By Amira Bilqis and Muhammad Rizki KresnawanReaching the 6th year of the adoption of the Paris Agreement at COP21, all eyes turned to COP26 that was held last month. As signatories, ASEAN is juggling between climate commitment and economic growth. The region is home to coal-dependent countries due to the significant increase, tripled between 2005 to 2018, of coal industries within the region. Although the latest ASEAN Plan of Action for Energy Cooperation sets a target of 23 per cent renewable energy (RE) share in total primary energy supply, as well as 35 per cent RE in installed power capacity by 2025, the targets do not entail any notion of coal-phase out.
However, the massive pressure for the energy transition and the declaration of financial institutions to stop funding new coal plants, forcing ASEAN coal industries to pinch. Moreover, several major coal players of ASEAN Member States (AMS) have signed the Global Coal to Clean Power Transition Statement, including Brunei Darussalam, Indonesia, Philippines, Singapore, and Vietnam, which account for the installed coal capacity of more than 60 GW.The pledge was endorsed on the Energy Day of COP26 by more than 40 countries, to stop permitting and building new coal power plants, and to fully transition away from the fuel by the 2030s for advanced economies and the following decade for developing countries.
Full signatories’ supporting actions
Several AMS who agreed with the coal pledge have performed essential actions in accelerating the energy transition. Brunei recently announced the alignment of the Brunei Darussalam National Council on Climate Change with the net zero by 2050, while Singapore maintained its pathway through its Long-Term Low-Emissions Development Strategy, invited its citizens to scale-up renewables with market-based instruments, namely renewable energy certificates.
Even though Vietnam leads renewables development in ASEAN with an eight-fold increase of rooftop solar in 2020 and aspires to join the race towards net zero by mid-century, the country is faced with the strained grid capacity due to the fluctuating supply-demand. Thus, the intermittency compounded with weak existing grid infrastructure are among the challenges to deploying more renewables. Under the newest draft of the 8th Power Development Plan 2021-2030 (PDP8), Vietnam may have to turn to coal- and gas-fired power plants in the future if there are no upgrades on grid and power transfer capacity.
Vietnam should show its eagerness to continue the triumph of renewables deployment by tapping the opportunities through the PDP8 and continue solving its issues rather than give up the attempts to advance the field. The plan’s development should also consider how Vietnam could fund its existing coal for conversion while most of the investors are now pressured to follow the climate pact.
Big coal producer approach
Meanwhile, not all clauses of the coal pledge were adopted by Indonesia and the Philippines, which influenced the action plans taken. Among the four points, Indonesia excluded the cease issuance of new permits for unabated coal-fired power generation projects that consist of new construction or financial close stages, to minimise issues that emerged due to potential breach of contract. Alternatively, Indonesia started Energy Transition Mechanism, a program aiming to use public-private financing to accelerate the retirement of 9.2 gigawatt coal power plants (CPP) by 2030 with the Asian Development Bank. At the same time, the country is actively seeking financial opportunities for renewable projects from developed nations, such as UAE who committed to investing US$44.6 billion.
The massive potential and untapped resource of variable RE, geothermal, and hydro should be able to encourage Indonesia to walk the talk of its climate pledge. Fortunately, under the new PDP of the state-owned utility company, PLN, more renewables are coming to the plan. This should be enacted for the investors to invest in renewable projects. In addition, eliminating fossil fuel subsidies will serve as an equal battleground for both RE and fossil fuel to compete in fulfilling the energy demand.
On the other hand, the Philippines only endorsed the first clause, and partially the second and fourth. Previously, the country has put a moratorium on new CPP in 2020 to create momentum for RE investment. It was followed by the launching of the Sustainable Finance Roadmap days prior the COP26, indicating the country’s will to move away from coal with prudent action. Even though the PDP 2017-2040 built on the technology-neutral standpoint from the Department of Energy, endorsing the coal statement was a little step to be valued for the Philippines.
An archipelagic nation, such as Indonesia and the Philippines, should embrace more potential renewable resources that are still not yet covered by the main grid. Still, further multidisciplinary approaches and careful plans are needed to decipher the energy trilemma.
Heavy reliance on fossil fuel will leap ASEAN to the potential energy scarcity in the region. The region is projected to be a net importer for natural gas and coal in the future, which means all the fossil fuels will hardly depend on the import to fulfill the domestic regional demand if there are no significant resources to be discovered. This issue will also affect the energy affordability for the region in the next couple of years.
To cope with energy security, energy affordability, as well as the countries’ respective climate pledge, this decade is crucial for ASEAN to set out more concrete targets that are aligned with the climate goal. Putting emission reduction on the energy sector as the regional target can be one of the solutions for the region, so fossil fuel and renewables can play their own part to support the pledge while still serving the growing energy demand.
Despite being spurned by the public on the statement’s ineffectiveness, the coal pledge announced in COP26 marks ASEAN’s promising steps away from continuing to be a high coal-producing region. These five countries made different approaches to kickstart their journey towards cleaner energy according to their energy potentials previously, by adopting the common but differentiated responsibilities and respective capabilities, as recognized on the 39th ASEAN Ministers Meeting on Energy Meeting. Yet, one common stance pounded on by AMS is the call for clean energy financial resources by developed countries as it is a crucial lever to promote the transformation of unabated coal plants and boost renewables share while the region embraces each member’s unique resources.
During the extra day of the conference, the Glasgow Climate Pact was reached, inserting carbon-market deals, which was a continual debate from the previous COP on the implementation of Article 6 in the Paris Rulebook. As a result, globally standardised carbon crediting mechanisms will provide investment opportunities causing higher demand for renewables projects and carbon sequestration. Thus, ASEAN could also tap this prospect to benefit the social and economic development while mitigating climate change.