Strategic Report on the ASEAN Readiness for CCT and CCU Technologies Towards Carbon Neutrality

Executive Summary

ASEAN’s energy landscape depends on coal and remains imperative, particularly in the electricity and industry sectors. To address an increasing energy demand of ASEAN in 2050, the region is predicted to still rely on fossil fuels despite its increasing renewable energy share. Oil and coal are expected to account for 62% of the total energy supply of ASEAN in 2050. The coal used in power generation in 2050 is projected to account for 44% of its total energy consumption.

Most ASEAN countries have become the major players in the global coal market both as exporters and importers, even though the trade balance of coal in ASEAN is surplus in 2021. It indicates that ASEAN still relies on fossil fuels for energy supply despite its unconditional or conditional commitment under the current national and foreign policies on the climate-energy nexus, such as the Enhanced Nationally Determined Contribution (ENDC) and Global Coal to Clean Power Transition Statement (GCCPS).

Based on the current trends and projections, Coal Fired Power Plants (CFPP) will remain operational even in the energy transition, which serves as stable supply sources and balancing sources through flexible operation until energy storage technology fully blooms and becomes affordable. Therefore, Clean Coal Technology (CCT) and/or Clean Coal Utilization (CCU) is the optimal solution to achieve carbon neutrality while ensuring energy security during the transition. ASEAN could employ this type of technology to make utmost efforts for utilizing coal power in the cleanest possible manner.

Since the possibility of introducing a new coal-fired power plant is slim globally, the practice of CCT and CCU introduced as “add-ons” to existing power plants, namely 1) air quality control system and 2) technology for flexibility and balancing. In ASEAN, ongoing projects with CCU technologies can be found in using biomass, hydrogen, ammonia, CCS projects and energy storage. Moreover, there are several best practices from other countries to apply technologies by modifying the plant, such as biomass cofiring by mixing the ratio up to 50% and dedicated firing with diverse types and plant scale, ammonia cofiring and green ammonia production, hydrogen utilization, supply chain of carbon-neutral fuels, and CCU technology.

By assessing the CCT and CCU deployment in the region, AMS still faces bottlenecks. There is a lack of commercial business models in the feasibility stage due to high business risks followed by share and transfer financial risk and public acceptance. Meanwhile, there are technical failures and policy and regulations during the deployment. Thus, a survey with ASEAN focal points on technology readiness and acceptance is conducted. Based on the online survey, most countries have common challenges in technology procurement for carbon neutrality and energy transition: technical, financial costs, and enabling policy and regulatory framework. In addition, land acquisition and geographical constraints pose a significant threat.

Therefore, to accelerate the CCT and CCU technologies in supporting carbon neutrality targets of the region, there are following actions for a well-designed of the introduction and deployment of the CCT and CCU technologies in the region by taking into consideration; 1) enabling policies within each AMS to support market condition and institutional frameworks; 2) inclusion of knowledge sharing and enhancing capacity building at the policy preparation phase and project implementation and large deployment of these technologies; 3) diversification of the available CCT and CCU technologies based on the country’s needs; 4) creating the greater access for finance or investment to be economically viable. Among others, carbon pricing (tax and credit) could serve as an important instrument with the potential to support and encourage private sector engagement also value chain establishment that would bolster the growth and resource enhancement in the region; 5) implementation of other supporting measures and cross-sectoral interlinkages such as integrating sustainable land use into existing energy and investment policy, and; 6) redesigning and strengthening industrial hub would enable the region for sharing required infrastructure of the CCT and CCU technologies, reducing cost, and ensure the availability of key elements needed for these technologies.