The Growing Dependence on Coal: A Closer Look at the Philippines and Indonesia
As the global community pushes towards a greener and more sustainable future, it is essential to examine the current energy trends and their implications. A recent Reuters article reveals a concerning increase in coal dependency in both the Philippines and Indonesia, highlighting the slower expansion of renewable energy in these countries.
Rising Coal Dependence in the Philippines and Indonesia
In 2023, the Philippines ramped up its coal division in electricity generation to 61.9%, a significant rise from 59.1% in 2022. Similarly, Indonesia's coal dependency increased slightly to 61.8%. These figures stand in stark contrast to the ASEAN average, which sits at 33% in 2023, up from 31% in 2022.
Renewable Energy Shares Lagging
Both the Philippines and Indonesia are trailing behind the ASEAN average in wind and solar energy shares. The Philippines has only 3.2% of its energy coming from these sources, while Indonesia has a mere 0.3%. In comparison, the regional average is 4.4%, indicating a broader, albeit slow, move towards renewable energy within ASEAN.
The Complexities of Energy Transition in Asia
The transition away from coal in Asia presents numerous challenges due to the region's extensive and relatively young fleet of coal-fired power plants (CFPPs). Coal remains the largest emitter of energy-related CO2, with 60-70% of energy consumed in Asia derived from this source. Additionally, there is significant unrecovered capital tied up in take-or-pay energy agreements, as many Asian plants are under 15 years old on average.
ASEAN's Struggle with COP28 Goals
ASEAN is falling behind its COP28 goals due to the sluggish shift towards renewable energy. The region's newer coal plants, some less than a year old, further complicate the transition. COP28 targets include tripling renewable energy (RE) by 2030 to above 11 TW. The International Energy Agency (IEA) projects that China will add more than 2TW, surpassing targets, while the rest of the Asia Pacific is set to grow by only 73% from 2022 levels, falling short of goals.
Investments and Solutions
Closing the financing gap is a critical hurdle for Southeast Asian nations aiming to meet their ambitious COP28 renewable energy targets. Multilateral development banks (MDBs) and institutions are playing a vital role in accelerating the clean energy transition in Asia. The Asian Development Bank (ADB), a key player in Asia's climate finance, has committed to investing US$100 billion through 2030 to address the shortfall in the adoption of renewable energy. Numerous international institutions, such as the World Bank, JICA, USAID, Norfund, and others, are also addressing the gaps in policy support, grid investment, and financing in emerging and developing economies, all crucial factors for accelerating clean energy adoption in the region. Their collective efforts are crucial for ASEAN to achieve its ambitious COP28 targets and foster a sustainable and resilient energy future.
One pivotal aspect of the renewable energy transition is the adoption of Battery Energy Storage Systems (BESS) in variable renewable energy projects. With BESS pricing becoming more affordable, integrating these systems will enhance the stability and profitability of renewable energy projects. The Private Financing Advisory Network (PFAN) estimates that large-scale climate investment, particularly in storage and backup capacity, requires $50-75 billion per year by 2030.
The Future of Renewable Energy
The good news is that renewable energy is becoming increasingly cost-competitive. In 2023, 96% of newly installed, utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas plants. This trend is expected to continue in key markets through 2028, despite variability.
Conclusion
While the Philippines and Indonesia's increasing reliance on coal presents significant challenges, the path to a sustainable future is not entirely bleak. Strategic investments, policy support, and the adoption of advanced technologies like BESS can help bridge the gap and accelerate the transition to renewable energy. The future of energy in Southeast Asia depends on collective efforts to overcome these challenges and achieve a greener, more sustainable energy landscape.
