News Desk :
Investment in coal-based power generation is declining rapidly in Asia’s developing countries in recent days while the governments are showing keenness in implementing clean energy policies following intensified pressure from environmentalists.
This major shift from previous policy by energy ministries and politicians has resulted in delaying the construction of coal-power projects with generation capacity of 25 gigawatts in Vietnam, Indonesia, the Philippines and Bangladesh in 2021, according to media reports.
That means, according to the Global Energy Monitor report, it is an 80 per cent reduction from the 125GW planned five years ago. Even, India had also made a U-turn cancelling several planned coal projects making a drastic fall to 30GW, from 238GW.
“Taken together, the cancellations are a major blow to coal’s hopes in Asia,” the GEM, a non-profit organisation, said in a new report reviewed by the Financial Times.
Among the important policy changes driving the changes is Vietnam’s new energy plan, expected early this year. The plan aims to help one of Asia’s fastest-growing developing economies transition away from foreign-funded coal-power producers and towards liquefied natural gas and renewables. In Bangladesh, a policy to scrap all future coal plants is up for the prime minister’s approval.
However, GEM analysts noted that remaining coal projects face an “ever shrinking” landscape for attracting investment. Traditional lenders from Japan, South Korea and Singapore have accounted for nearly half the $52bn in coal power finance in Vietnam, Indonesia, the Philippines and Bangladesh since 2015.
At least 16 Japanese banks have policies to restrict coal finance. Singapore’s biggest three banks have announced plans to stop supporting new coal-power projects. Two of the biggest South Korean coal backers, insurance groups Samsung Life and Samsung Fire & Marine, have made similar pledges.
There is concern though that Chinese groups – already responsible for about 30 per cent of that $52bn – will step in to fill the void, given Beijing’s lack of regulations linked to controlling finance for foreign coal projects. Notably, during the Glasgow climate change conference China said it would refrain from funding coal-based projects.
“As Singapore, Japan, and South Korea reel in their coal plant financing, south and south-east Asian countries may instead look to Chinese banks, which have increasingly played the role of lender of last resort for coal,” GEM said.
However, there is hope among some environmentalists that Beijing, too, will change tack and align its foreign coal investments with domestic promises after President Xi Jinping this year pledged that China would be carbon neutral by 2060.
