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Coal

Is market overestimating Indonesia’s ability to continue thermal coal supply for export market?

7 October 2019

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Indonesia

The economy of Indonesia is one of the largest in Southeast Asia with gross domestic product (GDP) of more than one trillion dollars, and coal has been at the heart of the nation’s energy policies for over four decades now. With total reserves of about 37 billion tonnes — more than 3 per cent of the total global reserves as per BP Statistical Review of World Energy 2019 — the government of Indonesia has set policies for many decades to use coal as one of the prime drivers of its economy. This is also evident from the various National Energy Policy documents issued by the government.

Coal is not just an important resource for generating electricity for Indonesia but also a strategic and top priority export commodity. Global seaborne coal trade has been in the range of 900 million tonnes to 1,000 million tonnes over the past five to seven years and Indonesia is by far the largest exporter with market share of about 40 per cent to 42 per cent. It has one of the unique river systems that enable it to ramp up its supply for thermal coal traded through sea routes. The coal exported from Indonesia is transported down rivers on barges to trans-shipment points on the coast. From there, coal is loaded onto seagoing vessels for export. This unique infrastructure system has enabled Indonesia to increase exports far quicker than its competitors such as South Africa and Australia that have mostly capital-intensive supply chain infrastructure and, therefore, are relatively slow to respond to short-term market movements. This is also one of the main reasons as to why Indonesia enjoys 40 per cent to 42 per cent share for seaborne thermal coal market.

In addition to its role in the energy sector, according to a recent PwC report, the coal mining industry contributed about 2.4 per cent of the GDP of Indonesia in 2017 and thereby contributes to national development as a revenue stream for the government. It also focuses on increasing trade revenue to counterbalance the trade deficit coming from imports primarily oil and gas.

Most of Indonesia’s coal resources and production are from only four provinces — East Kalimantan, South Sumatera, South Kalimantan, and Central Kalimantan. In the early 1990s, coal-mining sector in Indonesia was reopened for foreign investment. Since then, Indonesia witnessed a robust increase in coal production, coal exports and domestic sales of coal. Thermal coal exports more than doubled from about 160 million tonnes to 382 million tonnes from 2007 to 2014, before declining sharply in 2015 due to weak prices. Exports stabilised in 2016 at about 360 million tonnes and recovered strongly in 2017 as export prices improved.

In terms of domestic market, in recent years there has been a rapid increase in domestic coal consumption. Further, the Indonesian government is committed to its ambitious energy programme to increase its thermal coal generation capacity from 34.4 GW in 2018 to 64.8 GW by 2027. The domestic consumption of thermal coal — including power and other industries — has almost doubled from about 65 million tonnes to about 115 million tonnes over the past seven to eight years. Some estimates suggest that domestic requirement of coal would cross 200 million tonnes by 2027 to meet the domestic power requirements because of expected addition of 30 GW of capacity based on coal. Hence, additional 90 million tonnes to 100 million tonnes of coal would be required to service the domestic requirement. However, would this restrict the ability of Indonesia to grow exports?

In view of this outlook, the natural question arises whether Indonesia would continue to ramp up its production to meet its demand of export market considering substantial increase in domestic consumption or would it lose its tag of being the largest exporter of coal for seaborne market.

This question also assumes importance considering that Indonesian thermal coal varies in energy content. Low to medium-quality coal (less than 5,200 kcal/kg) constitute most of Indonesia’s coal exports with share of high-grade coal constantly declining. Over the past four years the share of high-grade coal (more than 5200 kcal/kg) in the total production has declined from 26 per cent in 2015 to about 15 per cent in 2018. Many reports indicate that currently, the majority of reserves consists of sub-bituminous and lignite, a lower energy coal. Further, only 10 per cent to 11 per cent of the Indonesian reserves are bituminous grade (high-grade coal), hence the possibility of increasing the production of high-grade coal seems limited.

Most of the new power plants within Indonesia are designed to use an average coal quality of 4,000 kcal/kg gross as received and that suggest the focus is on production of low to medium grade coal and as such more coal needs to be burnt to generate the same amount of electricity. Thus, more volume of coal would be required for the domestic market, which would replace the volume of coal available for seaborne export.

It seems evident that potential downside risks exist for seaborne exports from Indonesia given that demand from emerging economies has not shown signs of reducing, rather many trends suggest that demand for seaborne trade is on an upswing. What also needs to be seen is the capability of infrastructure in the emerging markets to handle thermal coal. Countries such as Vietnam, Bangladesh, Philippines, etc, have lower coastlines and hence focus on moving more Kcal/kg in order to optimise their handling facilities and hence the demand of high-grade coal will challenge its supply.

Thus, the mute question is how the expected demand and supply mismatch for seaborne trade would reach equilibrium. Would any other major coal-producing nation take advantage of this situation or will Indonesia ramp up the production of its low-grade coal reserves to maintain its market share even when the focus is on using high-grade coal across the world to reduce the carbon footprint?

Coal

Hundreds protest pollution from coal-fired power plant in Indonesian village

7 October 2019

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Indonesia

Hundreds of people in this city in central Java staged a protest last week demanding a meaningful solution to a long-running air pollution problem caused by ash from a coal-fired power plant.

The protesters, from the village of Winong in Cilacap district, gathered outside the district environment agency office on Sept. 30 to call for sanctions against PT Sumber Segara Primadaya (S2P), which operates the Cilacap power plant. They carried signs that read “The People Need Clean Air” and “The People Are Showered by Coal Dust,” as well as “We Need Proof, Not Promises,” in reference to previous statements by local officials to resolve the problem.

Residents of Winong, a village of fewer than a thousand people, have since 2016 blamed the power plant for polluting the water and air in area. They say the plant’s operations have depleted the water table, and that any water they can draw up from their wells is salty. They also complain of a constant rain of ash peppering their homes, forcing them to clean up every day. Local children have reportedly been diagnosed with pollution-related ailments, including bronchitis and skin rashes.

The plant, including its waste management facility, known as the ash yard, is located just 20 meters (66 feet) away from the village.

After multiple complaints and protests, the villagers finally got an opportunity to make their case to the Cilacap district head, Tatto Suwarto Pamuji, in August 2018. Following that meeting, Tatto ordered an investigation the next month into the plant and the operator. The investigation involved environmental experts from Diponegoro University in Semarang, the Central Java provincial capital, and two of the Winong villagers.

But the results of that investigation were never made public, according to Agus Mulyadi, from the Forum for Winong People Care for the Environment (FMWPL), who was present at the meeting with Tatto. Instead, the Cilacap environment agency and PT S2P met in November 2018 with the villagers to resolve the air pollution and mismanaged waste — without ever revealing the true scale of the problem. The agreement also called for an evaluation of the company’s efforts after four months.

That evaluation was due this past March. “But as of September, there has been no evaluation,” Agus said, adding that the people were still suffering from the pollution attributed to the plant and its ash yard.

“We don’t care how, but the point is, the ash yard has to be relocated because it has clearly polluted the environment, especially in Winong,” Agus added.

At their protest last week, the villagers met with Awaludin Muri, the environment agency head. They told him that their village continued to be enveloped in dust, adding “Please resolve this. Don’t let us continue to be victims of pollution.”

The pressure appeared to pay off, with Awaludin handing over the results of the investigation to the crowd. In doing so, he said he had “paid off one of the people’s demands.”

We don’t care how, but the point is, the ash yard has to be relocated because it has clearly polluted the environment, especially in Winong.

Agus Mulyadi, Forum for Winong People Care for the Environment (FMWPL)

But another demand that remains unfulfilled is the publication of the promised evaluation of the plant operator’s efforts to address the problem. The protesters gave Awaludin’s team a deadline to resolve the issue within a month.

“We acknowledge, because we’ve also gone to the site, that pollution is still happening,” Awaludin said. “In principle, we are working. But it’s unlikely to be resolved in a month.”

Awaludin also said there had been a delay in efforts to contain the pollution from the ash yard. “The Cilacap [district] environment agency and the Central Java [provincial] environment agency have been working together with PT S2P on the environmental impact assessment,” he said.

He added his office would boost efforts to manage the environmental impact in Winong from the power plant, including creating a dome to contain the ash from burning coal, and spraying water to prevent the ash from dispersing into the air.

Others

Hydrogen as a clean fuel for transportation

7 October 2019

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ASEAN

According to the International Energy Agency (IEA), ASEAN currently consumes 4.5 million barrels of oil per day, while it only produces 2.5 million barrels per day, with the remaining supply gap – over 40 percent of the demand – coming from imports. Such oil demand is mainly driven by the transport sector, especially land transport, according to a research paper by the Economic Research Institute for ASEAN and East Asia (ERIA). Importing fossil fuel not only increases insecurity of energy supply, but also burdens ASEAN’s financial and fiscal systems. Greenhouse gas (GHG) emissions and urban air quality issues add further to the concerns about the reliance on fossil fuel to power transport, regardless if it is pumped from local wells or wells in the Middle East. While ASEAN has emphasised biofuels as a form of relief to this problem, the amount that liquid fuels can be blended with biofuels is limited. Currently, the most aggressive plan is to reach 20 percent of blending of biofuels.

Electrifying road vehicle fleets seems to be the most desirable path to addressing energy security, financial and fiscal burdens, and emissions and pollution challenges. European countries as well as China have already announced their target years for banning the sales of fossil fuel-powered cars. Chinese cities also compete with one another to be the first to deploy electric cars and buses for public transportation. However, it should be noted that the concept of battery electric vehicles (BEV) comes with intrinsic limitations. Issues with costs, energy density, and short lifetime of batteries are just the tip of the iceberg. Various studies have shown that if electricity is not generated by energy sources that are sufficiently clean and green, BEV will cause more emissions and pollution than fossil fuel-powered vehicles. Last but not least, we will soon face problems stemming from limited global reserves of key battery manufacturing materials and the recycling of a million tonnes of used batteries.

Another pathway to electrify road transport

The concept of hydrogen plus fuel cell electric vehicles offers another option as a complementary solution towards electrifying the road transport sector. Hydrogen has long been widely applied as a material input by a range of industries including chemical, metals, food-processing and medicine. Therefore, it is conventionally available as a by-product of many industrial processes. However, until now, hydrogen has rarely been perceived as an everyday source of energy. Even fewer people are aware of its potential as a clean and even zero-emission energy when hydrogen is completely produced from renewables.

Hydrogen also has intrinsic advantages. First, its energy intensity is higher than that of gasoline. Five kilograms of hydrogen can sustain driving up to 500 kilometres. Second, refuelling can be done as quickly as with gasoline and diesel. These two advantages make it especially suitable for long-distance or heavy-duty trips, such as intercity buses and cargo delivery by trucks. Third, hydrogen can be produced by various means, especially from clean and locally available sources such as solar, wind, hydropower, nuclear energy, and biomass. Fourth, hydrogen storage is flexible in terms of scale, location, and timing. It complements intermittent as well as seasonal renewable energy such as solar, wind, and biomass. Integrating hydrogen as part of the energy system could strategically enhance its flexibility and security.

Hydrogen economy in ASEAN

ASEAN has rich energy resources which can be mobilised to supply hydrogen and to power the transport sector by applying fuel cell technologies. According to a report by the ASEAN Centre for Energy, ASEAN has rich fossil energy reserves, including 17 billion tonnes of hard coal, 11 billion tonnes of lignite, 6.8 trillion cubic metres of natural gas, and 2.1 billion tonnes of crude oil. Using data from the BP statistical review of energy, coal production can be sustained for over half a century, assuming current levels of production in ASEAN countries. In the case of natural gas, sustained production can last for over 20 years in Brunei, over 30 years in Malaysia, over 40 years in Indonesia, and over 60 years in Vietnam.

When it comes to renewable energy, according to estimations from various reports, ASEAN possesses 229 gigawatts (GW) of theoretical resources of wind energy, 158 GW of hydropower (including small hydro), 61 GW of biomass, and 200 GW of geothermal. In regard to solar energy, ASEAN plans to install 55 GW by 2025, while Indonesia alone is predicted to develop 47 GW of capacity by 2030, according to IRENA. An ADB report indicated 8 GW of technical potential in Cambodia, while the International Renewable Energy Agency (IRENA) indicated over 10 GW of potential for Lao PDR and over 25 GW in the case of Vietnam.

asd — Source: Economic Research Institute for ASEAN and East Asia

However, the hydrogen supply chain and related technologies are still expensive. According to a recent ERIA study, in ASEAN, the total cost of owning and driving a hydrogen-powered fuel cell vehicle is two to three times as high as a conventional gasoline or diesel vehicle, depending on the vehicle fleet (passenger vehicle, bus, or truck), scenario of vehicle usage, and pathway of hydrogen supply.

Coupling renewable energy development and hydrogen

In line with mainstream projections about future development of hydrogen-related technologies as well as the learning effect and economy-of-scale to be achieved by the industry, ERIA’s study revealed that by around 2030, the gap in price between conventional vehicles and hydrogen-powered vehicles will largely be bridged. Policies to encourage low emission vehicles, pricing GHG emissions, or putting surcharges on conventional vehicles and fossil fuels will further add to the competitiveness of hydrogen and fuel cell electric vehicles (FCEV). This is probably why major economies are moving quickly to demonstrate, and even to adopt in commercial applications, hydrogen as an energy source. It is thus about time for ASEAN countries to seriously consider it.

Moreover, ASEAN is also currently on a firm course to achieve 23 percent renewable energy integration into its energy system by 2025, and even more by 2030. If anyone has a doubt how ASEAN’s energy infrastructure should be developed to cater for such a major transition, hydrogen-based and electrified road transport appears to be an emerging and increasingly promising option.

Renewables

After PH inks nuclear energy deal with Russia, Duterte says it may be unconstitutional

6 October 2019

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Philippines

Metro Manila (CNN Philippines, October 6) — After the Philippines signed a deal with Russia on the possible construction of nuclear power plants, President Rodrigo Duterte said this may not be constitutional after all.

“The Constitution would not like it. That is why I have to talk to the Cabinet. I cannot affirm or deny that because that’s part of the proposals,” Duterte told reporters Sunday upon returning to the Philippines from his five-day official visit to Russia.

He added that he has to consult his Cabinet to see if anything in the deal would need the consent of Congress.

An agreement to explore the possible construction of nuclear power plants in the country was among the 10 business agreements with Russia, estimated to be worth $12.57 million or around ₱650 million.

The Constitution does not ban the use of nuclear energy, but it does “adopts and pursues a policy of freedom from nuclear weapons in its territory.”

Russian media earlier reported that the Rosatom State Atomic Energy Corporation offered to build floating nuclear power plants in the Philippines. Rosatom Director General Alexei Likhachev was quoted as saying the Philippines can also reboot its existing power plant or build another station.

The country’s first and only nuclear power station, the Bataan Nuclear Power Plant, never became operational due to issues of corruption and safety, compounded by the fear following the Chernobyl disaster in 1986.

The mothballed project was revisited in 2018 as the Philippines’ looked for other sources to meet the growing demand for power. Russian Ambassador Igor Khovaev, however, told CNN Philippines that the plant was beyond revival because of its “absolutely outdated” technology.

In November 2017, the Department of Energy inked a memorandum of understanding with Rosatom, which the Foreign Affairs department said covers cooperation on the various uses of nuclear energy.

The Department of Science and Technology also signed an agreement with Rosatom on the use of nuclear energy for peaceful purposes, which took effect in December 2018. The agreement covers workshops, training of personnel, and the exchange of scientific information.

Coal

Coal remains main source of energy in Southeast Asia

6 October 2019

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ASEAN

The energy multinational Wood Mackenzie said in a recent study that coal would remain a major fuel source in Southeast Asia for years to come, its use expected to peak only in 2027.

The Indonesian government has set a target of generating 23 percent of its power from renewable sources but has achieved only 12 percent thus far due to widespread dependence on coal.

Jacqualine Tao, a research associate at Wood Mackenzie, said the reality of rising power demand and affordability issues in the region means that coal’s capacity plateau will only be seen after 2030.

The International Energy Agency (IEA) has stated that global demand for coal grew by 0.7 percent for the two years ending in 2018. It has estimated that, in the next 20 years, coal demand will continue to rise due to its affordability and availability.

Southeast Asian nations, India and other developing countries will be the center of coal demand for the next 25 years, obtaining three-fourths of their energy from it, the IEA believes.

By 2040, the power generated from coal will have risen from the current 35 percent to 40 percent, while the proportion generated from natural gas drops from 30 to 45 percent, it has said.

Countries such as Vietnam, the Philippines, Malaysia, Thailand, and Pakistan will have to import coal-generated power from other nations, while the European Union, Japan, the Republic of Korea and China will need less.

However, Wood Mackenzie believes wind and solar power will eventually predominate in Southeast Asia, integrated with coal use to generate 35 percent of power by 2040.

Investment in wind and solar energy will increase by 23 percent between 2019 and 2050, for a combined value of USD 89 billion.

Renewables

Nuclear power in Malaysia – a ‘yes’ or a ‘no’?

5 October 2019

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Malaysia

I write in response to the reignition of the issue of how nuclear power is superior to conventional power plants which depend on burning of fossil fuels, especially, again, in our current climate of rising oil prices.

In the above letter, it was revealed how there were plans in 2010 to build two 1,000 megawatt electric nuclear power reactors with a target for the first unit to be in operation by 2021. It was rightfully highlighted that four conditions that must be met first before this plan can even go ahead namely public acceptance of the project, ratification by Malaysia of relevant international treaties, having correct regulatory framework put into place and approvals for the sites including from the local population.

Now, aren’t we all now heaving a sigh of relief that things changed in May 2018? Dr Mahathir Mohamad spoke in a speech to the Conference of the Electric Supply Industry (Cepsi) in September last year. He said, “This was not the policy during my time as the fourth Prime Minister but it was not (like that for) the fifth and sixth prime ministers. But now I am back,” he said. Mahathir emphasised that the main contention has always been the handling of radioactive waste.

Coming back to building of a new nuclear reactor, scientists who are proponents of nuclear energy may sing praises of how the few kilograms of uranium-235 generates a huge amount of energy which a Form 5 Physics student is familiar using the “E= mc²” formula and using the Avogadro’s Constant to connect with the actual number of particles involved in a nuclear reaction.

Yet, trends worldwide portray the opposite. A post on the website of the Union of Concerned Scientists started with, “Nuclear power is an increasingly expensive source of energy” and goes on with a caption of “Cheap dreams, expensive realities”. The post cites a Forbes article in 1985 that labelled the US nuclear power as “the largest managerial disaster in business history”. It has failed to attract private-sector financing in the US and there have been at least two public or government bailouts. Now we ask ourselves the question, do we want such a scenario in Malaysia 20 or 50 years down the road?

Let us also not forget the possibility of a nuclear accident. We have two living proofs already, Chernobyl in April 1986 and Fukushima in March 2011. One was due to human error compounding a technical flaw while the other was from a natural disaster. As I have always taught my students (radioactivity is the last topic for the SPM Physics Form 5 syllabus), it only takes one accident to have serious and severe ramifications and consequences on not only humans and flora and fauna but also on the ecosystem as a whole.

Then there is also the inevitable thermal pollution. You see, all nuclear reactors need to be cooled. Hence they are built near a large body of water, be it a river or a sea. It begs the question of where in Malaysia are you going to find a river big enough to provide such water? Then there is also the inevitable negative effect on the aquatic ecosystem of that river concerned. Surely the residents will object and that would already infringe one of the four conditions put forth by the letter I mentioned above.

It is very clear now that a mature country will take the stance of not having nuclear power. This was precisely the move taken by Germany in response to the Fukushima tragedy. Germany is gradually phasing out its current 16 nuclear reactors with a completion target by 2022. Surely Malaysia must not take this step back in our attitude towards nuclear power.

As our Minister of Energy, Science, Technology, Environment and Climate Change (Mestecc) Yeo Bee Yin said in July 2018, “Nuclear is obsolete […] there many other renewable energy solutions, We have biomass, biogas and solar energy.”

Let us in Malaysia, move forward. Let us discard the old thinking and ways and embrace instead the innovative ideas to help us manage not only our future but the future of our coming generations.

Bioenergy

Waste-to-energy plant to rise in Tarlac

4 October 2019

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Philippines

METRO Clark Waste Management Corp. (MCWM), operator of the country’s first and only engineered sanitary landfill, said it is eyeing to start constructing next year its $210-million waste-to-energy facility in New Clark City
in Capas, Tarlac as part of its efforts in venturing into renewable energy generation in the Philippines.

MCWM President Rufo Colayco said on Thursday the initiative would involve transitioning from merely landfilling to high technology recycling and renewable energy generation.

He explained this would be done through developing an advanced centralized recycling facility at the waste management center where materials will be segregated for recycling and processing into secondary fuel.

The secondary fuel will then be used as the primary feed stock for a secondary fuel CHP (cogeneration or combined heat and power) which will generate up to 35 megawatt of electrical renewable energy for the New Clark City.

MWCM Founder Holder Holst said the Philippines produced about 700,000 tons of waste in 2018, which is projected to grow at about 77,765 tons of waste per day by 2025.

Once operational, he said the new facility would allow the company to collect at least 2,000 tons of wastes a day, covering about 20 percent of the wastes in the area.

According to Colayco, the company has been awaiting a response from the Bases Conversion and Development Authority (BCDA), after MCWM submitted its “unsolicited” proposal in February this year.

“They wrote us finally last week and they said the what we have submitted needs additional information, which is so easy to do. What we could not believe is why it took eight months before they tell us [there are additional requirements we nned to comply with],” he said in mixed Filipino and English.

“I think he (referring to BCDA President and CEO Vince Dizon) also wrote sometime in June but all he said was the receipt, that’s all,” Colayco added.

Despite the delay, he said the MCWM was optimistic that once the project gets approval from the government, it can start construction of its million-dollar waste-to-energy power plant by “middle to late” part of 2020, provided that there will also be a six-month long bidding under Public-Private Partnership.

Meanwhile, Holst underscored the importance of building more engineered sanitary landfill amid the growing waste problem prevailing in many regions in the country.

Renewables

NGAP continues to champion geothermal development in the Philippines

4 October 2019

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Philippines

At the National Geothermal Association of the Philippines (NGAP) General Assembly, which happened at the close of the 1st Philippine Geothermal Conference at Taguig, Metro Manila, the NGAP Board of Trustees reinforced their commitment to champion geothermal development in the country.

In the face of the several challenges facing the local geothermal community, NGAP aims to continue their efforts to create a favorable regulatory and business environment, promote technological innovations, develop the competencies of the local human resource, and advocate the development of non-conventional geothermal sources in the country.

NGAP, together with the Department of Energy (DOE), continues to actively lobby in the Senate and the Congress for programs that will incentivize renewable energy development. They have also teamed up with other renewable energy developers and advocates with the Developers of Renewable Energy for AdvanceMent, Inc. (DREAM) and the Philippine Energy Independence Council (PEIC).

For 2020, NGAP’s plans include an initiative to promote awareness about the geothermal industry and its benefits through a series of roadshows to various schools and universities. They will continue to work with the DOE to craft a renewable energy program.

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