Massive New Coal Boom To Fuel Southeast Asia’s Booming Economies

  • Date: 27/10/17
  • Power Magazine

The International Energy Agency (IEA) reports that about 100 GW of new coal-fired power generation capacity is expected to come online in Southeast Asia by 2040, more than doubling the region’s current coal power capacity. Global coal-fired generation capacity to grow by nearly 50% over today’s levels.

The International Energy Agency (IEA) says the need for cheap electricity in Southeast Asia will drive global demand for coal for power generation through 2040, even as many countries continue to retire coal-fired plants and cancel projects for new coal facilities.

IEA, which is set to release its World Energy Outlook 2017 on November 14, this week said India and Southeast Asia will account for the majority of the use of coal in the coming years, as those areas’ economies continue to grow and demand for electricity rises.

“Coal maintains a strong foothold in [Southeast Asia’s] projected consumption, not only because it is markedly cheaper than natural gas, but also because coal projects are in many cases easier to pursue as they do not require the capital-intensive infrastructure associated with gas,” the IEA said in a report in advance of the release of the November outlook.

The agency said about 100 GW of new coal-fired power generation capacity is expected to come online in Southeast Asia by 2040, increasing the region’s installed capacity to about 160 GW. The IEA said 40% of the new capacity will be built in Indonesia. The group said Vietnam, the second-largest consumer of coal in Southeast Asia behind Indonesia, will become the region’s largest importer of coal by 2040.

A report this week by Wood Mackenzie, a UK-based research and consulting firm with offices worldwide, including five in the U.S., said thermal coal imports by Southeast Asia will more than double to 226 million metric tons by 2035, up from 85 million metric tons today. The group said imports into Pakistan, Bangladesh, India, and other parts of South Asia will jump to 284 million metric tons during that period, a 72% increase from this year’s levels.

At the same time, Chinese imports of coal—China in 2016 again became the world’s top importer of coal, overtaking India—will drop about 40% over the next two decades as the country ramps up its use of other energy sources, including wind and particularly solar, where it dominates the world market in terms of installed solar capacity and the production of solar panels.

China this year has canceled plans for more than 100 new coal plants, although Chinese companies are either building or planning to build more than 700 new coal plants worldwide, according to Urgewald, a German environmental group. Urgewald in July said more than 1,600 coal-fired power plants were either under construction or being planned in 62 countries, a number that would increase global coal-fired generation capacity by 43% over today’s levels.

Kiah Wei Giam, a principal analyst for coal and gas markets at Wood Mackenzie, this week at the Singapore International Energy Week said: “Coal is still the most affordable technology in power generation,” despite “pushback in coal development” due to concerns about pollution. Giam said coal demand will remain high at least until renewable energy sources and energy storage solutions become more economically competitive.

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