Coal clouds over climate change
talks By Andrew Symon
SINGAPORE - As industrialists,
environmentalists and government officials open
discussions in Bali, Indonesia, about the
importance of combating global climate change,
there is still clearly a long way to go before the
rhetoric translates into substantial change in
carbon-intensive energy consumption patterns.
Underlining the gap between the
environmental talk and commercial action is Asia's
increasing reliance on coal to fuel large
electricity generation expansion plans. Coal combustion
power generation is by far
the largest volume emitter of carbon dioxide per
megawatt (mw) of any fossil fuel - much higher
than both natural gas and oil. Yet it is coal that
is increasingly being turned to for base load
power generation in most major Asian power
systems, particularly in Southeast Asia.
It would seem that greenhouse gas issues
have a central place on regional government
agendas, with Indonesia hosting the United Nations
Climate Change conference this week, following on
the Association of Southeast Asian Nations'
(ASEAN) leaders' declaration on climate change,
energy and the environment at their summit meeting
in Singapore a fortnight ago.
Yet so far
these concerns have yet to have an impact on
actual development plans for the electricity
sector, as regional countries race ahead to power
their fast economic growth. Consider, for
instance, Vietnam, one of the region's
fastest-growing economies. Hanoi's current power
master plan includes 48,700 megawatts of new
generation capacity that is set to come on line
between 2006 and 2015. Of this, 25,890 MW, or 53%,
is slated to be coal-fueled, 29% from hydropower
and 13% from natural gas.
The additional
generation includes imported power from southern
China from a mixture of hydropower and coal-fueled
generation and from hydropower in Laos. A further
120,000 MW is planned for between 2016 and 2025
and again coal use features prominently. These
targets are colossal numbers, especially when
measured against the country's existing capacity
of just 12,000 MW. But it is what government
planners believe is needed to sustain the
country's current high economic growth rates.
Or, as another example, take Indonesia.
Now with a total installed capacity of 35,000 MW,
over one-fifth, or 7,460 MW, is currently
coal-fired. But Jakarta now has plans underway to
build 10,000 MW of coal-fired production through
the support of Chinese contractors, equipment and
finance. Indonesia has the most abundant coal
resources in Southeast Asia, but also has large
reserves of more environmentally friendly natural
gas.
Natural gas was earlier expected to
play a much larger role in Indonesia’s power
generation expansion plans. Its development has
been stymied by the slow pace of gas pipeline
construction. About 37% of Indonesia’s electricity
is now produced by coal, with the state utility,
Perusahaan Listrik Negara, planning to raise that
level to 66% by 2016.
Coal has also found
favor in neighbouring Malaysia. The country's main
power system on the peninsula - the power systems
on the outlying states of Sarawak and Sabah are
comparatively small - are largely natural
gas-based. Government policy is now to diversify
that environmentally friendly fuel mix to greater
coal reliance, which in recent years has risen on
peninsular Malaysia from less than a 9% share of
the total fuel generation mix to 22.5% at present.
Coal use is further projected in the Ninth
Malaysian Development Plan to rise to 38.1% by
2010, with total installed capacity on the
peninsula rising from 17,622 MW to 22,802 MW.
The power generation system in Thailand is
also largely natural-gas based. But energy
planners there want coal to play a larger role,
given uncertainty over the future extent of the
natural gas supplies available in the Gulf of
Thailand and from neighboring Myanmar, which now
supplies about 25% of Thailand’s power generation
demand. An additional 30,000 MW of power is
projected to be needed by 2021, on top of
Thailand's present 26,000 MW capacity. Currently
about 65% of Thai power is gas-fueled, while
another 16% is fueled by domestic coal and a small
volume by imported coal.
Unlike in other
countries in the region, coal has proven a
politically difficult option to implement in
Thailand due to vocal and effective opposition
from local nongovernmental organizations and
community groups. Rather than fearing of climate
change, these groups have been galvanized by the
memories of a lignite coal-fired plant disaster in
Lampang province in the early 1990s. The
development of two planned coal-fired independent
power projects has been scrapped and the Lamang
issue continues to be an obstacle for new
coal-fired developments. As a result, Thai
planners have cautiously put forward just 2,800 MW
of new coal-fired plants between now and 2021.
The Philippines is perhaps the only
country in the region where government policy
actually aims to reduce reliance on coal - or at
least not to increase its percentage of the
national fuel mix - through greater use of
domestic natural gas and imported liquefied
natural gas (LNG). Currently coal-fueled power
represents 4,200 MW of the Philippines total
installed capacity against the country's total
16,000 MW installed capacity.
Singapore
relies increasingly on natural gas piped from
Indonesia and Malaysia, and is not seriously
entertaining coal as an option for expansion -
though energy planners have not ruled it out.
ASEAN's underdeveloped countries, including
Myanmar, Laos and Cambodia, all have marginal
power generating systems, though fast-growing
Cambodia is turning to coal for the first time
with a 200 MW plant under construction.
Few clean options According to
the US-based Union of Concerned Scientists, a 500
MW coal-fired power plant emits 3.7 million tons
of carbon dioxide per year. Coal combustion plants
incur the wrath of environmentalists because of
their emissions - if not properly controlled - of
sulphur dioxide, poisonous nitrous oxides,
particular matter and mercury.
These of
course can be mitigated to acceptable levels
through various filtering technologies. A problem
seen in China, for example, where coal is used on
a massive and growing scale, is that these
technologies are often not deployed in order to
beat down costs. In Southeast Asia, governments
generally have regulations in place which require
coal-fired plant developers to mitigate polluting
emissions.
Resorting to coal and the
carbon emissions that its use as a fuel source
produces can easily be condemned when set against
the emerging apocalyptic dangers of global
warming. So what can be done? Natural gas could be
used to a greater extent in a number of places,
but development is often slow and difficult
because of the need to co-ordinate investments in
pipelines and other supply infrastructure with the
development of power plants - often representing a
logistical nightmare.
Coal by contract, in
comparison, is an easy fuel to obtain on short- or
long-term contracts and can be shipped in from a
variety of nearby suppliers, including producers
in Indonesia's Sumatra and Kalimantan islands,
Australia and South Africa. Additional natural gas
could also be supplied from sources distant from
major demand centers as shipped LNG. Northwest
Australia has huge reserves of natural gas that
could be drawn on, as could the huge gas reserves
untapped offshore near Iran if the situation there
was less politcally volatile and commercial
conditions more conducive to project development.
Thailand is one country that is looking at
more LNG imports to deal with its projected
natural gas shortfall, as is reportedly Indonesia
and the Philippines. But in comparison to coal
this is still an expensive option, with LNG prices
now at record highs. As with piped gas, LNG prices
in Asia are generally indexed against oil, while
contracted coal prices are increasing but
generally much lower on a dollar per heat content
basis.
Hence the region's governments face
a cost-benefit challenge. While global attention
is now focused on the power and other energy needs
of the industrializing giants China and India,
often overlooked is the large-scale demand in
Southeast Asia in aggregate terms. The region,
with upwards of 570 million people and comprising
some of the world's fastest-growing economies, is
expected soon to have electricity demand
comparable on a per capita basis to North America
or Europe and it is projected to expand quickly
for many decades.
Perhaps Southeast Asia
does not need to follow the energy-intensive paths
followed in the developed world. But alternative
patterns of energy use that still deliver
acceptable standards of living will not be easy to
achieve. Not surprisingly, nuclear power is now
starting to emerge as a possible greenhouse gas
friendly answer to the region's mounting energy
conundrum. For instance, Vietnam plans 2,000 MW of
nuclear capacity by 2015, Indonesia 4,000 MW by
2017 and Thailand 4,000 MW by 2020. Malaysia is
also reported to be looking into the nuclear
option.
Yet there are many economic,
logistical and safety issues that will have to be
addressed before the region shifts substantially
towards more nuclear-generated power. And even if
they do, new nuclear plants will for the
foreseeable future only make a small dent in the
region's projected energy needs. Indeed, if
nuclear is to replace coal anytime soon as central
fuel source in Southeast Asia, its safe
development and least-cost planning will need to
be co-ordinated closely across the region.
That would represent a true test of
ASEAN's maturity and effectiveness as an
organization and is at present still far beyond
the scope of the climate change discussions now
underway in Bali.
Andrew Symon
is a Singapore-based journalist and analyst
specializing in energy and mining. He may be
reached at Andrew.symon@yahoo.com.sg
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