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Joint interview: ACE-WCA MoU Signing

Jakarta, 15 December 2020

This joint interview is about the MoU signing, a partnership between ASEAN Centre for Energy (ACE) and World Coal Association (WCA), what it means for the ASEAN region and across the globe, the importance of Clean Coal Technologies (CCT) across ASEAN, and the work of two organisations in building a robust, sustainable global coal industry.

 

What would be the main agenda for this cooperation between WCA and ACE? What will be the realistic outcome to achieve within the 3 years framework?

 Ms Michelle Manook:

On behalf of the World Coal Association, we are pleased to sign a three-year MoU with the ASEAN Centre for Energy. The MoU was designed for three years so that it aligns with the three important joint studies that we’re producing in each successive year following our signing. These studies are based on the UN’s 2030 Action Agenda on Sustainable Development and form a key element of our collaboration with the ASEAN Centre for Energy, aiming to inform policy decisions in the ASEAN region.

Our partnership provides a demonstration of both parties’ ongoing commitment to advocating for economic growth and the enabling role of clean coal technologies in the ASEAN region.

Countries in the ASEAN region have the right to affordable sources of clean energy to build their societies and economies, and they have the right to choose any energy source that makes sense for them. And for many countries, coal is the energy that makes sense.

Our continued partnership with the ASEAN Centre for Energy will assist us in promoting the opportunities for clean coal in supporting economic development and environmental improvements across the region, by raising the Coal IQ, as you heard me mention earlier, with meaningful data and insights.

We want to make sure that investors and governments do not disadvantage countries who choose to use coal, and our work will help to educate governments, investors, and other key stakeholders on the reasons to promote clean coal deployment and a sustainable regional coal market, through technology, innovation, and collaboration.

Dr Nuki Agya Utama:

As the region’s central role for the energy sector, ACE has been acting as a catalyst for the economic growth and integration of the ASEAN region by initiating and facilitating multilateral collaboration as well as joint and collective activities on energy.

Coal is one of the most important resources in the ASEAN especially for baseload power generation and it will play an increasingly prominent role in the ASEAN energy mix over the coming decades. We see this continuing partnership as a solid platform for both parties, especially for the ASEAN region to secure financial support and promote policies to accelerate the deployment of the CCT as a technological breakthrough in the region.

In APAEC Phase II: 2021 – 2025, the Coal and Clean Coal Technology Programme Area will have the key strategy “To optimise the role of CCT in facilitating the transition towards sustainable and lower emission development”. In the implementation of APAEC, ACE and WCA and will produce three key studies, which endorsed by all ASEAN member states, namely Value-adjusted levelised cost of electricity (VALCOE) for Southeast Asia, Coal and the Sustainable Development Goals, Value of CCUS Deployment in ASEAN. In addition to that, we also welcome WCA participation in ASEAN Energy Business Forum, ASEAN Coal Business Roundtable Dialogue, and the annual ASEAN Forum on Coal (AFOC) Council meetings.

How could countries in the ASEAN region look at further adopting “clean energy” technologies?

Ms Michelle:

Coal is a secure, flexible, and affordable source of energy, and clean coal technologies are available today that show that coal can be sustainable and in line with ‘Paris’ goals. Growing economies and populations require baseload, dispatchable power to support their economic aspirations. For many, coal is that dependable option.

Recent developments in the ASEAN region show that countries are making strides with clean coal technologies, particularly high efficiency low emissions (HELE) technologies, to bridge the gap towards zero emissions – but this can only be achieved with cooperation, funding, and flexibility.

One of our members, GE, was commissioned by the Malaysian utility organisation, TNB, to construct Southeast Asia’s first ultra-supercritical coal-fired power plant. GE successfully delivered the project in just four years and within budget and have since received awards from Asian Power and International Project Management Association for this project.

In fact, one of the core objectives of the World Coal Association’s Evolving Coal strategy is to work with government and investors to ensure that policies promote a level playing field where coal isn’t disadvantaged relative to alternatives.

We’re looking forward to working alongside the ASEAN Centre of Energy, ASEAN governments and investors, to develop balanced policy environments that include all fuels and all clean technologies, including clean coal technologies.

What would be the most important outcome from your partnership with the World Coal Association, from the ASEAN Centre for Energy’s perspective?

 Dr Nuki:

Understanding many facts that both Michelle and I have delivered previously and based on the trend development in the energy sector throughout these past three years, coal’s role in ASEAN’s energy resiliency is expected to continue in the future, especially when future growth trends are considered.

Therefore, this cooperation should be a driving force in ensuring greater coordination and cooperation to support ASEAN’s technical and financial requirements in building a sustainable and low-emission coal industry. Moreover, our cooperation will identify how coal will play a new role in facilitating ASEAN’s energy transition towards affordable, reliable, and resilient cleaner energy options and technology.

What are the challenges that might hinder clean coal technology implementation and how do developed countries combat these challenges?

Ms Michelle:

Firstly, I think it’s important to remember that coal has made a global difference for the better and it has the right to continue to make that difference for developing economies.

Nations are developing at different speeds and we need policies that are inclusive and understanding of this. This is not an ‘either/or’ decision – we need all energy sources and all clean technologies available to us.

The development and deployment of clean coal technologies, such as HELE coal-fired power plants, provides substantial economic growth, alongside direct and indirect employment opportunities.

We need a pragmatic, solution-focused and agnostic mindset if we are to achieve our global economic and environment aspirations. Governments have a critical role to play through policies that establish a sustainable and viable market for clean coal technologies and industry also has an important role to play.

Our industry has a track record of continued improvements using current and emerging technologies, and it will continue to improve with the right government and investment policies in place.

How are the ASEAN Centre for Energy and the World Coal Association working to implement clean coal technologies in the ASEAN region?

Dr Nuki:

As an intergovernmental organisation within ASEAN structure, we play an important role in shaping regional energy strategies by initiating and facilitating multilateral collaborations, providing relevant information and expertise whilst also ensuring the necessary energy policies and programmes are in harmony with the economic growth and the environmental sustainability in the ASEAN region.

We serve the ASEAN members as well as promoting the CCT implementation through three critical roles. First, as a catalyst for strengthening and unifying ASEAN energy cooperation and integration. Through the ASEAN Plan of Action for Energy Cooperation (APAEC) that is translated into seven (7) programmes areas where Coal and Clean Coal Technology is part of it, we monitor, coordinate, and facilitate the implementation of The APAEC itself. Apart from that, through this role as well, ACE promotes private sector participation through The ASEAN Energy Awards, ASEAN Energy Business Forum, ASEAN Coal Business Roundtable Dialogue, and other distinguished platforms.

Second, as a sole think tank with strong institutional modalities to capture all energy issues in the region, we provide innovative solutions and insights for energy challenges in the region, such as on policy, legal, and regulatory framework and technology. Our strong coordination with the AMS policymakers is an advantage for providing reliable data and analysis.

Third, as a Knowledge Hub, the knowledge and information window for Energy in ASEAN through the ASEAN Energy Database System (AEDS) which aims to become a pool of various reliable energy data and information for ASEAN. Firstly, launched in 2018, the AEDS itself has gone through several stages of enhancements throughout the years and beginning to incorporate more content and visual improvement.

Therefore, with the expertise of both ACE and WCA, through this cooperation, we aim to provide the necessary resources for the ASEAN Member States that are pursuing the development of Clean Coal Technologies. This cooperation will advocate the use of clean coal technologies such as high-efficiency-low-emission (HELE) technologies, coal biomass co-combustion, coal upgrading, and importantly, the carbon capture storage and utilisation (CCUS). We hope that throughout our cooperation, the ASEAN Member States that are currently pursuing coal technology will shift their interest to more modern and cleaner coal technologies.

Indonesia is one of the world’s largest coal exporters. Why should Indonesia be interested in key global developments?

Ms Michelle:

Indonesia is one of the world’s biggest coal producers in the world and has seen unprecedented growth in production over recent decades. As the world’s largest coal exporter, and with its recent drive to build future growth, Indonesia is well-placed to assume a key leadership role in the global coal space.

Indonesia is also one of the major coal users that has identified clean coal technology implementation as a measure to reduce its greenhouse gas emissions.

We welcome the progress made in Indonesia, and look forward to leading a pragmatic, sensible discussion which allows us to meaningfully collaborate with our Indonesian partners to realise a united, robust, and flexible global coal industry.

What about Indonesia’s role in energy policy across the ASEAN region?

Dr Nuki:

Indonesia boasts for its ambitious target for establishing low-carbon power generation. This can be indicated by their National Energy Policy to endorse the national energy policy to promote renewable energy share target of 23% by 2025, along with its and energy elasticity target of <1. The projection of renewable energy shares is even expected to reach up to 31% by 2050. This is referred to Indonesia’s Presidential Decree No.22 the Year 2017 concerning the National Energy General Plan.

Under the ASEAN energy blueprint, the ASEAN Plan of Action for Energy Cooperation (APAEC), ASEAN ambitiously aims to achieve the aspirational target for increasing the component of renewable energy to 23% by 2025 in the ASEAN energy transition. Note that A huge dependency of fossil-based fired power plant remains constant along this period, and it is very likely coal will remain the main player in the next decades, to ensure smooth and successful ASEAN energy transition.

Meanwhile, in 2018, Indonesia represents the first of ASEAN installed capacity with 60.8 GW, while a total of Malaysia, Thailand and Vietnam can represent half of ASEAN with an installed capacity of 34.3 GW, 43.9 GW, and 47.0 GW, respectively.

Owing to its size, we can see how important Indonesia’s role in energy policy across the ASEAN region.

What would be the most challenging issue for Indonesian coal industry for now and how to address that?

Ms Michelle:

We can see that Indonesian coal is suited for blending, and one of our members, Berau, has significant experience in blending coal produced from several Indonesian coal mines.

The World Coal Association has engaged in meaningful interactions with the Indonesian Ministry of Energy and Mineral Resources. I spoke with Indonesian Minister of Energy Tasrif, about new opportunities for the use of coal within the region, and the development and deployment of clean coal technologies. We hope that this will ensure that Indonesia has a greater voice in the global coal space.

We look forward to collaborating with the Indonesian government and key Indonesian coal players moving forward.

Dr Nuki:  

The Indonesia National Energy Council (DEN) aimed to reduce high-carbon power consumption, such as coal by 30% of the energy mix by 2025 and 25% by 2050. DEN also forecast the oil-dependency reduction by 25% of the energy mix by 2025 and 20% by 2050.

This is implied that the Indonesia Energy Plan (RUKN) along with the utility PDP (RUPTL) has been seen trying on track to establish agenda on prioritising the use of RE to improve National economy, while on the same time, optimise the use of the nation’s most resourceful energy – coal.

ACE captured phasing out of coal is not a wise decision in short-term and medium-term strategies. Thus, smooth transition by introducing clean coal technology seems more promising as it will also compromising the existing player to adapt what’s coming in decades.

In another word, the most challenging issue for the Indonesian coal industry, for now, is what is needed is for the coal industry to develop the transition pathways, where minimising emissions from Coal-Fired Power Plants should be their main priority. However, on top of that, ACE believes coal can indeed take a role in facilitating the transition towards a sustainable and lower-emission energy development and utilisation through the deployment of CCT.

2020 is the year of COVID, where all the countries around the world are suffering economically. What does the world coal industry look like?

Ms Michelle:

2020 has been a challenging year across the globe. The COVID-19 pandemic has impacted healthcare systems, economies, and societies around the world. And the energy sector is no exception.

COVID, I believe, has provided a pause, addressing the real-world challenges related to people’s lives and livelihoods.

Having worked for over two decades in the resources and energy sectors, I was not surprised to see many countries moving quickly to identify coal as an ‘essential service’ – critical to their economy during the pandemic and key to their recovery.

Governments around the world have recognised that affordable and reliable power has been critical in the acute phase of the pandemic and the subsequent economic recovery. For example, the Indonesian government was quick to echo this view, referring to energy as a key ‘strategic’ sector that must remain operational during the pandemic response.

This does not diminish environmental goals, but instead reinforces the need for a pragmatic and sensible discussion about how we will need to respond and support lives and livelihoods in the recovery stages of the pandemic.

Dr Nuki:

Since the rise of COVID issue, the industry has been a little bit taken aback. Knowing coal is the major energy resource, uncertainty remains on how the economy will pick up. Lockdowns and quarantines slow down the industrial activity and hence the curve of energy slowing down is still visible until at least the third quarter of 2020.

ACE captures that the power sector remains an industry that is recovering at the latest due to the pandemic. The declining demand for coal as an impact of the deceleration of economic activity shows the great impact the spread of Covid-19.

However, it seems that coal is showing its potential to rebound the economic decline since it’s reliable and resourceful to ease the economic burden. The coal industry may have been impacted by the pandemic, but ACE founds that among all of the energy resource, coal industry shows its fastest recovery among other energy companies, even gas.  Its prominence in ‘bouncing back’ our economic stays ahead of the line, has been proven that coal plays important role in helping energy security overall.

What would be a lesson learned from the year of 2020 in terms of energy sustainability? Can you project a more positive outlook towards 2021?

Ms Michelle:

What we have learned is that low economic growth is not a realistic emissions reduction policy. We know that global emissions reductions have been caused by the economic downturn – and this is temporary. In the longer term, we need a practical solution to grow our economies while simultaneously reducing emissions.

Meeting development and emissions targets requires rapid scaling up of all clean energy technologies including CCUS and HELE technologies. It is very encouraging to see nations around the world preparing robust recovery packages to drive net-zero innovations which presents very promising opportunities for clean coal technologies. Governments will do well to heed this warning and recognise an all fuels and all technologies focus in energy investment decisions.

With the perception of coal as a dirty word, will there be a chance for coal to become a clean energy in the future?

Ms Michelle:

We know that coal can be clean, but there are many misconceptions that so often surround coal. This is why we are working to address these misconceptions, and alongside the ASEAN Centre for Energy to collaborate with key stakeholders and create inclusive policies. We’re seeing great progress in the ASEAN region as we move into 2021.

A number of ASEAN ministers have demonstrated their commitment to clean coal. This was a key message throughout the recent ASEAN Energy Business Forum, where government stakeholders vocalised their support for coal use in their respective nations.

Our industry has a track record of continued improvements using current and emerging technologies, and it will continue to improve with the right government and investment policies in place.

We need to remember that coal has made a global difference for the better – it should be allowed to continue to make that difference for developing economies who rely on it. We are responsible as an industry and have demonstrated a willingness to transform.

Dr Nuki:

We should all remind ourselves that coal the use of coal itself is not an act of evil, but it also to account that it is wrong to have not done anything to mitigate carbon emissions from coal usage. We need to open our eye that coal has been a building block for economic development by providing reliable, flexible, and affordable energy.

Experience from the projects worldwide and within ASEAN shown that CCTs are technically proven for ASEAN to pursue. For instance, Malaysia has led the way by operating the 1,000MW Manjung 4 plant, which is ASEAN’s first Ultra-Super Critical coal-fired power plant. CCS for coal and gas power generation has been technically proven, with successful commercial projects such as the Petra Nova Carbon Capture System. Additionally, Indonesia plans to harness the potential of CCS and a pilot project will be implemented in Gundih, making it the first CCS project in ASEAN.Along with rigorous policy support and enforcement, the transition towards sustainable and low-emission energy can be facilitated. The energy produced by coal has played and will continue its an important element for ASEAN’s development, whichmust be used more prudently.

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