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Southeast Asia (SEA) has been actively decarbonize the region's
energy mix, with coal power projects being phased out steadily. In
the second quarter of 2021, the Philippines and Malaysia have
outlined plans to cut coal-fired capacity in pipelines, and
Indonesian power utility PLN announced a coal retirement
scheme.
Withdrawal of financing in coal power projects by Asian
Development Bank
On May 7th, the Asian Development Bank (ADB) published a draft
Energy Policy, which ruled out financing for coal projects in SEA
for the first time but allows for continued gas finance under
strict criteria. The 2021 draft Energy Policy aims to assist
developing member countries (DMCs) in developing sustainable and
resilient energy systems, to achieve their Paris Agreements
pledges. The ADB Energy Policy is expected to be finalized by
October 2021.
The draft energy policy revealed that ADB will not participate
in investments to modernize, upgrade, or renovate coal facilities
that will extend the life of existing coal-fired power and heating
capacity. The only exception is to re-engineer such plants for use
of cleaner fuels, such as natural gas or renewable energy
sources.
All oil and gas exploration and production (E&P) projects,
as well as coal mining funding were axed, while LNG and other
natural gas operations will be subject to strict restrictions,
which include: (1) able to prove that no other technology can
deliver the same energy service at an equivalent economic cost that
considers the social cost of carbon; and (2) able to demonstrate
alignment with targets to attain carbon neutrality by mid-century
(2050).
However, the environmentalist argued that the draft energy
policy has a loophole by potentially allowing fossil gas
investments, positioning double standard in pursuing net-zero goal
by mid-century. The green groups have urged ADB to stop funding all
fossil fuels projects, not only coal, in order to meet ADB's
commitment to support climate change mitigation targets.
Philippines to discontinue 2.1 GW coal
projects
The Philippines government supported the transition from fossil
fuel-based technology to cleaner energy sources by introducing coal
moratorium in late 2020.
On April 28, the Redondo Peninsula Energy Corp. decided to
shelve the 600 MW Subic coal power projects. It was followed by SMC
Global Power Holdings Corp on 1 July, to discontinue coal projects
in Quezon ((Pagbilao and Sariaya, 600 MW each) and Cebu (300 MW
Looc Malabuyoc). These four projects accounted for 24% of the
planned capacity in coal moratorium.
Besides, the coal power projects (1,200 MW Orion Pacific and
1,336 MW Atimonan) in Quezon are pending on government's
consideration to whether cancel or exempt these projects from coal
moratorium 2020.
The huge cancellation of coal-based projects demonstrates the
government's intention to support energy transition plan. This was
backed by major financial institutions that have withdrawn from
financing coal power.
Peninsular Malaysia pledged to reduce 4.2 GW coal
capacity
On March 24, Malaysia's Energy Commission announced its 2021-39
Generation Development Plan, which is based on moderate economy
recovery scenario, to reduce coal-based power capacity by 4.2 GW by
2039.
The Malaysian energy minister announced that there will be 7 GW
retirement of coal-fired capacity. However, the Peninsular Malaysia
generation plan still plans for new coal plant build with 2.8 GW
capacity, scheduled for 1.4 GW by 2031 and the remaining by 2037.
Further on June 21, the Energy and Natural Resources Ministry
(KeTSA) announced that the coal plant's PPA that will expire by
2033 will not be renewed or replaced with new coals plants, and
early retirement for existing capacity will be enforced. Major
financial institution showed support for energy transition program.
On May 6, Maybank announced it will no longer finance coal
activities in its five-year strategy. Earlier in December 2020, the
Maybank rivalry, CIMB bank has unveiled a climate policy to phasing
out coal power from its portfolio by 2040, to support Malaysia
central bank's agenda to build climate resilience in the country's
financial sector. This shows the beginning of coal phase-out
preparation in the Malaysian market, as the market transitions into
renewable energy.
Indonesia's PLN set coal phase out by 2060
On May 27, Indonesian state-owned electricity company PLN
announced that it hopes to achieve carbon-neutral status by 2060.
PLN is planning to retire its coal-fired plants in several phases,
after the completion of the remaining 16 GW of the mega coal-based
projects by 2023, which is planned under 2014 Indonesian 35GW Power
Development Plan. However, there appears to be no alignment between
PLN's 2060 net-zero target with the Ministry of Energy and Mineral
Resources' (ESDM's) 2070 net-zero emission target.
Low carbon programs have been developed in SEA to decarbonize
the region's energy use, to meet Paris Agreement commitments and to
combat climate change. In addition to the domestic efforts, SEA
nations also expect to receive more international financial and
technological assistance that would expedite the region's energy
transition process.
