No plan to reach net zero will work unless it decarbonises power generation in Asia, where coal is a habit that dies hard
Narrated by Giles Whittell
“In Indonesia there are over 170 coal fire plants which generate 32 gigawatts and that electrifies the whole of Indonesia from east to west. And if this is shifted to renewable energy for instance like wind, water, sun, or whatever, [it] needs that much.”Retno Nartani, coal mining engineer
That’s Retno Nartani. Coal is her life. She’s been a coal mining engineer in Indonesia for her entire career.
“Maybe some people I don’t know but electricity in Indonesia is monopolised by a state-owned company so all power produced by power plants, including coal, has the same buyer which is the state electricity company and that’s opened a very grey area where people who have… have a guaranteed profit margin because the government will buy whatever they produce.”Wahyu Dyatmika, investigative journalist
And that’s Wahyu Dyatmika, an investigative journalist in Jakarta. Coal is one of his obsessions because his country depends on it and it’s wrecking the earth’s climate.
They both know Indonesia has to transition to clean energy. But Retno reckons that will cost $300 billion – which is a lot compared with the $100 billion a year the rich world has promised to the developing world to combat climate change.
Promised, but not delivered.
In the meantime coal keeps millions in employment across Asia. It powers some of the world’s fastest growing economies. And it delivers irresistible profits when prices surge, as they’re surging now.
Hello. I’m Giles Whittell, an editor at Tortoise, and in the next half-hour, with the help of experts and journalists from across the world of coal I want to try to understand why Asia burns so much of it and whether it can kick the habit.
“Coal remains the cheapest energy source on a [levelled] cost basis and we’ve seen a lot of technology improvements around renewables where costs have fallen tremendously over the last decade but they’re still not at the point at which they would challenge coal generation for building, so the cheapest generation source to build and through the life of the plant.”Natalie Biggs, Wood Mackenzie
Natalie Biggs is a coal analyst at Wood Mackenzie, the energy consultancy. What she says may come as a surprise to people – like me – who thought the tumbling price of renewables was putting coal out of business the world over.
It was. Thanks mainly to huge Chinese subsidies and economies of scale, the cost of a unit of solar power fell by 85 per cent in the decade from 2010. Then three things happened: Covid, war, and a bitter argument between the US and China over slave labour in Xinjiang.
Covid meant lockdowns, which meant supply chain chaos, which put the squeeze on new renewable energy capacity.
The end of covid meant sudden high energy demand, which only fossil fuels could meet quickly. War in Ukraine cut off Russian supplies of coal, and oil, and gas, driving up their prices – which were already high. And that bitter argument? Long story short, America has said it won’t buy solar panels made in Uighur “re-education” camps in western China. That puts another squeeze on new renewables.
So what is to be done? Are we – as a species – going to quietly forget about the need to stop burning coal, just because of our own screw-ups in public health and geopolitics?
Last year reporters from independent news organisations in Indonesia, Malaysia, Japan and South Korea set out to find out. They wanted to know what made Asia so dependent on coal in normal times, and how to break that habit.
“A lot of our audience in Indonesia thought that it’s a given situation that we are dependent on coal, that it’s something we can’t do anything about because that’s just the fact. We want to uncover the network of people and businessmen, the relation between businessmen and political elite.”Wahyu Dyatmika, investigative journalist
What Wahyu Dyatmika and the other reporters found wasn’t reassuring. They found that whole countries across Asia are hooked on coal – partly because it’s there. It’s abundant. It’s easy to get at. And so, as Natalie Biggs says, it’s cheap.
But the addiction’s worse than that. It’s made worse by vested interests, broken promises and unintended consequences.
For instance, on a promontory at the entrance to Tokyo Bay, a Japanese consortium is trying to build a big new coal-fired power station – one of nearly two dozen planned to compensate for the closure of the Fukushima nuclear plant.
It’s being built even though more coal plants are the last thing in the world the planet needs. Even though Japan can afford cleaner alternatives. Here’s Annelise Giseburt of Tansa, a non-profit Tokyo newsroom:
“The utility when it proposed the plant, and this plant is currently under construction in a schedule to come fully online in 2024, when the utility proposed the plant they say we are contributing to lowering emissions because we’re replacing an old thermal power plant but it’s old and inefficient, so by building a new “efficient” power plant, the emissions will decrease… but the truth is the old power plant was not even running, it had shut down the year before the Fukushima accident, and after Fukushima when Japan took its nuclear fleet offline this old power plant was brought back online for another two or so years and then once Japan got its energy mixed settled down again, then the old plant was brought offline again in 2014. So by the time the new plant was proposed, the old plant had been totally offline emitting nothing for about two years and in fact the group of lawyers who are working on the lawsuit that’s trying to stop the plant, they calculated the emissions from the previous plant and they found that actually, it had only emitted a similar amount to the level of CO2 to the new proposed plant in the early 1970s, so from the time of the old plant emitting a similar level of emissions to when the new plant comes online, about 50 years will have passed so that’s the sort of… greenwash that sometimes happens in Japan to enable utilities and the Japanese government to keep using coal even when public opinion and certainly international public opinion continues to become stronger and stronger against coal.”Annelise Giseburt, Tansa
In the developing world there’s a strong argument that if rich countries want poorer ones to make the transition to clean energy, they should pay for it. In principle, it makes so much sense. In practice, something’s gone wrong.
“The whole Paris Agreement from the pledge, for example, Malaysia made 35-45% greenhouse emission cuts, was predicted on the promise that developed and richer countries were going to contribute to financial and technology transfer. That has not been done…. so you’re looking at, in a way to be fair to… Southeast Asian countries, a lot of these countries rely on cheap energy sources such as coal to ensure a stable energy source. These countries are still heavily relying on the industry. So we need sort of stable energy to keep things moving, to keep… going, to even help some of the suburban areas and poor people to just cook food, for example, and now you come and countries are saying, ohh great, Malaysia go net zero… it’s all well and good but where is this technology transfer?”
Darshini Karsh, investigative journalist
This is Darshini Karsh, an award-winning Malaysian investigative journalist making what amounts to a powerful, moral and practical argument in favour of coal in Asia, even though, in fact, that’s the last thing she wants.
“We know that our renewable energy, for example, is getting much cheaper. Technology has suddenly caught up and it is suddenly looking like it’s going to become a much more viable transition fuel than natural gas, but not many countries have this technological know-how or the finance to put these together. So it’s definitely doable but I would say it would rely a lot on developing or developed countries, or larger economies to help not just, you know, make big promises but to actually put into motion this sort of aid and technology transfer to help other countries along. It’s not to say that this is allowing Asian countries, especially smaller countries, to hide behind their pledges… so basically my argument here is that we need to give people less excuse and we really need to help them along the way and be realistic of the challenges, especially smaller Southeast Asian countries face, to make this transition.”Darshini Karsh, investigative journalist
Without big transfers of cash and know-how, is it reasonable to expect countries with low incomes, and low per capita carbon emissions, to commit huge sums to the energy transition?
“To be fair to them, they are much more reliant on coal fire generation, they’ve built out a tremendous amount of new coal-fired capacity that is going to have an investment timeline… they’ll want paybacks for those investments. So it’s not easy for them to make a wholesale switch. I mean, their commitment would be much larger than some of these other countries so it’s hard to vilify them as.
And they’ve got, you know, a lot of it’s their own domestic production and so this is a whole industry. These are people’s jobs, a lot of their economy is tied to it, and so it is a big ask to have them completely switch gears. So there’s a lot of considerations for them and they’re more reluctant than some of the other countries as a result. We’ve had plants in the US last for 60 years and more but as far as payback, I mean, 20 or 30 years is a good assumption.”Natalie Biggs, Wood Mackenzie
Yes, energy infrastructure takes long-term planning. And sometimes calculated risks, like one Malaysia took.
Have a listen to Sharan Raj, national coordinator for the Bureau for Environment and Climate Crisis of the Malaysian Socialist party.
“When you look at a Malaysia historically before 2009, before the 2008 recession, Malaysia predominantly… the big lead domestically [was] natural gas. However, we were highly subsidised. So the state point operation… they don’t really agree on. They actually agree on natural gas. Unknown to many, Malaysia is actually a natural gas producer not a… oil producer. And the… has to sell the natural gas under price to state owned enterprise… which is the national energy corporation, and it was sold below the market price to keep tariffs in check.
In 2009, then the new prime minister… took a different turn in the energy policy. He actually decided that he will export the natural gas at a higher price to the global market and import cheap coal from our neighbour Indonesia.”Sharan Raj, Bureau for Environment and Climate Crisis, Malaysian Socialist party
So Malaysia’s big idea is to make money by selling gas at high prices on world markets, while powering its own economy with imported Indonesian coal, which it hopes would be cheap.
“This was done in 2009… So within less than one decade, between 2009 to 2019, we actually… tens of thousands of coal power plants became one of the biggest coal consumers in Southeast Asia, second, only to Indonesia if I’m not mistaken. And we imported so much of [the] coal from Indonesia but this calculation became a miscalculation in terms of tariff after 2013, when you hit what is known as the peak coal. So the global coal price… because coal consumption was dropping… old mines’ investment was dropping and [the] tariffs were soaring and we lost the advantage. So this calculation was done on a very simple thing. Let’s export natural gas at a higher price, buy call from our neighbour Indonesia at a lower price, and pocket the surplus in energy.”Sharan Raj, Bureau for Environment and Climate Crisis, Malaysian Socialist party
Sounds good, right? Wrong.
“One of the reasons why Indonesia was forced to extend its coal mine, particularly in the provinces in Kalimantan… because we were in a huge contract with the state mining corporation in Indonesia. So Indonesia had agreed to actually expand their mines, just to meet our demand, that is Malaysia’s dirty contribution. In fact, when the whole world is actually moving out, we were one of the very few that extended in just less than one decade. That is not something I’m proud of but that is the truth.”Sharan Raj, Bureau for Environment and Climate Crisis, Malaysian Socialist party
So Malaysia became a massive coal importer – and burner – when it could have just used its own gas as a transition fuel. Worse than that, it’s locked into long-term contracts that force it to pay today’s soaring coal prices, to Indonesia.
Could Indonesia manage without those earnings? Here’s Wahyu Dyatmika again:
“We know that Indonesia has one of the largest geothermal potentials in the world. We have the ring of fire mountains in our islands, and I think the government, we did a story on that in our last piece, [is] planning to build a holding company out of the three big players on geo-thermal, and, you know, they want[ed] to sell the shares to the public and an IPO was planned. And I think that exposed one of the problems with the renewables, which is financing. It’s very risky, it’s very expensive, and while in this planning stage, there’s a lot of resistance from all sides about this issue and I think that will really make the government commitment to reduce Indonesian and carbon emissions to 29 per cent, will be very difficult.Wahyu Dyatmika, investigative journalist
Financing renewables is risky and expensive, he says. In Indonesia, maybe. But it doesn’t have to be that way. In fact in the rich North, and that includes South Korea, it’s investment in fossil fuels that’s increasingly considered risky. Here’s Jiyoon Kim of Newstapa in Seoul:
“Even though the government, civil servants, as well as policy makers, they are still keeping coal policies, very friendly for the industry… but many banks and financial institutions in Korea, both public and private, are actually divesting out of coal investment, both in Korea and outside Korea because you know, Korea has been one of the largest investors for overseas coal power plants for mostly in Southeast Asia.
The reason is very simple in Korea, those investment choices are made basically on what the current administration is going for. In this case, that’s like president Moon Jae-in‘s policy campaigns on calling for net zero carbon reductions. So it has to do with some political issues but it is factually true that both public and private financial institutions in Korea are divesting from coal.”Jiyoon Kim, Newstapa
So policy works. Legislation can still set priorities, and the terms of business. Business pays attention. That’s partly because wherever the rule of law exists, it has to. Break the rules and you pay a fine or go to jail. But there’s probably another reason South Korea’s giant finance houses aren’t fighting the government on this. And that is that its policies are aligned with the big economic – and technological – trends. I asked Natalie Biggs if she reckoned the industry she’s paid to watch, the coal industry, had hit a purple patch or was in a state of managed decline. This is what she said:
“In the short-term we could see a bit of a boost, especially when you have many European governments discussing delay in coal retirements, like the UK, Italy, France, Germany. And so we could see a near-term boost, I don’t think that necessarily will append their carbon commitments for 2030.
I think that coal can play a role to help ease the transition to renewables and ensure reliability for power markets but I think long-term, there’s going to be a decline for coal and like I mentioned before, it’s hard to argue with the economics if renewables are lower costs and battery technologies, improve.”Natalie Biggs, Wood Mackenzie
Economics are hard to fight against, she says. And they favour renewables in the end. Even Retno Nartani, the lifelong Indonesian coal miner, reckons her country could kick its coal habit in the end.
“If you say, is it possible? Yes, it is possible but again, it needs a proper exit button, a proper exit plan.”Retno Nartani
A proper exit plan. So all we need is Covid to take a break and Russia to give peace a chance. I suppose there’s hope yet for Asian economies, trying to transition away from coal, for Asian workers hoping their skills will prove transferable into a new world of green energy and for the planet. But it has to be said that hope can look pretty forlorn.
Can Asia kick its coal habit? Yes. But voices like those of Dyatmika, Annelise, Darshini and Jiyoon are still too often drowned out by the roar of industry and the quiet chatter of lobbyists at lunch.
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