With coal-based energy responsible for 40 per cent of the world’s carbon dioxide emissions, serious climate change action must begin with strict monitoring and control of coal-fired power plants pending their complete phaseout, analysts say.
Yet China and India, the world’s biggest burners of the ‘dirtiest’ fossil fuel, have been lax on emissions monitoring, raising questions about their seriousness in reducing health impacts and fulfilling commitments to the Paris Agreement on limiting global warming through decarbonisation.
China, the world’s largest consumer, producer and importer of coal, has announced plans to become carbon-neutral by 2060 but the heavily industrialised country continues to build new coal plants with questions surrounding its data and reliability on monitoring of emissions at existing ones.
Second only to China as the largest producer, consumer and importer of coal, India is also investing heavily in coal-fired power plants and, contrary to pledges to achieve net-zero carbon emissions by 2070, has been developing new coal mines, building more coal-fired power generation capacity and consistently relaxing deadlines on emission control targets that should have been implemented five years ago.
China and India are critical players in the global fight against climate change. Together they account for over 2.7 billion people, nearly 20 per cent of global GDP and about a third of global emissions. China was responsible for 27 per cent of global-warming gases in 2021, according to a report released by the New York-based Rhodium Group in December 2022. Behind China was the US with 11 per cent, followed by the EU and India at third place with seven per cent each.
Speaking at the first session of the 14th National People’s Congress in March, Chinese President Xi Jinping said that the country would “make further efforts to build a green and low-carbon economy and society”, reiterating a pledge made five months earlier at the Communist Party Congress to “work actively and prudently toward the goals of reaching peak carbon emissions and carbon neutrality”.
Monitoring of coal emissions in India is nearly nil. The lifecycle impact of coal on health, groundwater, air and soil is not being studied and the regulatory bodies that should be keeping a watch on projects are often caught napping.
Joe Athialy, chief executive officer, Centre for Financial Accountability
In 2021, both countries committed to long-term net-zero climate targets — China before 2060 and India by 2070. China aims to decrease its carbon intensity by 65 per cent from 2005 levels by 2030 and India has pledged to reduce carbon intensity by 45 per cent within the same time frame.
But actions on the ground suggests that these targets are unrealistic.
Grant Hauber, strategic energy finance advisor at the US-based Institute for Energy Economics and Financial Analysis, says that “many regulatory regimes do not require older plants to upgrade their emissions control systems to modern standards”.
With China there has been an ebb and flow to regulations, Hauber tells SciDev.Net. “The most recent push has been for higher efficiency in fuel conversion with plants required to prove their merit or face being shuttered. That indirectly gets to the pollution side, as more efficient plants generate more energy per unit of fuel input. However, that doesn’t address the total level of emissions from a given plant.”
Dodgy inspections in China
A study of air pollution in the vicinity of 1,308 coal power plants in China found that sulphur dioxide (SO2) concentrations fell by 25–52 per cent during inspections compared to pre-inspection baselines. Published April in PNAS Sustainable Science, the study focused on SO2 because it is a short-lived pollutant and readily attributable to industrial sources.
Tellingly, emissions reverted to the normal 54–62 per cent of baselines within 10 weeks of the inspections, suggesting that ensuring sustained reduction in air pollution will require consistent monitoring and enforcement of regulations at the local level.
Underdeveloped monitoring and enforcement procedures and a lack of incentives to invest in pollution control equipment were among the reasons cited by the study for the poor environmental performance.
Valerie Karplus, associate professor, engineering and public policy, Carnegie Mellon University, says the study, of which she is an author, showed that the “relationship between industry and the regulator may influence the duration and intensity of any clean-up effort.”
Says John Sterman, a director at the Massachusetts Institute of Technology: “China’s environmental regulations limiting SO2 emissions from power plants are strong, but routinely exceeded, harming the health of the public. Central government inspection teams sent to different provinces to enforce these regulations have only limited and short-lived benefit — to meet the regulations and avoid fines.”
“The study shows the importance of continuous monitoring and enforcement to limit dangerous pollutants and applicable outside China and to other pollutants,” says Sterman. “It uncovers an important phenomenon for China and any nation seeking to cut pollution through government action.”
Zero monitoring in India
That certainly is the case in India where monitoring of polluting industries is notoriously lax to the point where the Air Quality Report released in March by the Switzerland-based IQAir showed that in 2022 India was home to 39 of the world’s 50 most polluted cities.
Likewise, the 2022 Climate Transparency report says that “around two million people die in India every year as a result of outdoor air pollution due to stroke, heart disease, lung cancer and chronic range respiratory diseases”.
Such dire results are unsurprising. Regulation of coal-based power plants for sulphur oxides, nitrogen oxides and mercury emissions began in India only in December 2015, after pollution control were extended beyond simply specifying minimum chimney height to disperse pollutants.
Since then, however, it has been a story of never-ending relaxations of deadlines, says Joe Athialy, chief executive officer of the independent Centre for Financial Accountability, an independent think tank committed to environmentally sustainable development.
Coal-fired thermal power plants, initially given time until December 2017 to install equipment to control SO2, NOx and mercury, had to be granted deadline extensions until December 2022 after it was found that the cost of retrofitting thermal plants was too high for operators to bear.
“Monitoring of coal emissions in India is nearly nil. The lifecycle impact of coal on health, groundwater, air and soil is not being studied and the regulatory bodies that should be keeping a watch on projects are often caught napping,” Athialy tells SciDev.Net.
Athialy’s charges of ever-receding deadlines were substantiated by a surprise government notification extending the December 2022 deadline to install flue gas desulphurisation units and other equipment to remove pollutants emitted by chimneys to December 2024 and December 2027, respectively, for non-retiring and retiring thermal power plants located within a 10-kilometre radius of cities with populations exceeding one million people.
Power plants due to retire by December 2027 were exempted from adhering to standards for sulphur oxide emissions. Delhi — the world’s most polluted capital city for several years running — will now only need to comply with the 2015 emission regulations by 2025.
Data released by the Central Electricity Authority in September 2022 show that only 21 out of the 600 thermal power plants in the country have flue gas desulphurisation units or other pollution control equipment capable of removing the main pollutants.
Devices that can be retrofitted into existing coal-fired plants may include electrostatic precipitators, scrubbers, catalytic reduction systems and fabric filters that can capture particulate matter, sulphur and nitrogen oxides, and mercury. There are also capture and storage technologies that separate CO2 from flue gas and store it for industrial use.
Instead of heeding warnings from environmentalists and non-profit groups like the Centre for Financial Accountability, the Indian government has gone all out to expand the coal sector, even opening up mines in deep forests and tribal areas to achieve a stated goal of producing one billion tonnes a year by 2026.
“India’s claims made at international platforms to being a renewable energy champion is belied by the fact that new coal blocks are being auctioned for mining and new coal plants are being planned with detrimental impacts on land, agriculture, water and food security,” says Athialy.
SciDev.Net approached India’s Ministry of Coal for comment on the apparent disconnect between climate targets and new coal projects in the country but had not received a response by the time of publication.
Athialy, who co-authored ‘Coal Trail’ that tracked investments in coal-fired thermal plants in India, says that out of the country’s installed power generation capacity of 405.77 gigawatts coal has the dominant share with 204 gigawatts. “Coal is likely to retain its leading position given that the Ministry of Coal, estimates demand to increase to 1,034 metric tonnes by 2029—2030, an increase of 47.71 per cent from 2021—2022,” he says.
According to a report by the International Energy Agency (IEA) emissions from Asia’s emerging market and developing economies, excluding China, grew more than those from any other region in 2022, increasing by 4.2 per cent or the equivalent of 206 million tonnes of CO2.
Over half of the Asian region’s increase in emissions come from coal-fired power generation said the report, part of the IEA’s support of the first global stock take of the Paris Agreement, which is to be finalised ahead of COP28, the next UN Climate Change Conference, at the end of 2023.
Coal financing restricted
Athialy says the rapid expansion in India of coal-fired thermal power plants of 1,000-megawatt capacity and above owes to liberal financing made available by domestic and international banking institutions between 2005 and 2022.
“Information on coal project financing of these large-scale projects is concealed from the public through astute use of rules governing the fiduciary relationship between bank and client,” says Athialy.
Total loans taken for coal power during the 2005—2022 period amounted to over US$93 billion with the national financing institutions accounting for 93 per cent of the funds. Another seven per cent or US$6.2 billion came from international financial institutions, according to the Coal Trail report.
In the COP26 climate conference in May 2021, the G7 countries had pledged to stop international financing of coal projects that emit carbon by the end of that year as part of efforts to meet globally agreed climate change targets to limit the rise in global temperatures at 1.5 degrees Celsius above pre-industrial times.
But it took two years and litigation for the International Finance Corporation, the private sector arm of the World Bank, to commit to stop indirectly funding new coal projects through local banks. This year the International Finance Corporation is taking the next step toward alignment with Paris Agreement ambitions by introducing an update to the Green Equity Approach under which the International Finance Corporation will start requiring a commitment from financial institution clients to not originate and finance any new coal projects.
Southeast Asia big on coal energy
Similarly, the Asian Development Bank (ADB) is under pressure to cease funding coal projects. Although coal expansion in the past decade is mostly attributed to China and India, other countries in South Asia and South-East Asia have seen a spike in proposed coal plants, according to the non-profit Centre for Energy Ecology and Development (CEED) in a report.
According to the centre, since 2009 there has been additional coal capacity of approximately 71 gigawatts in developing Asia. This is seven times more than the average additional coal capacity in the rest of the world at approximately nine gigawatts every year so that by January 2019, the total capacity of proposed coal plants in developing Asia had reached 341 gigawatts, the report said.
In April ADB announced that it would partner the non-profit Global Energy Alliance for People and Planet to provide US$35 million to help boost energy access and the energy transition in the South and South-East Asian countries of Bangladesh, India, Indonesia, Pakistan, and Viet Nam.
ADB’s managing director general, Woochong Um, was quoted saying that the partnership would help expand “clean energy for the 350 million people in our region who have either limited or no access to electricity” while “catalysing the transition from coal and other fossil fuels toward clean, affordable, and reliable energy sources”.
The same partnership has made funding available for Vietnam’s energy storage sector that Um said “would improve energy access and accelerate the transition away from fossil fuels”.
Domestic banks have not followed the multilateral banking institutions and continue to fund coal projects in the Philippines. For example, CEED reports that Philippine banks had financed US$867.08 million worth of projects in coal from April 2022 to March this year.
Hope for weaning countries away from coal in the Asia Pacific region now hinges on the success of ADB’s Energy Transition Mechanism, a programme aimed at helping confronting climate change caused by greenhouse gas emission through concessional and commercial capital to hasten the retirement or repurposing of fossil fuel plants. The Energy Transition Mechanism, which began in 2021 with three pilot countries, Indonesia, the Philippines, and Viet Nam, has now been extended to Pakistan and Kazakhstan.
With growing interest in the new initiative and similar mechanisms, more public and private financial institutions will be funding managed coal phaseouts, says a March 2023 policy brief by the Climate Policy Initiative. The brief cautions that “since financing mechanisms can be politically, socially and financially delicate, it is critical to mitigate the possible barriers to investment, particularly those regarding emissions accounting and targets”.
In Indonesia, the world’s third-largest coal miner, the Energy Transition Mechanism is working on funding the early retirement of a 660-megawatt coal power plant in Western Java which could be a replicable model. Additionally, ADB is supporting the development of plans under the Climate Investment Funds’ Accelerating Coal Transition programme, which has concessional capital approvals worth US$500 million.
Multilateral banks supportive
Multilateral development banks, ADB in particular, say they are committed to supporting climate change mitigation and/or adaptation by 2030. Climate finance from ADB’s own resources are expect to reach US$100 billion cumulatively by 2030.
A well-functioning and vibrant financial system that is resilient to climate-related risks and able and willing to play its part in scaling up climate finance is a pre-condition to achieving low-carbon and climate-resilient development in developing countries in this region, in line with the Paris Agreement, ADB says.
“Ultimately, it comes down to costs per kilowatt-hour based on legacy assumptions and inputs,” says Hauber. “Accounting systems in some countries may actually favour the oldest most fully depreciated plant. It’s an asset that can be run in perpetuity, regardless of operating efficiency or emissions rates.”
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