Southeast Asia must retire 5.5GW of coal plants per year to meet climate goals

Indonesia, Vietnam and the Philippines have cancelled almost 13GW of coal projects in 2022, but this is far from what is needed to phase out the fossil fuel over the next two decades, a new report from Global Energy Monitor has revealed.

Morowali Industrial Park
The coal-powered Morowali Industrial Park in Central Sulawesi, Indonesia hosts nickel-related industries. Image: Government of Indonesia

Southeast Asia must retire more than five gigawatts (GW) of coal plants per year, enough to light up around four million homes, over the next two decades to phase out the fossil fuel in the region, according to the latest report from a non-governmental organisation which monitors fossil fuel infrastructure globally. 

Indonesia, Malaysia, Vietnam and the Philippines—the top coal-consuming countries in the bloc—are cumulatively operating about 90GW of coal power, despite cancelling 12.7GW of proposed projects in 2022, revealed a study released on Thursday by the Global Energy Monitor (GEM), a San Francisco-based non-profit that monitors fossil fuel and renewable energy projects worldwide.

This figure is conservative, as it ignores coal capacity under construction and likely to come online in the next few years (25.6GW) and coal capacity that is still under active consideration (10.3GW), said Flora Champenois, the report’s lead author and project manager for GEM’s Global Coal Plant Tracker. 

To date, less than 1GW of coal capacity has been retired in the region since the year 2000 at a handful of units in Thailand (Mae Moh) and the Philippines (Naga and Toledo City). So an average of 5.5 GW of capacity retired by year will require a “dramatic increase” from the region’s historic closure rate, Champenois told Eco-Business.

“The typical useful life of coal-fired power plant equipment is around 40 years, and many of Southeast Asia’s plants are brand new, so a 2040 coal exit translates to a transition at record speed and brings up important equity considerations,” said Champenois.

“The international community must continue to support the region in moving away from coal through provision of public and private clean energy finance, support to develop flexible grid infrastructure, and technical and capacity assistance to bolster regulatory and policy frameworks that accelerate the transition from coal to clean.”

Indonesia’s operating coal capacity increased three per cent to 40.6 GW in 2022, and had 18.8GW of coal power under construction at the end of the year—an amount exceeding all other countries globally except China and India.

Even with the Just Energy Transition Partnership (JETP) agreement aimed to catalyse the country’s goal of doubling its renewable energy sources, the scheme has put a moratorium only on “new” coal power generation, but allows exemptions for “captive coal plants” which provide electricity for power-intensive industries like nickel ore production, aluminum smelters, steel and chemical plants.

The typical useful life of coal-fired power plant equipment is around 40 years, and many of Southeast Asia’s plants are brand new, so a 2040 coal exit translates to a transition at record speed and brings up important equity considerations.

Flora Champenois, project manager, Global Coal Plant Tracker, Global Energy Monitor 

Announced at the G20 summit in Bali in November last year, JETP is a funding mechanism where several G7 member countries will provide funds amounting to US$20 billion for Indonesia’s energy transition.

Industrial parks at three of Indonesia’s nickel mining hotspots – Obi Island, Morowali and Weda Bay – aim to install 14 coal power plants equivalent to 12,579 megawatts, according to GEM data.

“The exceptions made for Indonesia’s new coal-reliant industrial parks could mean carbon lock-in for the country’s industrial sector at a time when a coal phase out is a priority for its power sector,” said Champenois.

“It is time for Indonesia to finalise and implement a bold no-new-coal plan to ensure energy and economic development plans are in line with its climate commitments,” she added.

In the Philippines, coal capacity in pre-construction declined from 10.1GW in 2019 to 1.6GW in 2022, with estimated completion dates for the remaining capacity steadily slipping as conglomerates like Ayala Corp have been selling off its coal assets, along with government initiatives to replace coal with nuclear energy

However, the county also added 1.3GW of coal capacity, ranking it sixth in the world in terms of new coal capacity last year. The contentious Mariveles (600MW) and Concepcion (135MW) plants are still being built, for a total of 0.7GW coal power underconstruction, along with an existing coal fleet equivalent to 11.9GW.

Like Indonesia, Vietnam struck a JETP deal, where it would receive US$15.5 billion to cap its greenhouse gas emissions. One of the requirements was to install less than 6GW of additional coal capacity, down from over 12GW previously targeted as the country switched to gas and adding more renewables.

Five power stations, including the controversial Vung Ang 2 and Van Phong projects, equivalent to the entire 6GW new coal capacity target are already under construction. If they go into operation, the remaining capacity must be cancelled to align with the JETP agreement.

“The country’s 2050 net-zero target is achievable, but it requires thoughtful deployment of JETP funds and an upgrade to the country’s transmission grid to accommodate its rapidly-growing renewables sector,” read the study.

World’s coal capacity soars despite decarbonisation pledges

The world’s capacity to burn coal for power soared in 2022 despite global promises to curb the biggest source of man-made greenhouse gas emissions, the report added.

The global coal fleet grew by 19.5GW last year, with more than half of all newly commissioned coal projects found in China.

The increase comes at a time when the world needs to retire its coal fleet about five times faster to meet climate goals, noted the study. World leaders, including China, agreed to phase down the use of coal to limit global warming to 1.5 degrees Celsius at the United Nations climate summit in 2021.

China added 26.8GW while India put in about 3.5GW of new coal power capacity to their electricity grids in 2022. China also gave clearance for nearly 100GW of new coal power projects with construction likely to begin this year.

After the European Union retired a record high of 14.6GW of coal capacity in 2021, the gas crisis and Russia’s invasion of Ukraine prompted a slowdown in coal retirements, with only 2.2GW retired in the last year.

Meanwhile, the United States led coal retirements with 13.5GW of coal power no longer operating, along with those of Germany and Australia.

“The more new coal projects come online, the steeper the cuts and commitments need to be in the future,” said Champenois. “At this rate, the transition away from existing and new coal isn’t happening fast enough to avoid climate chaos. The Intergovernmental Panel on Climate Change and the United Nations have both renewed the marching order to wind down coal power globally in what may be our last chance to avoid the worst of a warming planet’s harms.”

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