Coal price: Asia’s near-term climate goals outweigh long-term pledges

It’s also clear that if the world is to meet the aim of keeping warming to less than 1.5 degrees Celsius (2.7 degrees Fahrenheit), what happens in the three major coal-producing and consuming countries of China, India and Indonesia will have an outsize influence.

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Indian Prime Minister Narendra Modi used the COP26 climate summit in Glasgow to commit to net-zero carbon emissions by 2070, a move that puts the South Asian nation somewhat behind the 2060 pledges by China and Indonesia.

These three countries have a combined population of just over 3 billion people or about 40% of the global total.

All three countries are heavily reliant on coal for electricity and industrial uses, and the future trajectory of their consumption of the polluting fuel will be key.

China is the world’s biggest coal producer, consumer and importer, while India ranks second on the same measures.

Indonesia is the world’s largest exporter of thermal coal and ranks fourth, behind the United States, in coal consumption.

More importantly, the three Asian countries still have massive volumes of coal-fired power plants under construction and in the pipeline.

Of the global total of 184.5 gigawatts (GW) of coal-fired power under construction, the three Asian countries are building 77.5%, with China leading the way at 96.7 GW, according to data from the Global Energy Monitor.

For coal-fired power plants that are announced, pre-permit or are permitted, the three are 68.2% of the total of 296.7 GW, with China again dominating with 163.3 GW.

While there are considerable doubts as to whether coal plants in the announced, pre-permit and permitted stages will proceed, the units currently under construction represent an 8.9% expansion of the existing global fleet of operating units.

It’s clear that Asia, and particularly the big three consumers, are still looking to coal to provide much of their electricity for decades to come even as coal power is likely to rapidly close in most of Europe and will decline in the United States as well.

That makes near-term commitments by the big three Asian coal consumers far more important than long-term pledges at dates so far into the future than hardly any of the current crop of political leaders will be alive by that time.

2030 targets

China’s economic planner, the National Development and Reform Commission (NDRC), said on Wednesday that it’s targeting a 1.8% reduction in average coal use for electricity generation over the next five years.

By 2025, coal-fired power plants in China must adjust their consumption rate to an average of 300 grams of standard coal per kilowatt-hour (kWh), the NDRC said. That compares to 305.5 grams per kWh in 2020.

This is part of a plan to have carbon emissions peak before 2030, which in addition to increasing the efficiency of coal plants will see renewables wind and solar increase their generation capacity to 1,200 GW by the end of the decade.

China is the world’s largest carbon emitter, and while environmental activists would no doubt be disappointed by the country’s ongoing coal-fired building program, it does appear that Beijing is adopting policies and plans that will bring about a meaningful reduction in emissions from 2030 onwards.

India also has some impressive goals for 2030, aiming to boost generation from renewable energy to 450 GW by 2030 from 100.6 GW as of August this year.

The problem for India is going to be financing, with the pro-renewable research group Institute for Energy Economics and Financial Analysis saying in a Oct. 28 note that the country will need $500 billion to reach its goal of 450 GW of renewables by 2030.

Indonesia shares the same financing issues as India, with Finance Minister Sri Mulyani Indrawati telling Reuters on Nov. 2 that the Southeast Asian country could phase out coal-fired power by 2040, if it gets enough financial help from the international community.

Previously, Indonesia has said it aims to end coal-fired power by 2056, but Sri Mulyani said investment of up to $23 billion in renewables by 2030 would help end coal faster, while maintaining electricity supply and reliability.

In some ways, the richer nations of the developed world can speed up the end of coal in Asia with financial and investment support.

In exchange, they should require that countries such as India and Indonesia cancel all remaining coal-fired power projects, and commit to mothballing older plants at an increasingly faster pace.

(Editing by Christian Schmollinger)