such as gas, such as renewable energy, and energy technology.” Further, ″[There are] a lot of megatrends happening — digitalization, decarbonization, decentralization — and that sped up Banpu to produce a new, greener, smarter strategy.”
While coal continues to fuel some of the largest Asian states, with more plants planned over the coming years, will these countries continue to pursue an energy strategy that is at odds with international green energy plans, or will they give in to renewables development?
By Felicity Bradstock for Oilprice.com
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Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More