Asia’s road to COP26 won’t be paved with coal
Asia’s largest emitters of CO2 are charting a new course for carbon reduction as COP26 arrives with the intention to “consign coal to history.”1
The burning of fossil fuels is the main driver of modern climate change. As a mainstay for power generation in Asia, coal is the go-to source of fuel across the region and accounts for 75% of global demand.2 But this figure is now under scrutiny. The Asian Development Bank has signaled it is working with financial institutions and investors to speed up the closure of coal-fired power plants with immediate effect.3 Asian governments and multilateral banks are leading talks to create a public-private partnership model to buy coal plants and close them within 15 years, spurring the region’s leap toward renewable energy.
As an area of the world that is most exposed to the effects of climate change, Asia is already facing average temperature rises and extreme weather events. Popular support for climate action is consistently high and decision-making at a national government level, through legislation and regulations to reduce emissions, is the critical determinant of the global emissions pathway. As a consensus on coal reduction emerges, are Asia’s climate goals turning into a reality?
In the lead-up to COP26, the Chinese government has made several major mitigation commitments that could help to limit global temperature increases to between 1.5°C and 2°C. Its latest policies aim to improve the efficiency of energy use, encourage other energy sources, especially non-fossil fuel sources, and to establish a clear trajectory for emission reduction. In September 2020, President Xi Jinping pledged China would hit its peak in carbon emissions before 2030 and achieve net-zero emissions before 2060.4
This was a significant moment for China’s climate policy. Traditionally, China has prioritized energy security and, as the world’s largest greenhouse gas emitter, it is still heavily reliant on coal for its domestic energy needs, but the country’s transition from coal to renewable energy is now seeing progress. In the weeks leading to the climate summit, China has pledged to stop funding coal projects overseas, thereby withdrawing any remaining viable funding for coal power projects.5
At home, China continues to grow its coal production to ease power shortages and support industrial production. But according to Greenpeace East Asia, approvals of new coal power projects in the first half of this year recorded a 79% drop.6 This is a positive step forward in the months since China’s climate targets were announced last year and a clear signal to international partners that it hopes to build consensus and agreement on climate cooperation.
Coal accounts for about 40% of South Korea’s electricity generation, and a quarter of national emissions.7 An earlier announcement to end support for overseas coal projects was made by South Korean President Moon Jae-in in April 2021 as it embarked on an ambitious schedule of “bold measures” for slashing carbon emissions earlier this year.8
The Korean National Assembly held a plenary session in August 2021 and passed the Carbon-Neutral Green Growth Framework Act, which outlines the government-wide goal of reducing greenhouse gases by 35% by 2030.9 In the remaining weeks to COP26, the South Korea plans to publish its final carbon-neutral plan with further details of how this target will be met.
President Moon also hopes South Korea will host the conference in 2023 after he announced his country’s bid to hold the 28th United Nations Climate Change Conference of the Parties (COP28).10
Decarbonization is a pillar of Japan's growth strategy, and in March 202111 the Japanese government said it would move to end support for overseas coal production. In April, Japan’s remaining coal power project was cancelled weeks after the country strengthened its commitment under the Paris Agreement to reduce its greenhouse gas emissions by 46% by 2030.12
Since October 2020, Japanese financial institutions and energy companies have been the first movers in Asia’s shift away from coal-fired power generation ever since Prime Minister Yoshihide Suga announced Japan’s target to decarbonize its economy by 2050.13
The country is now on track to close 100 inefficient coal-fired power units by 2030 and is closely aligned with the US and Europe on its coal reduction targets.14 In September 2021, Prime Minister Suga joined the Major Economies Forum on Energy and Climate (MEF) hosted by the White House and gave support to the Global Methane Pledge, which is set to be announced officially at the summit in Glasgow in November.15
Singapore is one of the most fossil-fuel dependent countries in the world and intends to rely on natural gas over the next 50 years for a substantial portion of its energy needs.16 This long-term transition is targeting 2050, when Singapore aims to halve its emissions from its 2030 peak and reach net-zero emissions as soon as possible in the latter half of this century.
Its Green Plan 2030 proposes an “Energy Reset” with a transition toward imports of clean energy from its neighboring economies across Southeast Asia, such as Indonesia, which is one of the biggest producers of coal power.17 Coal-fired generation is unlikely to play a part in Singapore’s energy transition, according to project tenders written by Singapore’s Energy Market Authority (EMA).18
Coal reduction is also central to Singapore’s role as a green finance hub. Since 2019, it has been supporting its three major banks – DBS, OCBC, and UOB – to end funding for coal projects across the region, particularly across Southeast Asia, and make a switch to financing renewable energy projects.19
A new consensus on coal
As COP26 approaches, investors are addressing their exposure to coal-fired power businesses at a time when consensus on coal power is emerging across the region. This is a significant and historic development because the politics of climate change have always varied widely due to Asia’s economic and political diversity.
The measures taken by Asia’s major economies on support for overseas coal projects and the exploration of renewable energy sources will be a turning point for how the rest of the world progresses with its transition away from fossil fuels.
COP26 provides an opportunity for Asian nations to build on these efforts and to develop a stronger regional policy infrastructure to address the climate crisis. By phasing out coal, Asia can play a greater role in shaping the global climate agenda.
1 Carbon Brief 'UK calls on countries to ‘consign coal to history’ at COP26' 14/05/21
2 Reuters 'As climate talks near, pressure grows on Asia to cancel new coal projects' 14/09/21
3 The Guardian 'Prudential in talks to buy out and shut coal-fired plants in Asia' 03/08/21
4 Carbon Brief 'China’s 2060 climate pledge is ‘largely consistent’ with 1.5C goal, study finds' 22/04/21
5 The Financial Times ‘China pledges to stop building coal-fired power plants overseas’ 22/09/21
6 Greenpeace.org ‘24 new coal-fired power projects approved in China in first half of 2021: Greenpeace’ 25/08/21
7 Climatechangenews.com ‘South Korea proposes cutting emissions 40% by 2030’ 16/06/21
8 WhiteHouse.gov ‘U.S.-ROK Leaders’ Joint Statement' 21/05/21
9 argusmedia.com 'S Korea enacts 2050 carbon neutrality framework' 31/08/21
10 The Korea Times ‘Korea to unveil higher target of carbon emissions reduction in Nov.’ 30/05/21
11 Japan.go.jp 'Japan’s Green Growth Strategy Will Accelerate Innovation' 16/09/21
12 The Straits Times 'Japan cancels its last coal power plant project' 28/04/21
13 The Guardian 'Japan will become carbon neutral by 2050, PM pledges' 26/10/20
14 Reuters 'Japan to shut or mothball 100 ageing coal-fired power plants -Yomiuri' 02/07/20
15 WhiteHouse.gov 'Meeting of the Major Economies on Energy and Climate September 17, 2021: Chair’s Summary' 17/09/21
16 Energy Market Authority 'Opening SIEW Remarks by Mr Chan Chun Sing, Minister for Trade & Industry, at the 12th Singapore International Energy Week 2019' 29/10/21
17 Greenplan.gov.sg ‘SG Green Plan: Introducing The Green Plan’ n.d.
18 Akin Gump 'Energy in ASEAN: Singapore and Hydrogen' 19/08/21
19 Monetary Authority of Singapore '"Green Finance for a Sustainable World" – Keynote Speech at SFF x SWITCH 2019’ 11/11/19