Are coal-fired power plants on the verge of extinction?
Are coal-fired power plants the way of the dinosaurs and on the verge of extinction?
Coal has faced backlash from environmental communities for years, but now combines dissenting public views and difficulties securing coal-fired power plants with a growing list of banks willing to refuse funding for new construction. coal-fired power stations, and the atmosphere has become much more hostile.
Manufacturers such as GE, Siemens Energy, and Mitsubishi will dramatically scale back their coal-related projects, but more so, the news is telling that the Asian Development Bank (ADB), a bank that typically facilitates grants and loans for some of the countries. the poorest in the country. ASEAN recently issued a statement claiming that it no longer provides funding for coal-related projects.
The bank said in a statement: “Coal and other fossil fuels have played an important role in energy access for the economic development of the region, but they have not solved the problem of access to energy, and its use harms the environment and accelerates climate change. “This decision has been a long time coming as the AfDB, among other banks, has been under pressure for years to implement more climate-friendly financing principles.
“MONEY DRIES UP.” – TIM BUCKLEY OF THE IFAA
For some, the writing has been on the wall for some time, and this latest ADB announcement only affirms the slow decline and eventual expiration of coal as an energy source. “Money is drying up. Coal funding has leaked around the world. Insurance, debt, equity, everywhere. The last man standing was the CEAs of China, Japan and Korea, ”said Tim Buckley of the Institute for Energy Economics and Financial Analysis (IEEFA).
Banks under pressure to only fund clean energy projects are ramping up, and it doesn’t look like coal can withstand the heat (Daddy’s joke strikes again!). Keep in mind that the AfDB is not the only bank to change its strategy. UOB now has a new sustainability director, Eric Lim, and he wanted to inform consumers that only about 5% of UOB portfolio funding goes to coal-related projects. The last coal-fired power plant they bought was in 2017. “Sustainability has become mainstream. It is no longer a reversible trend, ”he said. UOB and AfDB join the chorus of banks moving towards more renewable financing. However, if coal is not fundable and becomes obsolete, how and with what will coal be replaced?
A likely replacement could be a gas which, ironically, is also not considered environmentally friendly. The Institute for Climate and Sustainable Cities (ICSC) Senior Policy Advisor, Pedro H. Maniego Jr., is troubled to see signs emerging from the AfDB, which indicate that gas is taking over where the coal remained strange. “It is concerning that as the door is closed on coal, the door appears to have opened indefinitely for fossil gas. There is no bridge in the endless world, and if the Bank sees fossil gas as a bridge and a transitional fuel, it must stipulate an end, ”he said. The positive point he mentioned is that the bank “cited green hydrogen from renewable energy sources, which could eventually replace natural gas.” But Maniego believes that dedicated guidelines for this approach need to be urgently established.
Insurance is not a sure thing
Insurance is an urgent issue that advocates of coal face today. Last March, Swiss Re announced in a press release that it would completely disengage and was the first reinsurer to do so. AIA’s divestment of coal was announced the same month, and this year Lloyd’s of London’s Apollo company will not reinsure a thermal coal mine it had previously underwritten. The insurers mentioned are just a few of what should follow. Already, coal mine advocates are angry at the dramatic and rapid expiration of their funding and insurance.
For example and according to a communication from Whitehaven Coal, a major miner whose coal exports amounted to A $ 18.5 billion in 2020, “The funding restrictions imposed [by Australia’s four major banks] “It remains to be seen whether insurers will listen to these calls, especially with environmentalists and consumers getting louder every day.
Even with the global backlash and new initiatives to reduce carbon emissions, some countries continue to move forward with coal, possibly due to financial ramifications, but also due to the inability to completely and immediately stop the coal energy.
For example, countries like China are not prepared to give up coal in part because it would be an expensive endeavor, but according to the head of climate change at the Ministry of Ecology and Environment, it is also up to because of the people they feed. Li Gao said the reluctance is directly related to the quality of life of people in developing countries. “We can’t just say we’ll stop supporting coal-fired power plants in developing countries,” Gao said. China recently confirmed that it will go ahead with multibillion-dollar funding for coal-fired power plants in developing countries, regardless of Beijing’s carbon emission target. Like China, some countries are unwilling or unable to simply turn off the power flow from coal, including Indonesia.
Indonesian utility company Perusahaan Listrik Negara (PLN) is set to stop building new coal-fired power plants after 2023, but what about their current consumption? Indonesia is known to be one of the biggest consumers of coal, and unfortunately the country does not have the luxury of stopping consuming coal overnight. With countries like Indonesia and India, these governments have to grapple with what needs to be done to meet climate goals, even if they have to allocate or find funding and, although they do not have the money. an agile infrastructure to instantly switch to renewable energies.
What is the alternative?
It is simple enough to demand that countries stop building coal-fired power plants and consuming coal, but there must be a replacement for the fuel and a way for countries in this predicament to finance new sources of energy. energy. Let us not forget that countries which depend on coal generally have consumers who must have cheap energy.
To adapt to societal attitudes and abide by the terms of the Paris Agreement, governments must tackle energy challenges head-on, seek help when needed and find ways to alleviate growing pains, that is, that is, take measures to increase the role of RE in the energy mix, by replacing coal with green hydrogen or natural gas and perhaps reusing obsolete coal-fired power stations.
Regardless of the tough choices coal-dependent countries face, banks and insurance companies have stepped up the process. “At the end of the day, finance is incredibly powerful, and I was waiting for that tipping point to be reached… We reached it faster than I thought,” said Buckley of IEFA.
Author: Melissa Fitzgerald, Enlit Asia