Coal is the most carbon-intensive fossil fuel and its rapid phaseout is essential to limit global warming to 1.5°C.
A new International Labor Organization (ILO) report highlights the need for a “just transition” to ensure that the transition away from coal does not adversely affect Filipino, Indonesian and Vietnamese miners.
Any transition away from coal must be matched by steps to maintain employment most affected, says the new report released May 24.
“A Just Energy Transition in Southeast Asia – the impacts of coal phase-out on jobs” focuses on steps needed to ensure that new jobs and livelihoods are created to replace those lost in the Philippines, Indonesia and Viet Nam.
Semirara Island in Antique province hosts coal mining in the Philippines. Most of Indonesia’s coal mines are found in Kalimantan Island. Viet Nam’s are mainly found in Quang Ninh province and the Red River Delta basin.
The three countries are among the five economies with the highest levels of coal consumption in Southeast Asia where coal consumption has risen by 150 percent over the last 20 years.
In these countries, the share of coal in the electricity mix increased from 27 percent in 2010 to 43 percent in 2019.
Indonesia and Viet Nam are important coal producers while the Philippines relies heavily on coal imports. All three are vulnerable to climate change.
Among the three countries covered by the ILO report, Indonesia has the largest coal reserves, which amounts to 37.6 billion tons as of 2019. With 4 percent of the world’s coal reserves, the country ranks sixth, just after India.
Viet Nam’s coal reserves amount to around 4 billion tons, half of which have high production costs.
Indonesia, the Philippines and Viet Nam have the highest shares of coal use in Asia and the Pacific after China. These four economies account for 98 percent of coal consumption in Asia.
President Rodrigo Duterte signed an executive order earlier this year to include nuclear power in the country’s energy mix, as authorities prepare for the phasing out of coal-fired power plants and after earlier efforts failed due to safety concerns.
The Feb. 28 order could be a major milestone for an economy which suffers seasonal power outages and high electricity prices but will concern opponents of the move.
The order also directs an inter-agency panel to look into reopening the mothballed Bataan Nuclear Power Plant (BNPP).
“The national government commits to the introduction of nuclear power energy into the state’s energy mix,” it stated.
Energy Secretary Alfonso Cusi has backed nuclear power and said it could help alleviate supply issues and high costs.
Late last year, the Asian Development Bank (ADB) launched a plan to speed the closure of coal-fired power plants in Indonesia and the Philippines to lower the biggest source of carbon emissions.
The proposal, called Energy Transition Mechanism (ETM), plans to create public-private partnerships to buy out the plants and wind them down within 15 years, far sooner than their usual life.
The announcement was made at the COP26 climate conference in Glasgow, Scotland, which is being attended by world leaders under pressure to come forward with more ambitious climate action plans.
Reuters in August reported that ADB was working with other financial institutions to implement the plan, which was devised by Donald Kanak, chairman of Insurance Growth Markets at British insurer Prudential’s
ADB is now launching a pilot in Indonesia and the Philippines that will see it work with the governments on a feasibility study to detail the right business model for each country.
Japan’s Ministry of Finance committed a grant of $25 million to the ETM, the first seed financing, ADB said in a release.
“Indonesia and the Philippines have the potential to be pioneers in the process of removing coal from our region’s energy mix, making a substantial contribution to the reduction of global greenhouse gas emissions, and shifting their economies to a low-carbon growth path,” said ADB President Masatsugu Asakawa.
Some 67 percent of Indonesia’s electricity and 57 percent of the Philippines’ power generation comes from coal.
A full scale-up of the plan in Indonesia, the Philippines, and Vietnam, aiming to retire 50 percent of the coal fleet over the next 10 to 15 years, could cut 200 million tons of CO2 emissions per year, the equivalent of taking 61 million cars off the road, it said.
A large portion of coal is used to generate electric power, its total power generation increasing in Indonesia, the Philippines and Viet Nam.
The majority of the existing plants are younger than 10 years old. Retiring them soon presents a challenge since coal plants have a normal lifespan of 40 to 50 years.
The number and concentration of the plants demonstrate the extensive use of coal in electricity production. Those in the Philippines are mainly found around the capital, Manila.
In Indonesia, the majority of the high-capacity plants are located in Java Island. In Viet Nam, high-capacity plants are concentrated in the economically important regions in the north and south.
The cement industry consumes the highest amount of coal. The majority of carbon dioxide emissions are produced by cement plants located around the capitals Manila and Hanoi and in Java Island in Indonesia.
The number of steel producers using coal is low in all three countries. There are only a few operating steel plants in Java Island and one in Sulawesi in Indonesia, two proposed plants in the Philippines and three operating plants in Viet Nam.
According to the International Energy Agency (IAE), the demand for coal in Southeast Asia in 2019 was 332 metric tons, of which 42 percent were accounted for by Indonesia and 27 percent by Viet Nam due to the new coal power plants.
In 2020, coal demand in Viet Nam increased by 12 percent because of strong economic growth while it fell in Indonesia and the Philippines due to the COVID-19.
A 7 percent rebound in coal demand is expected as economies recover, according to IEA projections.
