Page 6 - AsiaElec Week 26 2021

AsiaElec COAL AsiaElec

Asia’s coal proposals could

threaten Paris goals

ASIA UP to 92% of the coal-fired power plants on the demand.
drawing board in Asia and Africa could be une- Japan has 45 GW of coal capacity with 9 GW
conomic and could waste up to $150bn of private in the pipeline. Renewables are already cheaper
and public investment. than new coal and will be cheaper than existing
A recent report from Carbon Tracker into coal by 2022, despite being hampered by lack of
the coal plans of five major Asian economies land, capacity market payments favouring fossil
– China, Japan, India, Vietnam and Indonesia fuels, and grid constraints. The government has
– warned that coal plans at they stand could pre- committed to no longer supporting foreign coal
vent these countries, and the world as a whole, projects.
meeting the Paris Agreement climate change Vietnam has 24 GW of operational coal
goals. power, with a further 24 GW in the pipeline. New
The five countries account for 80% of global renewables will outcompete existing coal units in
new coal power investment, with plans in place Vietnam by 2022.
for 600 units and an estimated 300 GW of Indonesia is heavily reliant on thermal
capacity. power, with 45 GW of coal and 24 GW of new
“These last bastions of coal power are swim- coal planned. New renewables will outcompete
ming against the tide, when renewables offer a existing coal by 2024.
cheaper solution that supports global climate
targets. Investors should steer clear of new coal Costs
projects, many of which are likely to generate Carbon Tracker said in its report that continued
negative returns from the outset,” Catharina investment in coal is grossly uneconomic, and
Hillenbrand von der Neyen, the author of the could mean that $150bn of planned investment
report, said. would in fact fund stranded assets, which means
The report said that around 70% of the global power plants that can never hope to make a
coal fleet relies to some degree on policy support return on investment, never mind make a profit.
and would likely be unprofitable in the absence This adds to the $220bn of operating coal
of market distortions. plants are deemed at risk of becoming stranded
Coal is increasingly unviable both finan- if the world meets the Paris climate targets.
cially and environmentally and is ceasing to Globally, new renewables beats 77% of oper-
make sense as an option for investors and ating coal in terms of levelised cost of energy
governments. (LCOE), and this will rise to 98% by 2026 and
Asia’s policies contrast with firm plans in 99% by 2030.
Europe and the US to wind down coal. The UK Carbon Brief compared the LCOE of new
this week confirmed that it would cease all coal renewables to the long-run marginal cost
generation by 2024. (LRMC) of existing coal units, while taking into
account current pollution regulations and cli-
Capacity mate policies.
Drilling down into the plans of each Asian coun- In China, Carbon Tracker report said that
try, China is by far the biggest backer of coal. solar and wind is cheaper than 85% of the coun-
Indeed, the five Asian countries operate try’s existing coal power stations, rising to 100%
nearly three quarters of the current global coal by 2024
fleet, with 55% in China and 12% in India. In India, renewables will undercut coal by
Beijing’s 1,100 GW of coal plants could be 2024, while the date for Japan and Vietnam is
expanded by another 187 GW, with new capac- 2022.
ity replacing older plants as well as expanding the Put simply, the trump card for renewables is
current fleet. that investments in new renewables beat invest-
Around 27% of China’s existing capacity is ments in new coal in all major markets in terms
already unprofitable and another 30% is close of the LCOE.
to breakeven, generating a nominal profit of no Meanwhile, the report named 10 Asian power
more than $5 per MWh, the report found. generators as accounting for 40% of existing coal
India has 250 GW of operating coal capacity plants.
and a pipeline of 60 GW. New renewables can The report’s findings chime with a recent
already generate energy at a lower cost than report from the International Renewable Energy
84% of operating coal and will outcompete Association (IRENA), which found that two
everywhere by 2024. It has a target of 450 GW thirds of new renewable capacity proved to be
of renewables by 2030 – more than five times its cheaper than new fossil fuel-fired power gener-
2020 capacity – which would meet 60% of energy ation in 2020, with 162 GW, or 62% of the total,

P6 www. NEWSBASE .com Week 26 30•June•2021