Forget Paris: Asia Building 500 New Coal Power Plants (This Year Alone)
In Asia alone this year power companies are building more than 500 coal-fired plants, with at least a thousand more on planning boards.
The shine is coming off once bright prospects for natural gas as the future fossil fuel of choice in Asia as power companies in India and Southeast Asia tap abundant and cheap domestic coal resources to generate electricity.
Asian loyalty to coal is shrinking the space available for natural gas just as supplies are ramping up after massive investments in U.S. and Australian output. Demand growth for natural gas is also slowing in top energy consumer China, further dampening the fuel’s prospects.
While much attention has been given to a potential peak in China’s coal demand and worries about emissions, in Asia alone this year power companies are building more than 500 coal-fired plants, with at least a thousand more on planning boards. Coal is not only cheaper than natural gas, it is often available locally and has no heavy import costs.
Growth in coal use is expected to hit liquefied natural gas (LNG) producers hardest, especially with prices half of year-ago levels as Australia and North America wind up their spending spree of hundreds of billions of dollars.
“Electricity is increasing its share in total energy consumption and coal is increasing its share in power generation,” said Laszlo Varro, head of the gas, coal and power markets division for the International Energy Agency (IEA).
Some of the biggest growth in coal use is in India, where it meets 45 percent of total energy demand, compared with just over 20 percent each for petroleum products and biomass/waste.
“We’re absolutely sure India’s coal demand will continue to grow,” Varro said.
At the same time, costs for solar, wind and other renewables are falling, and countries are stepping up investments, eating away more of natural gas’ portion of the market.
China, in particular, added nearly as much wind capacity as the rest of the world in 2014, according to the latest annual report from the Global Wind Energy Council, and India is also investing heavily in renewable energy.
Renewables are attractive as an offset to the carbon emissions and pollution associated with coal, and also because they help reduce import bills for expensive fossil fuels.
Other emerging Asian economies are seeing similar growth to India’s in coal-fired generation.
“Coal is still the cheapest and the fuel that most Asian countries will use,” said Loreta G. Ayson, undersecretary at the Philippine Department of Energy.
Forty percent of the 400 gigawatts in generation capacity to be added in Southeast Asia by 2040 will be coal-fired, the IEA says. That will raise coal’s share of the Southeast Asian power market to 50 percent from 32 percent, while natural gas declines to 26 percent from 44 percent.
And growth in coal is not only seen in developing economies. Coal’s share of the energy mix in Japan, top importer of LNG, will rise to 30 percent by 2030, up from 22 percent in 2010, according to the nation’s Institute of Energy Economics, while natural gas will hold at 18 percent.