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In Asia, King Coal Hard to Dethrone

The Philippines is set to open 23 coal-fired power plants over the next five years to meet rising electricity demand, illustrating the challenge climate-talk negotiators face in crafting a deal that reduces carbon emissions.

Competition from natural gas and environmental regulations have crippled the coal industry in most of the developed world, bankrupting companies and snuffing out jobs in the U.S. and Europe. But in the Philippines and in dozens of other developing countries, coal remains an essential fuel for building more prosperous societies.

The commodity is cheap and abundant, supplying about 40% of the world’s energy, according to the International Energy Agency. But coal is also responsible for a third of all carbon emissions, and its use is projected to rise—especially in Asia.

Environmentally minded leaders, especially from the West, want to curb coal use. But many developing countries, aware that it fueled the industrialization of the U.S. and Europe, argue that coal is key to their future too.

Manila’s building bonanza will make it Asia’s most coal-dependent country by 2035 as a percentage of its energy mix, according to IHS Energy Insight, an energy research company. Government officials say the booming economy needs the new coal plants to offset declining domestic reserves of natural gas.

The government's position is at odds with the country's self-image as environmentally progressive. A third of the country’s power is now generated by renewable sources, chiefly geothermal and hydroelectric.

Filipinos became acutely conscious of climate change after scientists blamed global warming for the intensity of Typhoon Haiyan, which killed over 7,000 people and ravaged the country’s central provinces two years ago.

At the climate talks in Paris, the Philippines is leading a 20-nation group, the Climate Vulnerable Forum, comprising countries such as Bangladesh, Ethiopia and Vietnam that are most at risk from rising temperatures. The group is arguing for far-reaching emissions cuts that would limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit)—less than the 2 degrees Celsius the talks have targeted.

Before arriving in Paris, President Benigno Aquino III pledged the Philippines would reduce its carbon emissions by 70% by 2030.

“We all have to do as much as we can,” Mr. Aquino told Asia-Pacific leaders in Manila in November. “Countries have to contribute the maximum.”

The Philippine government said in its Paris pledge that the 70% cut would be conditional on financial assistance and the transfer of green technology from more developed nations, but that ambitious reductions could be made in various sectors, including energy.

Yet, according to IHS, the Philippines will nearly triple its fleet of coal plants by 2020, while doubling the amount of CO2 to 70 million metric tons a year by 2025.

Manila is failing “to balance climate goals with the need to supply” rising demand,” said James Ooi, an IHS director.

The Philippines is hardly the only developing country depending on coal.

Vietnam plans to double its coal plants to 40 by 2022 to tide it over until a generation of nuclear generators comes on line. Thailand is boosting its use of coal as part of a security strategy designed to ease the country’s dependence on natural gas. Indonesia is encouraging more coal-fired plants to support its mining industry.

China added an extraordinary 39 gigawatts in new coal-fired capacity last year, according to official data, enough to power millions of homes. Even Japan is building dozens of new coal plants in the wake of the Fukushima disaster, which led to Tokyo’s closure of nuclear plants.

But while the use of coal in countries like China and India has yet to peak, the commodity is projected to be a smaller proportion of their total fuel mix in the coming decades. In contrast, the Philippine government doesn’t dispute an IHS forecast that around 60% of the country’s power will come from coal by 2035, up from 42% today, under current plans.

Officials and energy executives say it is unfair to criticize a country whose 100 million people represent 1.4% of the world’s population, but contribute what the U.S. Energy Information Administration says is just 0.3% of global emissions.

“The Philippines’ carbon footprint is small by any measure you look at,” said Erramon Aboitiz, CEO of Aboitiz Power Corp., whose plants mainly use coal and renewable energy sources. “Our problem is affordability of power—and the only way to address that is through coal.”

The Philippines has some of Asia’s highest electricity prices because the government, unlike others, doesn’t subsidize the power sector. Rates are therefore a highly sensitive political issue.

For a developing economy where a sixth of the population still isn’t connected to the main power grid, “the priority has to be to assure there is enough supply,” not curbing emissions, said Francisco Viray, a former energy secretary.

Some environmentalists disagree. Yeb Sano, a former government climate negotiator turned activist, said vulnerable countries like the Philippines, an archipelago of 7,000 islands, must lead by example.

“I am very disappointed that the country is building dozens of coal power stations when it has so much potential for renewable energy,” Mr. Sano said. “The coal and oil lobby is very strong.”

One possible solution to help replace the Philippines’ dwindling natural-gas supplies, which produces far less CO2 than coal, is liquefied natural gas. First Gen Corp. , the only major Philippine power company that doesn’t have coal plants, is in talks with potential partners about building a $1 billion LNG terminal, said Giles Puno, the company’s president.

Mr. Puno also urged the government to provide incentives to exploit untapped hydropower and geothermal resources.

Mr. Aboitiz agreed that only the government can shape the Philippines’ energy framework to ensure it becomes more friendly to the environment.

“We have to survive in the market and be competitive, so right now it has to be coal,” he said. “But the government can change that.”

source: http://www.wsj.com