By Tilak K Doshi
Once again, the outlook through 2040 for rapid coal power capacity growth in Southeast Asia, next only to India in incremental global capacity (https://wattsupwiththat.com/2018/11/15/iea-global-coal-demand-bounced-back-in-2017/ ), has become the subject of great concern to the global warmists. David Fogarty, the assistant foreign editor focusing on environmental and climate change issues for The Straits Times, Singapore’s main and only large-circulation English daily, sees it as a “power struggle” — no doubt double entendre intended.
“There is a power struggle going on across Asean, and how it is resolved could determine the course of climate change in a region ranked as among the most vulnerable to rising sea levels and more extreme weather…We don’t need policies that support renewables. We need policies that stop supporting coal, gas and oil. That’s all we need,” said Mr Assaad Razzouk, group chief executive of Singapore-based Sindicatum Renewable Energy, which invests in green energy projects in the region… the region’s power needs have reached a crisis point. Increasingly severe weather disasters, from storms to heatwaves to droughts, are exposing the risks from the region’s decision to back coal- and gas-fired power stations to fuel growth…The World Bank, along with the UN, International Energy Agency (IEA) and investors say there are compelling reasons based on cost, health and energy security for Asean to switch to green power…But entrenched local coal interests, coal-focused bank financing and the wrong policies have hindered a rapid roll-out.
The “power struggle” is thus between government policies that unreasonably “support” coal and other fossil fuels, and those that are calling for rapid growth of renewable energy. Nothing of course could be further from the truth than the “green” renewable energy (David) vs. “black” fossil fuel interests (Goliath) caricature.
As elsewhere in the world, World Bank and Asian Development finance has long been denied to coal power plants in Southeast Asia. There is a veritable parade of private sector banks that have joined the “ corporate social responsibility” rush to end the financing of new coal power plants. A short list includes BNP Paribas, Société Générale, Deutsche Bank, ABN AMRO, RBS, Standard Chartered and Barclays. https://www.banktrack.org/page/list_of_banks_that_ended_direct_finance_for_new_coal_minesplants
The latest leading bank to join this group is Europe’s largest, HSBC. https://www.reuters.com/article/us-hsbc-strategy-fossil-fuels/hsbc-to-stop-financing-most-new-coal-plants-oil-sands-arctic-drilling-idUSKBN1HR1NR
Turning from global banks, the leading Southeast Asian banks – specifically those headquartered in the region’s hub in Singapore — DBS, OCBC and UOB – were named as those “funding coal power despite climate change risks” by Singapore’s main English daily (https://www.straitstimes.com/asia/se-asia/singapore-banks-dbs-ocbc-and-uob-funding-coal-projects-despite-climate-risks-study ). These banks reportedly provided over US$2 billion to fund 21 coal power projects since 2012 mainly in Indonesia and Vietnam. Less than a month after the Straits Times’s publication, a coalition of environmental non-government organizations (NGOs) with activities in Southeast Asia including Greenpeace and Friends of the Earth called on the banks to “end financing of the highly polluting coal-fired power stations in Southeast Asia”. https://www.eco-business.com/news/local-ngos-push-singapore-banks-on-coal-stop-using-our-money-to-fuel-climate-change/
“EcoBusiness”, the region’s leading ‘environment and business’ media organization, headlined its article on the issue as follows: “Funding coal in Southeast Asia is ‘collective suicide’ say experts”. https://www.eco-business.com/news/funding-coal-in-southeast-asia-is-collective-suicide-say-experts/
The anti-coal power alliance does not end there, with the multilaterals (WB and ADB), the main international banks and the mainstream media. This matter was raised in Singapore’s parliament soon after the coverage in The Straits Times, when the Prime Minister was asked whether the financing of coal power plants in Southeast Asia by the Singapore banks had any impact on Singapore’s commitments to the Paris Agreement. http://www.mas.gov.sg/News-and-Publications/Parliamentary-Replies/2018/Reply-to-Parliamentary-Question-on-the-financing-of-coal-power-projects.aspx
The issue gained regional significance given the government’s declaration that as Asean Chairperson for 2018, Singapore would “work with fellow Asean members and … dialogue partners to advance the Asean Plan of Action for Energy Cooperation 2016 to 2025” (https://www.todayonline.com/singapore/spore-declares-2018-year-climate-action ) where the “renewable energy” and “sustainable development” memes takes pride of place.
Perhaps the most astonishing presumption in Fogarty’s “power struggle” narrative is the claim <a la> </i> Al Gore that renewable energy is <already> </i> cheaper than coal and natural gas, and hence merely needs a level playing field in policy terms to compete (https://wattsupwiththat.com/2018/11/10/al-gore-claims-wind-and-solar-are-now-cheaper-than-coal/ ). This is gob-smacking in terms of a policy debate own-goal for the renewable energy lobby.
The fact remains that by and large, renewable energy businesses in Southeast Asia count on a significant part of their revenue streams from policy supports such as Feed In-Tariffs (FITs) and renewable portfolio schemes. Most countries in Asia already extend policy support to solar PV projects, beginning with Thailand which pioneered with FITs (locally called the “adder” program) –- and which accounts for greater solar capacity than the rest of Asean put together — over a decade ago. In short, renewable energy investments in Southeast Asia, as elsewhere in Asia, Europe and the US, depend on continued subsidy and other regulatory support, otherwise they fall (as in https://wattsupwiththat.com/2018/06/07/china-slashes-solar-subsidies-green-stocks-tumble/ and
The real power struggle in Asean power is among the Chinese and Japanese banks. This includes China Development Bank, China Export Import Bank as well as China’s Asia Infrastructure Investment Bank (AIIB which both claims to support sustainable goals and supports building coal power plants in Asia http://www.atimes.com/aiib-uproar-reveals-the-east-west-divide-on-coal/ ) and the leading Japanese private banks and the Japan Bank for International Cooperation which plan to build many such plants in Japan itself http://www.globalconstructionreview.com/markets/japan-plans-dash-co7al-43-statio7ns-12-yea7rs/ as well as compete against the Chinese banks in the Southeast Asian coal project funding arena https://www.thegwpf.com/new-coal-war-china-and-japan-compete-for-coal-projects-in-southeast-asia/ .
Perhaps the recent example of the African Development Bank which broke ranks with its World Bank and Asian Development Bank counterparts by supporting coal-fired power projects in Nigeria, Kenya and elsewhere will prove instructive. https://www.chronicle.co.zw/africa-breaks-ranks-with-imf-wb-on-coal/ It is significant that the current US administration, in competition with China in Southeast Asia as elsewhere, is supporting advanced, low-emission coal-powered projects in a “new energy realism” espoused by Energy Secretary Rick Perry. https://www.energy.gov/articles/new-energy-realism-secretary-perry-remarks-cera-week-prepared-delivery
The battle lines of the power struggle in Asean power are being drawn, and no doubt we shall see further developments one way or another.
Tilak K Doshi
The writer is a consultant in the energy sector, and is the author of “Singapore in a Post-Kyoto World: Energy, Environment and the Economy” published by the Institute of South-east Asian Studies (Singapore, 2015).